Nagornyi Yeugene, Candidate of Economic Sciences, Leading researcher of the Research Sector, Sumy State Pedagogical University named after A. S. Makarenko, Sumy, Ukraine

ORCID ID: 0000-0003-0756-8398
e-mail: 780317@ukr.net

The Scope of Failure Rates in the Market of New and Innovative Products

Introduction. A significant progress has been made in recent decades in developing new and refining existing methods to research consumer needs and inquiries, to understand their behavior. This was expected to reduce the number of failures in the market of new and innovative products. However, the level of product failure remains consistently high and is estimated to vary from 40 to 95%. Such considerable differences in the estimation of failure rate make it necessary to analyze in more detail the reasons that determine such a significant variation in results. Equally important is the analysis of empirical studies that have been performed to assess the actual volume of market failure.

Purpose. The purpose of the study is to analyze empirical studies conducted to assess the market failure rates of new and innovative products, as well as the factors that determine the significant variation in the outcome of the failure measurement.

Results. The scope of failures rates in the market of new and innovative products. It is revealed that marketing and consulting agencies unreasonably and purposely overestimate the percentages of commercial failures of products to attract potential customers, to convince them that they created products will not find their place in the market, the cost of developing and commercializing products will not be covered by their revenue sales, and you can reduce the risk of failure by ordering appropriate services or advice. It was found that the high percentages of the failure rate in the product market are also explained by the imperfection of the methodological base for its accounting, since the evaluation also includes the number of failed ideas, concepts and prototypes of new and innovative products eliminated at the stages of the innovation cycle. Thus, it was found that the inflated failure rate is a market myth. The idea that 80-95% of products are failing in the market is popular and widely used in media, but it is not true because the actual percentage of failures is much smaller. The article presents the results of actual empirical studies to determine the failure rate, which does not confirm the market myth of its high value, but gives the average value of failure at 40%, which has been kept at this level for the last 50-60 years. The failure rate varies depending on the country and industry. Overall, in the industrial market the failure rate is slightly less than in the consumer market.

Conclusions. Years of research and practical activities devoted to the development of new and innovative products have little or no effect on reducing the percentage of commercial failures. The emergence of professional associations dedicated to new products; introduction of various disciplines, workshops, courses, etc; the publication of several scientific journals fully dedicated to the development of new products also did not in any way reduce the failure rate. Therefore, the search for new ways of reducing this indicator is becoming more relevant, both from a scientific and practical point of view.

Keywords: market success; market failure; innovative products; empirical research; key success factors.

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