The number of products introduced each year is up 41%, but most of those rack up less than $16 million each in revenue; 54% of those new products deliver less than $1 million in profit.
Half of the new products in the pipeline have long-term estimates of less than $10 million in annual sales.
Those dismal facts were presented by William Hensley, president of consultancy Hensley & Associates, at the American Marketing Association's 28th Annual New Products Conference in New York last week.
Mr. Hensley, one of a dozen speakers on how to create new products "faster, better, cheaper," said there are four common mistakes made by marketers that result in product failures.
DO YOUR HOMEWORK
The first two: "We don't do enough homework," he said, and marketers "forget lessons learned before."
A former Procter & Gamble Co. executive, Mr. Hensley recalled the introduction of Ivory shampoo in the late 1970s, originally marketed in a blue shade until the company found the color white a better fit with Ivory's "pure" positioning.
Ten years later, P&G erred again by testing a new blue color for its Prell shampoo, traditionally green.
Third, marketers mistakenly reward systems that focus on action rather than results.
Mr. Hensley cited an unnamed marketer that was ready to "anoint" a marketing manager for a new-product launch that entailed a number of line extensions in rapid succession. But the marketer was focused too much on the product activity rather than actual product sales, which turned out to be a blip at $25 million within 18 months.
BUILD ENDURING BRANDS
Finally, he said marketers should focus on building enduring brands rather than taking a "flavor of the month" approach.
That can be attained, Mr. Hensley said, with stronger and longer ad copy, and an emphasis on strategy development that lasts longer than "30 minutes in the CEO's office."