Market Failure

Market failure occurs when a new product's actual market result is less than or the opposite of the expected result. This is not necessarily a reflection of the product's quality or the team's competence.

When a new product is brought to market, there's an investment of time, money, and resources, with the expectation of a certain outcome (e.g., revenue, market share, user adoption). If the actual outcome falls short of these expectations, it's a market failure.

For example:

• A new restaurant that doesn't attract enough customers to be profitable.
• A new app that doesn't get enough downloads to sustain its development.
• A new book that doesn't sell enough copies to justify its publication.

It's important to distinguish market failure from other types of failure. A product can be a technical success but a market failure. For instance, an engineering team can build a product that works perfectly, but if nobody buys it, it's a market failure.

Understanding the specific criteria for Market Success is crucial to defining what market failure would look like for a given product.