Failure to launch: Singapore brands could be wasting millions on new products

Go into any supermarket or retailer in Singapore and you will be faced with shelf upon shelf of new products trying to catch your attention: new flavours, added vitamins, or easier packaging.

The majority of these will be line extensions, a variation on an existing product. You may be tempted to give it a go and try something new, or else just stick with your trusted favourites.

Those products which persuade you to test new waters – particularly if you have never used that brand before – will bring huge rewards both in terms of revenue and brand awareness.

Singapore's iconic Tiger beer recently launched Tiger Radler, a new variant of the light lager which introduced the addition of natural lemon juice for a more refreshing flavour. Tapping into the growing appetite for fruit-infused beers and ciders, the product has been highly successful in attracting new customers who prefer a sweeter, fruitier flavour over the more traditional lager.

Eu Yan Sang, the Traditional Chinese Medicine (TCM) retailer, is another good example. It has worked hard to develop new products as a core part of its strategy to diversify its offering and attract additional customers. Its honey products, positioned as a natural superfood to soothe indigestion, sore throats, and skin ailments, have been particularly well-received in the past five years.

Yet on the flipside, a large number of the products you see will be taken off the shelves after just 1 or 2 years, consigned to the scrap heap with thousands of others. Less than 10% will add to the long-term growth of the brand.

For these failed products, it means wasted marketing budgets and potentially huge damage to the brand's reputation. Singapore is saturated with new products competing against each other, from softdrinks to consumer electronics to cleaning products, with only a tiny fraction receiving any substantial returns.

So when the stakes are high, what are the most important considerations that companies need to consider before launching a new product?

Firstly, it is essential that they understand the opportunity in the market and the benefits that are important to the consumer, which could be from a bigger size to a more health-conscious version of the existing product – think of Philadelphia Light or Diet Coke.

These benefits must be delivered without compromise and clearly communicated in both the packaging and marketing materials.

It's also about creating something that is suitably different to the existing brand portfolio. For Tiger Radler, it was about appealing to a new category of consumers looking for a light, refreshing drink who may not have previously considered beer.

Too many brands fall into the trap of launching endless line extensions that simply steal customers from one item to another. Oreo Cookies is a culprit of this, launching everything from Ice Cream to Watermelon flavours.

These cannibalistic launches bite into the share of a company's existing revenue. This means that customers might buy a different flavour, but don't buy more of the product, while also conditioning previously loyal customers to explore other options.

It is equally important not to go too left-field. Does the new product fit comfortably with the brand's identity?

Harley Davidson, the iconic American motorcycle manufacturer, learned an important lesson about over-extending the brand when it launched a line of aftershave and perfumes. It received strong criticism from even the most loyal fans, who felt the product did not resonate with the tough Harley Davidson identity.

Last but certainly not least, you need to have the resources to support the launch, through credible marketing and advertising campaigns. A new product launch requires significant investment and the company needs to be prepared to meet these costs.

Talking about the need to innovate is a popular discussion within businesses. The piles of consumer products appearing and disappearing off the shelves in Singapore make it clear that innovation, if not approached in the right way, comes with a high price-tag.

Only if the opportunity is there, it's delivered the right way, and there are the right levels of support to make it a success, will company get that crucial first-mover advantage.