r the failure rate, marketers said, was not the recession or cutbacks in advertising. The majority of respondents blamed the high rate on the new product process itself. Companies, they felt, were still relying too much on pointless extensions of brand names that offered very little that was really new to consumers. Two-thirds of the respondents said that too many companies were just paying lip service to the idea of corporate commitment to innovation. Respondents seemed to feel that the willingness to back genuinely worthwhile new products was often lacking where it was needed the most--at the highest division of management.
Indeed, the Innovation Survey revealed that new product development was often a misnomer. For example, in 1990 and 1991, some 81 percent of new product entries were brand extensions within or outside the category. Only 19 percent were new brands in an established category or new products that created an entirely new category. In fact, many companies are trying brand extensions as a low-risk and low-cost way to produce a new product. However, according to some research, established brands have important advantages in advertising. Consumers appear to better remember new product information for familiar brands. Exposure to competitive advertising appears to have little effect on claim recall from ads for well-known brands. Results suggest that it will be difficult for consumers to remember product information from ads for new brands in heavily advertised categories. This difficulty, which may play a role in the high failure rate of new products, can be lessened by avoiding media contexts in which other brands in the category advertise.
Advertising agencies, marketing firms, and package designers might be surprised to see how marketers assess their contributions to the new product process. Respondents in the 1991 survey rated marketing departments and consumers as the most important factors i...