NEWS10 September 2014

Majority of new products don't meet profit targets

News UK

UK — Almost three quarters ( 72%) of new products fail to meet their profit targets according to Simon-Kucher’s latest global pricing study.


This is despite 77% of respondents of the survey saying new products were the best means of achieving higher market prices.

Price remains a critical marketing issue and according to the study, only one third of planned price increases are implemented in the market. This compares with two years ago when companies averaged about half their price increases.

Worldwide, 83% of companies said they were suffering increasing price pressures and 58% admit that they are currently involved in a price war. Despite the economic recovery and attempted price increases, 39% of respondents were unable to improve their margins in the past few years.

Mark Billige, managing partner of Simon-Kucher & Partners in London said: “Price pressure, price wars and competition shouldn’t hold businesses back from achieving the prices they want. If you know the true value of your product, you can set the right price. This also means having the courage to kill new products if it becomes clear that they won’t meet their profit targets.”

The Global Pricing Study 2014 is conducted by Simon-Kucher & Partners in collaboration with the Professional Pricing Society (PPS). It surveys more than 1600 directors and managers across all industries in 40 countries.