1. 1. BEAT THE ODDS: HOW TO WIN THE NEW PRODUCT GAME A.J. RIEDEL Sr. Partner Riedel Marketing Group
2. 2. 95%Thats the percent of heavy bettors those who placed the largest number of total wagers over a two year period -- who lost money. Its also percent of new products that fail in any given year. Source: How Often Do Gamblers Really Win?, Wall Street Journal, Oct. 11, 2013 http://www.wsj.com/articles/SB10001424052702304626104579123383535635644
3. 3. Think about it: The odds that your new products will be successful are about the same as the odds that a heavy gambler will win money in the long term.
4. 4. Theres not much gamblers can do beat the odds. Even the savviest most experienced gambler is going to lose far more money than he wins in the long run. There is, however, a lot YOU can do to beat the odds.
5. 5. Why Do New Products Fail?
6. 6. Knowing causes of new product failure can screen out ill-fated ventures before too much time and money has been invested.
7. 7. Lets take a look at three of the biggest flops in history.
8. 8. THE LASERDISC 1980
9. 9. THE LASERDISC 1980 The LaserDisc, introduced in 1980, had a number of benefits over the home video formats of the day, VHS and Beta. Most notably, it was superior in sound and picture quality. The format never gained widespread use in North America outside of videophile circles. By 1998, 18 years after Laserdiscs were first introduced, only 2% of US households owned LaserDisc players. By the early 2000s, the LaserDisc had been completely replaced by the DVD in North America.
10. 10. THE APPLE NEWTON MESSAGE PAD 1993
11. 11. THE APPLE NEWTON MESSAGE PAD 1993 Under John Sculleys leadership, Apple started work on the Newton in 1991. By todays standards, the MessagePad was a pretty basic PDA. It could take notes, store contacts, and manage calendars. You could use it to send a fax. In 1993, the first product in the Newton Line, the MessagePad, was introduced at the Boston Macworld Expo and took the show by storm. But then word started getting out that the handwriting recognition didnt work properly in the debut models. Handwriting recognition was supposed to be Newtons killer feature, but it was the feature that probably ultimately killed the product. The Newton Line didnt sell in huge numbers. Whats more, Steve Jobs hated it. He raged against the device for its poor performance (and because it was Sculleys innovation). And so when Jobs at last wrested back control of his company in 1997, he scuttled it.
12. 12. THE SEGWAY 2001
13. 13. THE SEGWAY 2001 The Segway, a two-wheeled, self-balancing battery electric vehicle, was launched in 2001. Inventor Dean Kamen pronounced that it was going to revolutionize transportation. He said that it would be to the car what the car was to the horse and buggy. Kamen predicted that he would sell 50,000 Segways in the first year The $5,000 Segway failed to gain significant market acceptance. By mid 2003, the company had only sold 6,000 units in total. Unlike the Laserdisc and the Apple Newton, the Segway is still around. You can take a Segway tour in almost every major city in the US. You see it in use by security guards and law enforcement. What you wont see is consumers zipping around on their own personal Segways.
14. 14. Why did these new products fail?
15. 15. TOO EXPENSIVE Laserdiscs cost up to 5 times more than VHS tapes and the players cost at least twice as much as a VCR. The Newton cost about $700 for the first model with later models costing up to $1000. The Segway retailed for $5,000. If you were looking for an alternative to a car, you could buy a high-end street safe scooter for less than half that amount.
16. 16. PRODUCT DESIGNS THAT WERE NOT USER FRIENDLY If you were watching a movie on a LaserDisc, you had to stop the disc and flip it to it's other side. The MessagePad was roughly the slze of videotape and weighed almost a pound, It was too large and heavy to be considered pocket-size. The Segway was too small and too slow for riders to feel comfortable on roadways yet, too bulky and fast to be allowed on sidewalks in most cities.
17. 17. PRODUCT THAT DIDNT MEET CONSUMER EXPECTATIONS You couldnt record on a LaserDisc. The Apple MessagePad operated too slowly; certain actions, such as scrolling through notes, took too long and its handwriting recognition was fairly inaccurate. The Segway weighed more than 80 pounds and could only go 11 miles before the battery had to be recharged.
18. 18. Why Do New Housewares Products Fail?
19. 19. Manual Fruit & Vegetable Choppers
20. 20. Manual Fruit & Vegetable Choppers Over the past couple of years, kitchen tool and gadget companies have launched all sorts of contraptions designed to chop, slice, and dice fruits and vegetables. Very few of these multi-blade gadgets have really caught fire with consumers.
21. 21. Manual Fruit & Vegetable Choppers Over the past couple of years, kitchen tool and gadget companies have launched all sorts of contraptions designed to chop, slice, and dice fruits and vegetables. Very few of these multi-blade gadgets have really caught fire with consumers.
22. 22. 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% LACK OF OR POOR USE OF RESEARCH POOR EXECUTION POOR PLANNING POOR PRODUCT CONCEPT According to senior housewares executives, there are four key causes of new product failure. Source: Survey of Senior Housewares Executives, Nov. 2014
23. 23. 0% 10% 20% 30% 40% 50% 60% 70% Lack of differentiation/"me-too" product Product does not meet consumer need/has no reason for being A new product will fail if the concept is fundamentally flawed. Source: Survey of Senior Housewares Executives, Nov. 2014
24. 24. 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Poorly managed Inadequate investment/budget Wrong channel strategy Wrong timing Poor planning can lead to new product failure. Source: Survey of Senior Housewares Executives, Nov. 2014
25. 25. 0% 5% 10% 15% 20% 25% 30% 35% Sales/sell-in issues Not enough or wrong kind of marketing wrong price Poor design Product performance/quality issues Ineffective packaging A new product will fail when the plan is poorly executed. Source: Survey of Senior Housewares Executives, Nov. 2014
26. 26. 0% 10% 20% 30% 40% 50% 60% 70% Not enough market analysis Not enough consumer research Poor use of research can lead to new product failure. Source: Survey of Senior Housewares Executives, Nov. 2014
27. 27. With so many mistakes that can be made at the concept, planning, and execution stages, you may be wondering how you can possibly increase the likelihood that the new products you launch will be successful.
28. 28. Do you remember the 1991 film City Slickers? The movie was about Mitch, played by Billy Crystal, an unhappy Manhattan yuppie having a mid-life crisis, who is roped into joining his two friends on a cattle drive in the southwest. In this scene, Curly, the crusty irascible trail boss, is talking to Mitch about the meaning of life.
29. 29. What does this clip of the exchange between Curly & Mitch have to do with new product failure?
30. 30. Curly said that there is one secret to life. One thing, just one thing. You stick to that and everything else dont mean shit.
31. 31. There is also one secret to new product success.
32. 32. Your new product must meet a NEED or solve a PROBLEM for the consumer.
33. 33. If the Laserdisc, Apple MessagePad, and Segway had been priced more reasonably and didnt have the product design problems they did, would they have been winners? I doubt it. Because these products did not meet needs or solve problems for the consumer.
34. 34. THE LASERDISC 1980
35. 35. THE APPLE NEWTON MESSAGE PAD 1993
36. 36. THE SEGWAY 2001
37. 37. Why is it so important for a product to meet a NEED or solve a PROBLEM for the consumer?
38. 38. If consumers dont think the product will meet a NEED or solve a PROBLEM for them, it is HIGHLY UNLIKELYthey will purchase it.
39. 39. There is an almost perfect correlation between perceived NEED and PURCHASE INTEREST
40. 40. 66% 73% 67% 80% 74% 80% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Purchase Interest Buzz Worthiness Need Likeablity Uniqueness Believability NEST NEST Learning Thermostat 67% of survey respondents said that the Nest Learning Thermometer would meet a need or solve a problem for them. 66% said they would be interested in purchasing the Nest. I would love to have one. I am always changing the temperature and forget to make it more energy-efficient when I am not home. I love the idea of controlling it with my phone. Sounds like a great idea, since I am always getting in trouble by not adjusting the thermostat before I leave or when I get home!
41. 41. 66% 73% 67% 80% 74% 80% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Purchase Interest Buzz Worthiness Need Likeablity Uniqueness Believability NEST NEST Learning Thermostat 67% of survey respondents said that the Nest Learning Thermometer would meet a need or solve a problem for them. 66% said they would be interested in purchasing the Nest. I would love to have one. I am always changing the temperature and forget to make it more energy-efficient when I am not home. I love the idea of controlling it with my phone. Sounds like a great idea, since I am always getting in trouble by not adjusting the thermostat before I leave or when I get home!
42. 42. IKETTLE 9% 19% 8% 14% 38% 64% 0% 10% 20% 30% 40% 50% 60% 70% Purchase Interest Buzz Worthiness Need Likeablity Uniqueness Believability iKettle Wi-Fi enabled electric teakettle controlled with a dedicated smartphone app 8% of respondents said that the iKettle would meet a need or solve a problem for them. 9% said they would be interested in purchasing it. I don't think this would meet a need for me. My current coffee maker has a timer and it is perfect. This is not something that I need. I do not need to control my kettle from my phone.
43. 43. IKETTLE 9% 19% 8% 14% 38% 64% 0% 10% 20% 30% 40% 50% 60% 70% Purchase Interest Buzz Worthiness Need Likeablity Uniqueness Believability iKettle Wi-Fi enabled electric teakettle controlled with a dedicated smartphone app 8% of respondents said that the iKettle would meet a need or solve a problem for them. 9% said they would be interested in purchasing it. I don't think this would meet a need for me. My current coffee maker has a timer and it is perfect. This is not something that I need. I do not need to control my kettle from my phone.
44. 44. THE ONE THING: Your new product must meet a NEED or solve a PROBLEM for the consumer.. NEST got it right. IKettle did not.
45. 45. How Do You Get That ONE THING Right?
46. 46. How Do You Get That ONE THING Right? The best way to answer that question is with case studies.
47. 47. DOWNY SINGLE RINSE Source: Game-Changer by A.G. Lafley, former Chairman and CEO of Procter &
48. 48. DOWNY SINGLE RINSE Source: Game-Changer by A.G. Lafley, former Chairman and CEO of Procter & In the early 2000s, Mexican market share for Downy fabric softener was slow and stagnant. P&G needed to develop products that were specific to the needs of the lower income consumer. So P&G product managers went out to live with poor Mexican families for a couple of days.
49. 49. DOWNY SINGLE RINSE Source: Game-Changer by A.G. Lafley, former Chairman and CEO of Procter & In the early 2000s, Mexican market share for Downy fabric softener was slow and stagnant. P&G needed to develop products that were specific to the needs of the lower income consumer. So P&G product managers went out to live with poor Mexican families for a couple of days. By living with their consumers, P&G product managers learned that lower-income Mexican women liked to use softener, they had high standards for performance, and doing laundry was arduous and time consuming. A typical load of laundry went through a six-step process: wash, rinse, rinse, add softener, rinse, rinse which required plenty of water. Not so easy for rural women who had to lug buckets back from wells or communal pumps. Not so easy for City dwellers either because they typically only had running water for a few hours a day.
50. 50. DOWNY SINGLE RINSE Source: Game-Changer by A.G. Lafley, former Chairman and CEO of Procter & In the early 2000s, Mexican market share for Downy fabric softener was slow and stagnant. P&G needed to develop products that were specific to the needs of the lower income consumer. So P&G product managers went out to live with poor Mexican families for a couple of days. By living with their consumers, P&G product managers learned that lower-income Mexican women liked to use softener, they had high standards for performance, and doing laundry was arduous and time consuming. A typical load of laundry went through a six-step process: wash, rinse, rinse, add softener, rinse, rinse which required plenty of water. Not so easy for rural women who had to lug buckets back from wells or communal pumps. Not so easy for City dwellers either because they typically only had running water for a few hours a day. The big ah ha was discovering how valuable water is to lower income Mexicans.
51. 51. DOWNY SINGLE RINSE Source: Game-Changer by A.G. Lafley, former Chairman and CEO of Procter & In the early 2000s, Mexican market share for Downy fabric softener was slow and stagnant. P&G needed to develop products that were specific to the needs of the lower income consumer. So P&G product managers went out to live with poor Mexican families for a couple of days. By living with their consumers, P&G product managers learned that lower-income Mexican women liked to use softener, they had high standards for performance, and doing laundry was arduous and time consuming. A typical load of laundry went through a six-step process: wash, rinse, rinse, add softener, rinse, rinse which required plenty of water. Not so easy for rural women who had to lug buckets back from wells or communal pumps. Not so easy for City dwellers either because they typically only had running water for a few hours a day. The big ah ha was discovering how valuable water is to lower income Mexicans. With that insight, P&G was able to identify a problem to solve (making laundry easier and less water intensive) and come up with Downy Single Rinse.
52. 52. Scott came up with the idea for Savino the way most entrepreneurs do he had a problem that was not being solved by products on the market and he thought he could create one that worked better. Before investing too much time and money, he confirmed that Savino met an unsolved problem by talking with other wine enthusiasts. He found out that other wine enthusiasts had the same problem with wine preservation.
53. 53. Once Scott and his team had a design they liked, they wanted to find out if wine enthusiasts thought the product did a good job of preserving wine. They did 20+ blind taste tests of wine that had been stored in the Savino carafe for several days compared to wine from a newly opened bottle. The blind taste tests confirmed that yes, the carafe they had designed actually works Savino beat the other wine preservers on the market and did the best job of keeping the wine fresh for several days.
54. 54. Scott knew from talking to wine enthusiasts that the concept of a more effective wine preservation system was appealing to them. But was the product design they had come up with appealing to wine lovers? Scott showed a rendering of the product to 50 groups of wine-loving friends and acquaintances. The feedback was positive; the overwhelming response was if this works the way you say it does, I would be interested.
55. 55. At this point, Scott and his team started showing a 3D model of the product to manufacturers to make sure the product could be manufactured at a reasonable price. Every time they hit an obstacle that required them to modify the product design, they went back to consumers to make sure that they still liked the product. The type of research they did depended on whether the design change affected the function or was cosmetic. If product functionality changed, they sent prototypes out. If the change were cosmetic, they would hold a focus group or send a survey via e-mail.
56. 56. To confirm that Savino was intuitive and user- friendly, Scott and his team conducted a set of focus groups once they had finalized product design. Test participants were given prototypes and a brief explanation of what the product does. Then they had to figure out to use it on their own. Before investing in molds, Scott and his team wanted to confirm that wine enthusiasts would actually purchase Savino. They conducted a final set of focus groups to find out if the product evoked a strong positive emotional response in wine enthusiasts. They knew they had a product that would resonate with wine drinkers when the test participants response was This is fantastic. I want it. Where can I get it?
57. 57. Consumers sometimes say that they will buy a product but when it comes to actually spending their hard earned dollars, they dont actually buy. Knowing that there can be a disconnect between what consumers say and what they do, Scott and team mounted a Kickstarter campaign to validate that people would actually buy the product. Consumer response was so positive that they ended up raising significantly more than their original pledge amount and garnered the most backers of any wine related project in the history of Kickstarter.
58. 58. THE ONE THING: Your new product must meet a NEED or solve a PROBLEM for the consumer.. P & G got it right. Scott got it right.
59. 59. FIVE STEP PROCESS
60. 60. Step One: They got to know their consumer really well. P&G management knew there was a gap between what its brands were offering and what lower-income consumers wanted. They admitted that they were pretty ignorant about their target consumers. They had to get out of their offices and become immersed in the real world and daily routines of lower income consumers. Scott did not need to take such drastic measures to get to know his consumer. Because hes a passionate food & wine guy and very active in the food-and-wine scene in Sonoma County, he and his foodie friends are the target consumer.
61. 61. Step Two: They identified a problem to solve. P&G gleaned insights from their in-home visits and used those ah has to identify a problem to solve. Scott talked to wine enthusiasts about wine preservation and tested competitive wine preservation systems.
62. 62. Step Three: They came with a new product that would solve the problem. P&G came up with a product that reduced the six-step laundry process to three stepswash, add softener, rinse which would save consumers an enormous amount of time, effort and water. Scott and his team designed a carafe that keeps wines fresh days after opening.
63. 63. Step Four: They tested the concept with their target consumers to make sure that consumers thought the product solved a problem. Scott and his team did more than 20 blind taste tests of wine to make sure that the carafe they had designed actually worked. Then they showed renderings of the product to 50 groups of wine-loving friends and acquaintances. .
64. 64. Step Five: They tested throughout the new product development process to ensure that consumers liked the final product as well as they liked the first product concept. Every time Scott and his team hit an obstacle that required them to modify the product design, they went back to consumers to make sure that they still liked the product.
65. 65. Will your new product meet a NEED or solve a PROBLEM for the consumer?
66. 66. Why is it so important for a product to meet a NEED or solve a PROBLEM for the consumer?
67. 67. If consumers dont think the product will meet a NEED or solve a PROBLEM for them, it is HIGHLY UNLIKELYthey will purchase it.
68. 68. Can You Answer These Questions?
69. 69. Can You Answer These Questions? What consumer problem does your new product solve?
70. 70. Can You Answer These Questions? Does your new product solve that problem better than the products that are on the market today?
71. 71. If You CANT Answer The Questions I CAN HELP YOU GET THE ANSWERS. CALL OR E-MAIL TODAY TO FIND OUT HOW.
72. 72. HOW TO CONTACT A.J. (602)840-4948 ajr@4rmg.com 4rmg.com