Carryover Sales for New Products

 

Sales carryover for a brand-new product is always zero in the year if its release—after all, you can’t have carryover on a product that did not previously exist. Likewise, it does not have brand awareness and a loyal customer base. You will, however, have a carryover after the product is released.

Typically, the carryover for new products is higher than their older counterparts in the market. Here is a breakdown of how carryover is typically classified:

  • Super Carryover- 100%+
  • High Carryover- 90%- 100%
  • Medium Carryover- 70%- 90%
  • Low Carryover- Anything less than 70%

A new product usually has a very high carryover during its second year. If a product was launched in the beginning of the year (as pictured below) it typically has at least a 100% carryover.

Carryover for new products (Full Year)

Using the Law of Triangles, you see one triangle comprises 2014 and when promotions are halted at the end of the year, the sales drop to zero in the full year. This reflects a 100% carryover as illustrated by the two triangles.

In the second example below, we have a product that is launched in the middle of 2014 with promotions stopped at the end of the year.

Carryover for new products (Half year)

Here, you actually have a 200% carryover of sales for 2015. Still, it is important to note that this is a theoretical example of how carryover works for new products.

Personally, I do not see any reason to halt promotions on a brand-new product after the first year or even six months. New product launches are important and need to be strongly promoted within the first few months in order to have visible impact on the market and meet its sales targets.

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