Consumers Choose "New" - It's More Than Just a Word

Last week I wrote about how sometimes it pays to be second to the market with a new idea. Those of us involved in innovation try to look at all angles.

But what is it about developing new products that makes it worthwhile? Why do companies large and small put massive efforts into creating new products? The answer is that new products make money. Sure, the vast majority of new products fail, but those that make it, often make it big, bringing millions of dollars of profit to successful innovators.

A recent post, The Power of New, at Marketing And Strategy Innovation Blog delves a little deeper into the why of new products. Why do consumers like new products? Why do we keep changing the products we buy? Of course, technological advancement drives new product efforts in techie fields, but why do we feel the need to keep changing cereals?

Because it gets us high; that's why! Choosing something new releases dopamine, the same pleasurable sensation associated with a "runners high".

The UK Telegraph, reports that:

Scientists in London have found that we all possess the key brain region which acts on the same pleasure pathways that make drugs addictive. They discovered that people are programmed to try out something new, such as a familiar product in an unfamiliar package or one that boasts a new formula.

Consumers are drawn to the word "new, as well as a change in packaging or product design that convinces the brain that it is looking at an unknown.

"Seeking new and unfamiliar experiences is a fundamental behavioral tendency in humans and animals," says Dr Wittmann. "It makes sense to try new options as they may prove advantageous in the long run. For example, a monkey who chooses to deviate from its diet of bananas, even if this involves moving to an unfamiliar part of the forest and eating a new type of food, may find its diet enriched and more nutritious."

The neuromarketing message, then, seems simple - making a product "new" in some way may give it a boost when compared with competing products.

As professionals involved in innovation, keeping in mind the power of "new" certainly makes sense. However, we do not believe this necessarily should impel companies to step up their new product efforts or slap "new and improved" on existing products that boast incremental changes. Yes, consumers are preprogrammed to seek out the new, but mindless product development and poor execution can still hamstring the most well financed new product effort.

Product Marketing versus Service Marketing

Product marketing is more specialized and detailed than most people may realize. If it wasn't, there wouldn't be nearly as much investment lost on products that do not become commercial successes. General marketing companies that don't seem able to clearly differentiate between marketing products and services haven't been able to effectively increase the commercial success rates for companies that specifically market products.

There are several references that give the failure rates for new product introductions. The normal range is typically from 70 to 80%. These sources include:
1. Various studies cited by Advertising Age,
2. A study by Linton, Matysiak & Wilkes, Inc. of the top 20 food companies reviewing 1935 new products,
3. A Booz Allen Hamilton study on new product management claiming that one out of seven product ideas yields a successful product,
4. Boston Consulting Group vice presidents and directors James Andrew and Kermit King claiming 60% to 85% in an article titled ‘Boosting Innovation Productivity',
5. Some college textbooks claim 80%.

Before looking at the different kinds of marketing and a couple key differences that can help companies improve their commercial success rates for launching or products, let's take a brief look at some definitions.

So, what exactly is a "product marketer" and what is the definition of "product marketing"? What about "service marketing"? The answers are not as obvious as they should be. In fact, there are conflicting definitions of "marketing" that can lead to considerable confusion. Let's begin with a crystal clear definition of marketing - the process of anticipating, identifying and satisfying customer requirements profitably. This is the core of what a business is all about and therefore a clear leadership role. That differs greatly from the opinion held by many that marketing is or ought to be primarily a support or management function rather than a key strategic leadership issue.

Okay, now that we have a clear definition of marketing and positioned it so that the tail doesn't try wagging the dog, we can look at the key differences between marketing products versus services.

Here are some differences between product marketing and marketing services:

1. Product marketing requires more sophisticated feedback systems than that required for marketing services. This is a key difference.

2. Product marketing has a lot of front end investment compared to service marketing which normally has much of its investment in the back end. This is another key difference.

3. People and companies become more attached to products than to service offerings. Few talk about this inventoritis aspect that can and often does have enormous impact on a business.

4. Products are often returnable whereas services are not. This is not a key difference although it is one that is often cited by marketing professionals. More service providers are offering guarantees making this difference somewhat moot.

5. Products except for things like insurance are tangible while services are less tangible. Construction workers building a bridge might argue otherwise but most buyers of services are purchasing intangibles. This is also a commonly cited difference that really isn't that important when looking from an investment standpoint.

Looking closer at the key differences.

When a product is sitting on the shelf at Wal-Mart, it isn't as easy to relate relevant customer feedback into the offering itself. In contrast, service providers are often sitting face to face with the consumer of the service and there is not a multi-link distribution chain involved like there is for most products.

Largely due to the complexity of determining products in the context of often modern distribution channels, it takes a lot more investment on the front end to accurately determine the product, its market orientation, packaging, presentation, etc. than it does for service offerings. Services are not normally distributed through complex or multi-player channels, each of which has specific needs to be considered for the process to work.

Another important and often ignored aspect is that it is a lot easier to get attached to a product than to a service. People and their organizations have a natural tendency to become attached to their products. This is generally not the case for service offerings. Look up "inventoritis" and you'll see what we mean.

Knowing the key differences between the different kinds of marketing will allow you to position resources more effectively. It also makes it easier to better plan your product deployments for greater returns on these investments, while avoiding common pitfalls. The bottom line: greater success with your product marketing.

[1] Brock, D. (1997). Getting the most out of your new product introductions. Partners in Excellence. Retrieved April 27, 2007, from the World Wide Web:
http://www.excellenc.com/articles.htm

[2] Linton, D.B. (1997, July 1). Market study results released: new product introduction success, failure rates analyzed. Frozen Food Digest 12(5), 76.

[3] Dean, B. (2005, March 28). Case study: Incorporating focus group research into the product development process. DM News, Article 32310. Retrieved March 31, 2007, from the World Wide Web: www.dmnews.com/cms/dm-news/e-commerce/32310.html

[4] Andrew, J.P. & King, K. (2003, April). Boosting innovation productivity. BCG opportunities for action, April 2003. Retrieved April 27, 2007, from World Wide Web:
http://www.bcg.com/publications/publication_view.jsp?pubid=847

[5] Friedman, H.H. (2000). Product policy; new product development. Retrieved March 31, 2007, from City University of New York, Brooklyn College Economics Department website: http://academic.brooklyn.cuny.edu/economic/friedman/mmproductpolicy.htm