Risk, a constant companion
1. New products are only successful if people buy them.
2. Studies say that 50% or more of new products fail. Because?
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Not because they don’t work.
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Not because they are not good products.
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Not for technical problems.
3. So why?
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A faulty understanding of customer needs.
If you don’t understand what the customer needs or wants, you can’t meet that need.
Customer integration
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Integrate customers in innovation.
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Ask for product ideas
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Search only the most popular
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Obtain purchase commitment before final development
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This is called “Collective Customer Commitment”
Major changes are needed.
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The traditional process of developing new products.
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Formation of New Product Teams.
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Involve the Client, Designer, Production and management in the NPI Decision.
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Reduce the risk of failure by obtaining purchasing information prior to production.
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Sell Before Produce.
Limitations of traditional market research
1. Focus Groups
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Too small to be indicative of the population.
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Lack of realism, only verbal description of the product.
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It is not a measure of actual buying behavior.
2. Marketing tests
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Expensive
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Waste of time
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Exposed to a high level of noise from competitors.
food for thought
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Only 50% of Fortune 500 companies use focus groups.
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Less than 25% of Fortune 500 companies use limited implementation or proof of concept.
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Many consumer goods companies do not regularly survey potential customers.
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Excuse; “Customer behavior is often impossible to predict”
So what do they do?
1. They develop variants of existing products.
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Different sizes
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added functionality
2. They put off manufacturing until they see what will sell.
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Store or manufacture generic components.
3. Manufacture on demand. Full customization.
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Customers define unique products for manufacturing.
Collective commitment to the client
1. It’s not a new idea
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New homes purchased from plans.
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Concept products assess willingness to buy
2. News
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This concept is used for FMCG products.
3. Because?
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Consumers are now more informed.
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They want to have more say in what they buy.
Collective commitment to the client
1. Very successful in testing innovative products.
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Yamaha, electronic guitar. An aid to learn to play the guitar. Pre-order enough to allow production
2. Very successful when the market segment is small
The best of both worlds
1. Does the Collective Commitment to the Client apply to all companies?
2. no
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It will follow some companies and not follow others.
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Some companies will use a hybrid of conventional and collective customer engagement.
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For companies that can use it, collective customer engagement can significantly reduce the risks associated with new product development.