Product Launch Evaluation

Many years back, Treetop, a juice drink in tetra packs was launched into the Indian market. It was a novelty at that time, and sales in the first year were so good that the manufacturer substantially expanded production capacity. But sales plummeted soon after and never recovered.

More recently, in a major offensive, a food conglomerate set up a business division to launch nutritional bars into Asia. Initially the growth was exceptional as the brand entered one market after another. However, distress signals began to emerge about 8 to 12 months after launch. Another year or two later the business division was closed down.

What went wrong? In the case of Treetop, while the initial product trial showed promise, the juice drink failed to generate repeat purchases from most consumers after their first few tries. The company was reading retail sales, which looked very strong in the first year of launch. However, what the sales data did not reveal was the repeat purchase rate, which for Treetop was low. In the second example, while the nutritional bars were filling the distribution pipeline and going on the shelf, not many were going off the shelves. The regional team, for some time, continued to post good aggregate primary sales as they kept entering new territories, expanding their distribution and stretching the pipeline.

Primary sales and retail sales tell us how the product is performing at that time, but as can be gauged from the above examples, they are not a good prediction for the future. On the other hand, consumer panels are particularly good in predicting sales, and should be used for this purpose.

Products that underperform can result in financial and opportunity losses, as well as harm the corporate reputation and dilute brand equity if corrective measures are not taken promptly. It is crucial to identify such products soon after launch and either improve them or discontinue them before they adversely impact the company’s business and reputation with stakeholders such as consumers and retailers.

Given the high failure rate, it is essential to conduct diagnostic and predictive research even after the product has been launched. Being able to anticipate the expected market share of a new product in the future gives management the confidence to make timely decisions. This enables them to invest further in successful products and cut their losses with underperforming products.


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