Learn why 90% of new products struggle and how to beat the odds in your business.
New product failures are more common than you might think, with studies showing that a large percentage of new launches don't make it past the initial market test. Many research reports suggest that as many as 70% to 90% of new products struggle to gain lasting momentum, although the exact figures vary across different industries. You’ll find that sectors packed with fierce competition often bear higher risk rates, while niche markets face unique challenges of their own. These numbers are backed by data that reveal common pitfalls such as insufficient market research, product misalignment with consumer needs, and premature launches. Grasping these factors can give you the clear picture you need to assess risks and plan more carefully for your own product’s journey.
Read on to uncover detailed statistics and practical insights that can help guide your next product launch.
What is the average failure rate for new products across industries?
When we examine the data more carefully, we see three tiers of product failure rates for physical products:
- Consumer packaged goods (CPG): 70-80% failure rate
- Retail products: 50-60% failure rate
- Industrial products: 30-40% failure rate
Why such variation? CPG products face intense shelf competition, shorter decision cycles, and more impulsive purchasing behavior. Industrial products, meanwhile, typically undergo more rigorous pre-purchase evaluation and serve specific functional needs.
The definition of "failure" also matters tremendously. Are we measuring:
- Failure to meet sales projections?
- Failure to achieve profitability targets?
- Failure to maintain market presence beyond one year?
- Failure to recover development costs?
Each metric yields different failure rates. A product might miss its ambitious sales targets (technical "failure") yet still generate positive ROI (business "success").
Time horizon also affects these numbers. Nielsen research indicates that only about 15% of CPG products remain commercially viable after two years—a sobering statistic for brand managers planning long-term portfolio strategies.
What's clear is that product failure is common enough to warrant serious attention but not so universal that innovation isn't worth pursuing. The key is understanding the specific risk factors in your industry and category.
How do product failure rates vary between startups and established companies?
Does having deep pockets and brand recognition guarantee product success? Not necessarily, but it helps. The data shows significant disparities between startups and established companies when launching new products.
Startups face failure rates approximately 1.5 to 2 times higher than established companies. While established companies experience roughly 30-40% failure rates for new product launches, startups often contend with 60-80% failure rates.
This disparity stems from several key advantages established companies maintain:
| Advantage | Established Companies | Startups |
|---|---|---|
| Brand trust | Existing consumer confidence | Must build credibility from scratch |
| Distribution | Established channels and relationships | Limited access to prime shelf space |
| Market research | Larger budgets and historical data | Often limited to smaller, less representative samples |
| Financial runway | Can absorb initial losses | Typically need faster path to profitability |
| Talent pool | Specialized expertise across functions | Often reliant on generalists |
However, startups aren't without their own advantages. They typically demonstrate:
- Greater agility to pivot when early signals suggest failure
- Less bureaucracy slowing decision-making processes
- Higher tolerance for risk and experimentation
- Fewer legacy constraints on innovation
Interestingly, product extensions (incremental innovations to existing product lines) show much lower failure rates—around 20-30% for established companies—compared to truly novel products. This explains why established companies often prefer line extensions over disruptive innovation.
For startups, the "fail fast" mentality can actually be beneficial. Research from CB Insights shows that successful startups pivot an average of 2-3 times before finding product-market fit, suggesting that early "failures" are often stepping stones to eventual success.
What industries have the highest and lowest new product success rates?
Not all industries face the same uphill battle when launching new products. Success rates vary dramatically across sectors, influenced by factors like regulatory requirements, technical complexity, and consumer behavior patterns.
Industries with the highest failure rates (70-85%):
- Fashion and apparel
- Consumer packaged goods (particularly food and beverage)
- Mobile applications and games
- Restaurants and food service concepts
- Beauty and personal care products
Industries with moderate failure rates (40-60%):
- Consumer electronics
- Automotive products and accessories
- Home goods and furnishings
- Financial services products
- Entertainment media (movies, music, books)
Industries with lower failure rates (20-40%):
- Medical devices and healthcare products
- Enterprise software and B2B solutions
- Industrial equipment and machinery
- Defense and aerospace products
- Professional services offerings
What explains these differences? Several factors contribute to an industry's product success profile:
- Regulatory barriers – Industries with stringent regulatory requirements (pharmaceuticals, medical devices) have higher barriers to entry but lower post-approval failure rates because products undergo extensive pre-market testing.
- Development timeline – Industries with longer development cycles tend to conduct more thorough market validation before launch.
- Purchase decision complexity – B2B and high-consideration purchases typically involve multiple stakeholders and more rational evaluation, reducing impulse-driven failures.
- Market research limitations – Fashion and trend-driven categories are notoriously difficult to predict through traditional market research.
- Technical complexity – Products with higher technical barriers face fewer competitors but more challenging execution hurdles.
Understanding where your product fits within these industry patterns can help set realistic expectations and inform appropriate risk mitigation strategies.
What steps can be taken to reduce the risk of product failure?
Can you significantly improve your odds of product success? Absolutely. While no approach guarantees success, research consistently identifies several practices that substantially reduce failure risk.
Start by addressing the most common causes of product failure:
- Inadequate market research – 35% of failures stem from misunderstanding customer needs or market conditions
- Poor product-market fit – 30% of products fail because they don't solve a meaningful problem
- Pricing strategy issues – 25% of products are priced inappropriately for their target market
- Execution problems – 20% of products have quality issues or fail to deliver on promises
- Competitive pressure – 15% of products can't effectively differentiate from alternatives
To combat these failure points, implement these evidence-based strategies:
Before development:
- Conduct ethnographic research to uncover unarticulated needs
- Test concept statements with target consumers before investing in prototypes
- Analyze purchase decision journeys to identify critical influence points
- Evaluate competitive landscape for white space opportunities
- Calculate realistic break-even scenarios based on conservative projections
During development:
- Create minimum viable products for early feedback
- Implement stage-gate processes with clear success criteria
- Conduct iterative testing with representative user groups
- Develop contingency plans for likely failure modes
- Maintain flexibility to pivot based on emerging insights
Before full launch:
- Run small-scale market tests in representative locations
- Measure not just purchase intent but actual purchase behavior
- Gather feedback on the entire product experience, not just core features
- Pre-test marketing messages for comprehension and persuasiveness
- Establish clear KPIs and monitoring systems
Companies that implement comprehensive testing protocols report failure rate reductions of 30-50%. The key is making testing an integral part of the development process rather than a final validation step.
Remember that even "failed" products often provide valuable insights that inform future successes. The most innovative companies view product development as a portfolio of calculated risks rather than a series of binary outcomes.
Final Thoughts
Understanding new product failure rates isn't about discouraging innovation—it's about building smarter strategies. The statistics we've explored reveal that success isn't a matter of luck, but of meticulous research, consumer understanding, and adaptive thinking. While the numbers might seem daunting, they're actually a roadmap for more intentional product development.
Every percentage point represents a learning opportunity. Brands that approach product launches with curiosity, rigorous market research, and a willingness to pivot can significantly improve their odds of success. The most successful companies view failure not as a setback, but as valuable intelligence that refines their approach.
At Highlight, we understand the risks associated with launching a new product. That’s why we’re committed to delivering turnkey, in-home product testing solutions that show you how real users interact with your products. Our platform connects brands with representative testing audiences who provide honest, actionable insights—reducing the junk data rate from the typical 30% in mainstream surveys down to just 1-2%. With a highly selective Highlighter community and a 90%+ completion rate, we’re able to deliver reliable, detailed consumer insights in as little as three weeks, versus the months required by traditional product testing methods.
By integrating rigorous testing protocols into the product development process, Highlight helps transform uncertain product journeys into calculated pathways for success. When viewed as a narrative of data and insight, each statistic becomes a stepping stone that guides brands to pivot, iterate, and ultimately thrive.