The High Rate of New Product Failure Leads to More Co-Branded Consumer Products

There is an excellent story in the New York Times reporting on the success rate of new consumer products introduced in the last few years. The information, produced by marketing research firm Nielsen, shows that out of nearly 17,000 new products introduced since 2008 only 62 achieved modest sales of at least $50 million in the first year on the market and then followed this by experiencing a sales increase in the second year. These results point up the challenges marketers face with introducing new products in a cluttered competitive market.

To address the risks surrounding new products, another story in Advertising Age discusses how more marketers are turning to a co-branding strategy. As we discuss in our Managing Products tutorial, a co-branding strategy occurs when two or more known brands share a product label. In some cases both brands are owned by the marketer, such Crest Toothpaste with Scope both owned by Procter & Gamble, while in other cases the brands are from two different companies, such as Betty Crocker teaming with Hershey to market a cupcake mix. The principal advantage sought by a co-branding arrangement is the expectation that the power of two brands will lead to faster customers’ acceptance, especially if each brand appeals to a different target market. Additionally, depending on the co-branding relationship, the cost of introducing the product may be spread over each brand.

The Advertising Age co-branding story presents examples of six recently introduced co-branded products. Sometimes the joining of brands makes sense, such as Kellogg’s Peanut Butter Cereal that features Jif brand peanut butter. Other times, you have to take a step back and question how the brands can work together. For instance, the combination of Dial Body Wash and Froyo Frozen Yogurt may seem a bit odd.