New Products Archives - Don Roy, Ph.D.

Apple iPhone 7 and Status Quo Resistance

A game that has emerged within the consumer tech industry is predicting development trends for the next generation of popular products. Will the next Samsung Galaxy have a larger screen? Weigh less? Include marked improvement in camera capabilities? This speculation and more is repeated for any product yet to hit the market, especially successful ones.

It was Apple’s turn to take center stage of new product reveal this week. The company unveiled the iPhone 7 nearly two years to the day that it first presented iPhone 6. Surprisingly, opinions about the new iPhone had more to do with product design than its price (starting at $649 for iPhone 7 and $769 for iPhone 7 Plus). While some design features like the dual camera lenses (one wide-angle and one telephoto) were widely lauded, others were questioned and even ridiculed. The feature ridiculed most was one not included in the design: headphone jacks. No more headphones tethered to a phone. Instead, iPhone 7 features wireless, rechargeable AirPods. One pair is included with the product, and they retail for $169 if bought separately.

Change for Good?

Let’s face it- a smartphone without wired headphones is a feature many of us might struggle to wrap our arms around at first. A user who is shall we say, organizationally challenged, could easily misplace their AirPods. Change sparks uncertainty, fear, and even mockery as evidenced by some of the reaction to iPhone 7 on social media (see a few examples below).

Is elimination of the headphone jack in the iPhone 7 meaningful innovation? Or, is it change for the sake of change? Will the new feature add value to the user experience. Or, is it more of a design feat driven by internal decisions at Apple instead of users’ needs and wants?

Status Quo Resistance

A recent study of US iPhone owners found 51% are interested in upgrading their iPhone to the latest model (although the study was conducted prior to unveiling of iPhone 7). This finding suggests people are open to upgrading if they can be persuaded to make the commitment to the latest iPhone. The decision whether to adopt this product is no different than it is for any other purchase decision. It comes down to a marketer’s ability to shake up the status quo. Will prospective buyers be convinced that upgrading to iPhone 7 will result in a better, more satisfying smartphone experience? If yes, owners could be open to upgrading. If the answer is no or don’t know, the safe course of action is to stand pat and keep their current phone.

The marketing challenge of overcoming status quo resistance reminds me of an often-told story about a family holiday meal. Three generations were gathered in the kitchen preparing the meal. As the mother cuts off the end of a ham before placing it in the pan, her daughter asks why she always cuts off the end of the ham. The mother’s response was “I cut off the end because that’s what my mother always did.” She was in the kitchen, too, so the question was posed why she always cut off the end of the ham. Her response? “I cut off the end of the ham because my mother always cut off the end of the ham.” Fortunately, the family matriarch was also in attendance, so the younger generations asked her the same question. She revealed the secret: “I cut off the end of the ham because my baking pan is too small for the ham to fit.”

What does this story have to do with the Apple iPhone 7 or any other new product? It is reflective of consumer behavior. Many people do what they always do, perhaps even influenced by the behavior of a parent or friend. The behavior becomes rote; we continue it without evaluation of whether it is optimal. Better alternatives could exist, but hey, that would entail change and do we want to deal with the hassle of change?

I recall times when Facebook made significant changes to its user interface. Some of my friends proclaimed “I don’t like the new Facebook, so I’m out of here.” And they were… for a few days. Then, they overcame status quo resistance and adapted to Facebook’s new look. While there is a difference between adapting to a free online service and a smartphone costing hundreds of dollars, the underlying force of resistance is the same.

Time Will Tell

Time (and sales) will tell whether innovations in the latest iPhone resonate with consumers. Some skeptics have been waiting for Apple to fall on its face in the five-plus years since Steve Jobs stepped away from the company. It could happen with the iPhone 7. Or, we could be looking back in a few years laughing at ourselves for the times we walked around with white wires hanging from our ears.

New Product Success Simplified

A stark reality of marketing that students learn early on is that a vast majority of new products eventually fail. Stats on product failure rate are tossed about such as two-thirds, 80% and even 90% (although I rarely see a source cited for any of these “facts”). The precise statistic is not as important as the underlying concept – gaining acceptance for new products is difficult. However, a recent global study by Nielsen sheds light on consumers’ attitudes toward new products.

The Nielsen study contains several interesting findings such as:

60% of consumers prefer to wait until an innovation is proven before adopting
60% prefer to try new products from brands that they know or have used (yet another benefit of building brand equity)
39% are willing to pay a premium price for new products

While these stats on attitudes toward new products are interesting, they do not help marketers get to the core question of how to improve the chances of new product success. But, analysis of the report’s findings yield two valuable insights for demystifying new product success:

New products have a better chance of success when they met a real customer need rather than positioning against perceived need.
New products that offer a benefit or advantage that is superior to existing alternatives are more likely to gain acceptance.

These two factors for new product success point back to a basic trait in human nature that does not need to be examined through market research because we know it exists. It is the age-old question “What’s in it for me?” Consumers evaluate a new product against this basic criterion. Why should I buy this product? What will using this product do for me? How will things change or improve if I use this product? We buy products because of what they will do for us or what they will help us become. You are probably familiar with the adage “People don’t buy drills – they buy the holes that the drill makes.” Customers do not care about your new product as much as they care about the benefits of your new product for them.

As you evaluate the viability of a new product idea, it should be put through the rigors of focus groups, surveys, and test markets. But, begin by asking two basic questions from the customer’s point of view – What’s in it for me? How is it better than my current situation? Without solid answers to these two questions it is more likely that a new product is destined to become part of the statistic of new product failures.

Sell Solutions, not Products

Marketers are constantly on the lookout for the “next big thing,” aspiring to hit a home run with a new product that contributes to profitability and strengthens the brand in the marketplace. Unfortunately, most new product development does very little to meet these aims. Why? Think about most new products you encounter – they are not very new at all. Instead, they are minor modifications of existing offerings- new colors, flavors, or sizes- not new in the sense that one would expect.

Another reason why most new products struggle to overcome the odds of failing in the market (80 to 90% of new products do not stick on the market long term) is because of an incorrect marketing focus. People want solutions to their problems, not new products. Yet, a tendency exists to focus on a product’s features and benefits. Oh sure, most products tout their point of difference, how they are better or different than competition. But, that still misses the mark of relating a product to how it adds value for users.

One example of a product that understands that marketing is an enterprise of offering solutions instead of products is Keurig. The coffee machine and single-serve beverage unit of Green Mountain Coffee Roasters got it right with its K-cup concept. The K-cup brewers and single cup varieties of coffees, teas, and other beverages make it easy and cost effective for consumers to brew drinks. And, while customers can order products directly from Keurig, they are not held captive and forced to buy from a single source. K-cups are also available at supermarkets, specialty stores, and department stores.

The impact of Keurig’s K-cup brewers is evident in that it has quickly captured a 6% market share of the home-brew market, a market that has grown during the economic downturn. An alliance with Starbucks will bring K-cup offerings of Starbucks coffees to stores this fall, further entrenching Keurig as a force in the single-cup coffee market. Its ease of use and ability to sample a wide variety of coffee products through product assortments has definitely increased this blogger’s coffee consumption. While I wanted the product (the brewing machine), what I came to experience was the solution of making beverages quickly and at a lower cost than visiting a coffeehouse.

As I sip the final few drops a cup of Green Mountain Coffee Dark Magic, the takeaway is this: strive to offer customers solutions to problems or situations. They will reward you with greater purchase frequency and brand loyalty. Products are interchangeable; solutions eliminate the need to seek out products.

Why We Won’t Be Riding the Wave

Google receives accolades regularly as one of the world’s most innovative companies. But even a strong brand and a knack for developing new services does not make a company immune from product failures. Google signaled defeat this week when it announced it would no longer develop Google Wave as a stand-alone application. The real-time communication and collaboration service had a loyal following, but one that was too small for Google to continue supporting it as part of its product portfolio.

As I learned of Google’s decision, my immediate reaction was “I’m not surprised.” I am leading students in a Product Management course through the book Made to Stick by Chip Heath and Dan Heath. This bestselling book examines why some ideas “stick” or are adopted and others are not. The difference is not necessarily in the quality of the idea, but it is in the messaging that communicates an idea to the audience for which it is intended.

Two of the six traits of a sticky idea are noticeably absent in Google Wave: simple and concrete. A simple idea is one that can be expressed succinctly yet contains a meaning that is consistent. I am unsure whether “real time collaboration” is a core message that got through to the masses. And, the invitation program used by Google to introduce the Wave may have appealed to some people, but it left the uninvited in the dark about the service. A concrete idea removes abstraction and presents it in an easy to understand format. Until reading Wave’s obituary yesterday in Fast Company, I was unable to tell anyone what it was because I did not know myself!

Wave is not the first failure Google has had, and it likely will not be the last. Sure, having a powerful brand gives a company a leg up when introducing new products. Consumers are more likely to acknowledge a new product’s existence and perhaps even consider trying it when it is the sibling of brands that they trust and know. That benefit was not enough in Google Wave’s case, nor was the innovative nature of the service.

The story of Google Wave should serve as a reminder that regardless of a brand’s strength and product uniqueness, if the benefit to consumers is not articulated in simple and concrete terms it is vulnerable. The question “what’s in it for me?” has to be answered clearly if consumers are expected to change their behavior and adopt a new product.

The Meaning of the Music Industry’s Sales Song

Many young people become enamored with music during their teenage years. They listen to songs intently and seek to decipher meanings or messages they believe are contained in the lyrics. That description fits many of my friends and me in the early 1980s. We were eager to take away something substantive from the songs we heard. Sometimes we could, and sometimes, well it was harder!

Fast forward to 2010, the adolescent experience of learning from music can be extended to businesses learning from the music industry. A recent article appearing on FastCompany.com painted an interesting contrast about the state of music in the United States. On one hand, data shown in the article reflects a woeful state for music sales. Annual sales volume is less than half of dollar sales 10 years ago when adjusted for inflation. Such a dramatic slide in sales would usually trigger red flags that product interest is waning, but we know better. The article leads with a quote from Tom Silverman, a music industry executive, who says “More people are engaged with music than ever before.” His view is based on the our options for consuming music today without paying for it (Pandora, iTunes, and Internet radio, to name a few legal options).

What was broken in the music industry for some time is not the consumer’s interest in music, but the long-time product kingpin: the album. Artists and music companies packaged a collection of songs in a single product, but in many cases music lovers may have had an interest in only one or two songs. Now, rather than paying $14.99 for a CD to get a few coveted songs, consumers can buy single tracks for $1.29 and get only the songs they want to pay for. So, instead of music sales being driven by what the labels want to sell (but consumers do not want to buy), the product that appeals to most buyers is the individual song.

As I read the article and thought about the transformation of product sales in the music industry, I could not help but wonder “are there other industries that suffer from an out-of-touch sales model”? Did a similar situation lead to a decline in the American automobile industry? Are lack of offering new approaches to products and distribution responsible for stagnation in the soft drink industry? It seems that opportunities exist for businesses that are willing to depart from the status quo if selling products differently will positively influence consumer acceptance. It requires listening to the music (as performed by customers) to interpret the meaning.

Chick-fil-A Creating Buzz, not Pandemonium with Product Launch

A disclaimer about the following piece on Chick-fil-A: I am biased because I admire the company and its values, I am a fan of its marketing, and I love Chick-fil-A sandwiches! My affinity for Chick-fil-A hopefully has not influenced the following opinion, but in the spirit of full disclosure I share where I stand with the company.

New product development is a key growth strategy for a business. Expanding offerings that reach new customers or appeal to unmet needs can lead to revenue and profit growth. Surprisingly, Atlanta-based Chick-fil-A has experienced tremendous success and growth with a menu that changes very infrequently compared to other quick service restaurants. One of the most noteworthy new product launches in the company’s history is about to occur as Chick-fil-A is adding a spicy chicken sandwich to the menu on June 7. In some ways, the spicy chicken sandwich is like a lot of new products that hit the market; they are slight variations of a core product rather than radical innovations. What is different in this case is the approach used to create buzz about the product launch.

Chick-fil-A is using a “reservation” system in which consumers can go to www.getspicychicken.com between May 21 and June 5, select a Chick-fil-A location, and request a coupon for a free spicy chicken sandwich. Where do reservations come into play? A limited quantity of coupons (approximately 100) will be distributed per location each day during the promotion. Apparently, marketing managers at Chick-fil-A watched and learned from KFC’s grilled chicken giveaway debacle last spring. Too many coupons were distributed, and customers swamped restaurants but in many cases were unable to redeem their coupons as many locations were unprepared for the response the promotion generated. Chick-fil-A is managing time and place interactions with customers.

The reservations approach to launching a new product would not work for all brands, but it is a good fit for Chick-fil-A. The reservations system fits Chick-fil-A’s brand personality trait of being slightly quirky. Many consumers, like me, will likely appreciate the more orderly approach being used to offering free product in its stores than what KFC did last year (I’ll have to remind myself of this if I am shut out of getting a coupon). And, using a promotion that relies heavily on word-of-mouth via social media and online marketing enlists Chick-fil-A’s loyal customers to help spread the word about the spicy chicken sandwich.

Good luck securing a coupon for a free spicy chicken sandwich… save a coupon for me!

What’s Old is New… and Sells Well for Starbucks

New products are the lifeblood of a business. They fuel growth and stimulate interest for a company and its offerings. The quest for new products often suggests images of massive spending on research and development in the hopes that something truly new to the world can be created. New product development does not have to be that radical to be effective. Starbucks is proving that point, as many new product introductions have done before it.

A “new” breakfast item, oatmeal, has been a hit with Starbucks’ customers. In particular, younger customers and women have been key customer segments that have responded favorably the product. Oatmeal is now the number one selling food item at Starbucks, and although food is not a big part of its business, the fact that oatmeal rose to top seller status in one month’s time is noteworthy.

In a time when a business must carefully spend every dollar, new product development may not require the massive investment and research that one might think. New products can be something as old as oatmeal that is presented or packaged in a way that creates value for the customer.

Link: AdAge.com – “Starbucks’ Surprise Success: Oatmeal”

Will Amazon Kindle Interest for E-Books?

Technology enhancements have impacted our lives in many ways. One part of our lives that has largely gone untouched by technology up to now is the experience of reading a book. The sensations associated with physically handling a book, the smell of the pages, and the touch of turning pages are difficult to replicate with e-books. E-book hardware has been introduced with little success, but retailing giant Amazon aims to change that trend.

Amazon has introduced an e-book reader called Kindle. It retails for $399 at Amazon.com and is supported with more than 90,000 available titles . Positioning for Kindle is the convenience of having so many books at your disposal. It is a wise positioning strategy because positioning Kindle as somehow being on par with the experience of reading a paper book would be futile and not very credible.

Early feedback on Kindle has been positive considering Amazon is currently out of stock. Only time will tell if Kindle catches on or becomes another unsuccessful e-book format. But, even if it fails, interest shown by consumers in e-books will likely advance development of the format so that we get closer to the point where a product does achieve widespread adoption by consumers. Who knows, Kindle may be the product that is at that point now.

Better-for-You Gatorade?

People who exercise are typically concerned with what they put into their bodies. Pepsico is hoping its Gatorade brand extension, G2, will appeal to consumers who seek hydration benefits after exercising but want less calories contained in regular sport drinks (including Gatorade). A serving of G2 contains 25 calories, half of what is in a serving of regular Gatorade.

Extending into low calorie sport drinks is not new for Gatorade. It tried it in the early 1990s with Gatorade Light and failed. What’s the difference this time? There appear to be several differences. First, Pepsico got the brand name right. By avoiding the “Light” tag in the brand name, there is less chance that consumers will feel they are getting a “diet” version of the product. It is similar to what Coca-Cola is trying to do with its branding of Coke Zero. They are diet drinks that are not positioned as diet drinks! Second, more consumers are involved in recreational activities and pursuit of a healthy lifestyle. Market demand for products that meet their needs stand a better chance of gaining acceptance than they did 15 years ago. Third, the marketing know how of Pepsico and its channel relationships should benefit G2. These factors, coupled with the benefit of being able to learn from the failure of Gatorade Light, make G2 a more viable brand extension. Link