There are a number of risks and challenges faced by organizations while they are developing new products, some of which are:
- Failure of the new product development process
- Failure of the product at the testing stage.
- Problems in market acceptance.
- Unsuccessful launch of the new product.
The firm can mitigate these risks and challenges by Investing in appropriate R & D practices, developing products according to demands and requirements of the market and investing appropriately in marketing and promotion of the product.
New product development can stress an organization. Change brings conflict!
To manage stress involve other departments in the decision. Sales will eventually have to sell it, manufacturing make it and logistics ship it. So periodic meetings can keep everyone up to date and limit surprises.
Many new products fail. To minimize this possibility companies need to make sure their new product matches well with their customers needs. If the product benefits are matched by another in the marketplace, what incentive to customers have to switch.
Some products fail because the market is too small. Again good market research can help solve this problem. Companies can perform economic analysis to see if the market will generate sufficient profits to make it worthwhile to pursue.
Some other problems are too high a price like iPhone. Or quality issues battery fires in laptops. Manufacturing complexity like Airbus. There are others but I think you have the idea.
There are a number of products which are developed by the companies and some of them get successful but some are failed. The reason is that each product has to face risks and challenges. The major challenge for the product is the selection of the right market. Secondly, after a new product development it becomes very confusing for the companies to decide the right customers' segment. Some of the other questions which companies face include: How should be the new product positioned? Can your product give competencies to get competitive advantage? The major risk that is faced by the new product is the competition in the market. If right marketing mix is not selected for the company then there can be chance of failure for the product. I think porter five forces is the perfect model that describes the challenges which the new product can face. The five factors of his model includes purchasing power of buyers, purchasing power of sellers, barriers of new entrants, threat of substitute, and competition.
For combating all challenges the only thing which company can do is to completely analyze the market. An excellent market plan can reduce the risks and challenges for the company.