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:
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:
- 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
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.
- 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.
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.
Labels: New Products