Surveying 791 forecasters and demand planners around the globe, the report sheds light on the role of New Products today and how forecasts are prepared, including models used, review frequency and acceptable forecast errors. Crucially, the report reveals insight into the difficulties of launching and forecasting new products amidst an increasingly difficult business environment.
New Products Are Crucial To Maintaining Market Share
The report find that New Products are increasingly important, and comprise increasing percentages of companies’ offerings. The differences by industry are revealing: Technology/Electronics and Healthcare feature on top at 27% and 22% respectively. By comparison, Industrial products and Chemicals are at 14%. Food/Beverages remain low at 12%.
New Product Launches Are Not So New
Arguably the most revealing part of IBF’s Benchmarking report into new product launches is that the vast majority of New Products are variations on existing products, specifically Line Extensions, market Extensions or Product Extensions. Just 20% of ‘New Products’, are completely new. The majority are Line Extensions (30%) or Product Extensions (27%).
Companies Are Adapting to Intense Demand By Extending Lifespan
The report reinforces existing trends within the Fast Moving Consumer Goods (FMCG) industry, with the trend particularly pronounced in Tech and Electronics. To meet consumer demand for new products, companies are cutting lead time and cost by reworking or rebranding existing models. One example of this is Apple releasing new versions of the iPhone, having released 14 models between 2007 and 2016.
The benchmarking data supports the thesis that companies are repositioning products, lowering the price, reducing the content, and or selling in bulk in order to extend product lifespan. This is how companies are overcoming the increasingly short product lifecycle environment.
Companies Creating Practical Solutions to Meet Demand, But Forecasting Gets Harder
IBF’s benchmarking data reveals that New Products face high forecast error, at 64%, compared to Product Improvement and Market Extension at 35% and 36% respectively.
Download the full report to see all the benchmarking data, including the forecasting models used in New Product forecasting, how new products are reviewed (independently or as part of the S&OP process), and how far ahead new products are forecast. See your company measures up.