This report re-examines the common assertion that the vast majority of new products fail. We investigate whether claims of very high new product failure rates are true or not. We review past empirical research from peer-reviewed academic journals published over the past 26 years and provide a detailed analysis of failure rates for over 30,000 new product launches, from around 10,000 brands, across 25 consumer packaged goods categories (ranging from soft drinks to bath tissue) in the United States market. The findings show that new products do fail, but failure is not as high as is widely believed, or at very least not as fast as thought.
Categories such as transport, accommodation and music have undergone considerable change with the introduction of so-called disruptor brands. Brands such as Airbnb, Netflix, Uber, Spotify, Apple music, have entered markets with new business models to shake up the status quo. In this report we investigate if the introduction of disruptor brands has disrupted the law-like patterns of brand growth.
Sub-brands show high rates of substitution by buyers. But they do still add to the penetration of the brand as a whole – on average, the combined actual penetration of sub-brands is 83% of their summed penetrations. For example if sub-brand A has 5% annual penetration and B has 5%, their combined annual penetration will not be 10%, but will be around 8.3%.
Empirical evidence from 20 fmcg categories shows that increased brand sales tend to arise more from additional customers buying the brand than from increased purchases by existing customers.
An unexpected but striking finding: loyalty to new brands was near-instant in some 20 cases examined so far. The new brands' average purchase frequency at launch is already 'normal'.
Now available as an eBook exclusively to Apple iBooks
The Ehrenberg-Bass Institute for Marketing Science is the world’s largest centre for research into marketing. Our team of market research experts can help you grow your brand and develop a culture of evidence-based marketing.