3 Reasons To Cancel A Toy Or Game In Development Before It Hits Shelves
One of the peculiarities of the toy & game business is that the level of due diligence applied to product selection is far lower than in many other industries or consumer products categories. This is largely due to the fact that most products in market don’t carry forward to the next year. In our business, if a new product launch fails to live up to expectations, the implications are normally not that severe in terms of lost revenues – we budget for some markdowns and stock clearance across our product range and we clear the failed product and move on. In other industries where products can stay in market for years, and where the average value of a new product is far higher, more due diligence is applied before, during and after the product development stage.
The bottom line is that sometimes it just makes more sense to launch something (even if we’re not sure it will sell well) than to leave a gap in our topline revenues by not launching something.
There are some products though that should never see the light of day, regardless of how far advanced the product development is, because the risks of complete and utter failure are high.
REASONS TO CANCEL PRODUCT IN DEVELOPMENT
RETAIL RELATIONSHIPS – retailers hate over stocks or slow selling products. If you ship a complete and utter dog of a product to your biggest customers, they will certainly not thank you. They may also be less inclined to take your next wave of product launches. Retail buyers are assessed and incentivised on selecting products that sell. So, if you get quite a long way into the cycle and become convinced that there is something fundamentally awry with the product in terms of commercial appeal or functionality, then perhaps you should cancel the project & put the inventory budget against upping the marketing on your other lines.
RISK OF DAMAGE TO BRANDS – one $multi-million product line I worked on was a brand extension of one of THE most iconic brands both in our industry, but also in terms of broader consumer society. We developed a new version of this product involving an added technology element. But as often happens with technology development the end result did not live up to expectations, and we had to decide fairly late in the game whether to pull the product or not. We should have pulled the product because it bombed in retail, left a nasty hangover for both our company and the retailers, but perhaps more importantly it risked the health of a mighty cash cow of a brand.
FUNDAMENTAL CONCEPT OR FUNCTIONALITY FAILURE – due to the prevailing lack of structure and due diligence in product development processes in the toy business, sometimes products make it a long way through before some fundamental flaw is discovered. I can think of one very painful experience for a client when I research tested their new major product release and discovered that both the underlying concept for the toy and the dexterity fit between the product and the target demographic were a complete mismatch. I made the rare recommendation that the product should be dropped before launch as it was genuinely so bad! Alas at this stage, the product had already begun tooling and the client chose to proceed. They shipped out in the region of $1m of inventory to the market and had to markdown or clear nearly all of that stock. The costs of this failure were close to catastrophic for the company, and they had to curtail 2 or 3 rounds of product development after. The cost to the company overall of proceeding with the product was $millions.
In conclusion, there are so many product concepts out there that we need to have robust product selection and product development review processes to filter out products that will fail badly. The earlier in the process we can find that a product has serious issues the less we have invested and the more we can put into alternative concepts with more ‘legs’.
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