74% of new products in Asia-Pacific fail after leaving pricing strategy too late

74% of all new products in Asia-Pacific fail and a quarter of companies fail to fulfil profit targets for any new products, according to the Global Pricing Study 2014.


The study by global strategy consultancy Simon-Kucher & Partners and the Professional Pricing Society (PPS) surveyed about 1600 managers from more than 40 countries globally.

Simon-Kucher managing director for Oceania Christoph Petzoldt said the high fail rate of new products could be attributed to companies’ poor timing of tactics.

“Most companies deal with product pricing and marketing when it’s already too late – often only right before the launch. It’s no wonder that three out of four new products are a bust, thus shooting down any chances of securing those profit targets.”


Pricing pressures

The study also found that price pressure is affecting 85% of respondents in Asia-Pacific. 36% of respondents had been unable to improve margins in recent years.

The Asia-Pacific region had a higher number of price wars happening than the rest of the world – 72% of respondents said they were currently involved in a price war, compared to 58% of respondents globally.

81% of those in price wars blamed their competitors.


How the ‘best’ differ from the rest

About 10% of respondents globally fall into what the study had determined as the ‘best’ companies.

In Asia-Pacific, this group’s amount of new products that meet their profit targets is 62% higher than the remaining 90% of the population. They also have a 57% higher share of innovative products and 62% higher success rate at enforcing price increases.

Petzoldt says the ‘best’ tend to succeed because they integrate marketing and pricing strategies early in the innovation process.

“The ‘best’ leave nothing to chance. If you know the true value of your product, you can set the right price. Besides, it’s essential that companies are able to make tough decisions when necessary – from the beginning to the end of the innovation process.

“This also means having the courage to kill new products if it becomes clear that they won’t meet their profit targets.”


Michelle Herbison
BY Michelle Herbison ON 26 September 2014
Assistant editor, Marketing Magazine.