Articles from Cass Knowledge

It's new, it's cool, it's a.... flop

Up to 90% of technological innovations fail - and it's usually because their manufacturers don't put across the message of what they are for, Cass research shows. Caroline Scotter Mainprize reports.

Fans queued overnight. The police were on hand to keep the crowds in check. There were cheers every time one was seen. "It's fantastic. It's so worth the wait," said one enthusiast. "I just came down for the atmosphere," said another. A new boy band? The opening of the final Harry Potter film? No: this was the UK launch of the Apple iPad tablet computer in May 2010. Similar scenes had been enacted in the US and were repeated throughout Europe, Japan and Australia. Our love affair with technology had reached its apogee. Yet not all technological innovations are so successful. The vast majority (between 40 and 90%) of really new products - those that create entirely new product categories and allow consumers to do things that they have not been able to do before - fail. And highly innovative products fail at an even greater rate than less innovative ones. According to Dr Stephanie Feiereisen, a Lecturer in Marketing at Cass, this is often because consumers simply don't understand how the new products are going to work for them.

Additional costs
"With existing products, such as a laptop, consumers know what to look for when they are evaluating it," she says. "They already know how they are going to use it, so the decision becomes one about how fast it is, how light it is, or how much memory it contains. But with an unfamiliar product they have to get their heads around how it will work for them, as well as wondering if there are additional costs that they don't yet know about." For example, the digital camera was once a really new product. No longer would consumers have to remove the film from the back of the camera (taking care not to expose it to sunlight) and carry it to Boots for processing and printing; instead, they would just plug the camera into a computer, or directly into a digital photograph printer, upload and print. We barely think about it now, but at the time there was real consumer anxiety, not only about doing things differently but also about the unknown costs associated with dedicated printers and special paper, and who knew what else. But once people could see the need for digital images in the fast-developing world of the internet and social media, the digital camera not only became accepted but swiftly overtook the film camera. The story of the digital camera also illustrates the potential for really new products to transform entire industries and create enormous upheaval in the spread of market share. Kodak, for example, had been a market leader in film cameras. However, despite being involved in the early development of digital cameras, it missed the boat when it came to marketing the concept to consumers.

Failure rate
"Companies need to introduce really new products," said Dr Feiereisen, "and they need to keep up with the market. But the high failure rate, caused by the difficulties of explaining the benefits of these products to consumers, makes it a process fraught with uncertainty. It is increasingly evident that really new products demand new ways of thinking about marketing communications." Dr Feiereisen is researching how learning strategies can help consumers to understand the benefits of really new products. A recent study set out to determine which learning strategy and which style of presentation - words or pictures - was most effective. A traditional method of explaining really new products is by using analogies. The personal digital assistant (or palmtop) was introduced by comparing it with a secretary. More recently, Nike teamed up with Apple to market the Nike + iPod Sport Kit, a pedometer system designed to give runners feedback on their workout. The system was compared with a coach and a personal trainer. This analogy encourages consumers to draw upon their knowledge of what a coach does to understand what the Kit will offer them. For instance, as a coach gives feedback on an athlete's progress from one training session to another, one may infer that the Kit possesses a similar progress-tracking function.

Key feature
But, says Dr Feiereisen, this approach can have its weaknesses. Using an analogy to simplify a complex concept may result in over-simplification and the risk of misinforming consumers. In the case of the Nike + iPod Kit, a consumer may incorrectly infer that the product has a feature to keep him or her motivated, as a coach would do. On the other hand, he or she may miss that the Kit has a feature that can measure the number of calories burned as you run, as one would expect a coach to measure only times and distances. And as no coach in history has been known to personalise playlists and shuffle songs during a training session, a key feature of the Kit is entirely lost in the analogy. A different strategy is mental simulation, in which consumers are encouraged to imagine themselves using the product. This can be done either through pictures or words, and Dr Feiereisen's research showed that the effectiveness of these two formats hinges on the type of really new product being advertised. "We found that if the really new product is hedonic - about entertainment or pleasure - then a visual mental simulation is likely to lead to a high degree of product comprehension," she says. When mp3 players were introduced, for example, advertisements showed people how to use them: people accustomed to loading vinyl records or CDs into a player and moving sequentially through a list of tracks would not have understood instinctively how an mp3 player worked. The first iPod advertisement showed a man dragging music from his iBook to his iPod, then closing the laptop and dancing out of the room with the iPod in his pocket.

Focus on function
"Showing people, step-by-step, what is going to happen is a way of making the unfamiliar more familiar," said Dr Feiereisen. "They can see themselves in the picture and imagine how it would feel to have the product in their lives." However, this approach is less likely to work with a more utilitarian product such as wireless charger mats, which recharge devices that are left resting on them. "With a product such as this the communication is not about the experience but about the function it serves. People are more convinced by an explicit, and therefore apparently more objective, verbal simulation when evaluating a product that is highly functional." The failure to understand the importance of showing consumers exactly how they should use a product and where it fits into their lives is behind the disappointing response to a very high-profile really new product, the Segway. This two-wheeled, self-balancing electric vehicle devised by the American inventor Dean Kamen, was introduced to great fanfare in 2001. People found it intriguing but could not work out whether it was a leisure vehicle or suitable for the daily commute. This confusion was probably shared by legislative authorities, who have largely placed restrictions on its use. As a result, the Segway is a niche product used, for example, by police in some Portuguese cities, by security staff patrolling shopping centres such as Gunwharf Quays in Portsmouth and for guided tours around some European cities, but it has not fulfilled its market potential. Against a background such as this, the successful launch of the iPad was perhaps surprising. "The iPad was a really new product and was introduced with all the uncertainty that accompanies new product launches," says Dr Feiereisen. "But they had prepared the ground carefully in marketing communications terms. The first adverts showed the iPad being used by a real person - rather than the usual Apple silhouette - swiping and opening a range of applications. Apple used a visual mental simulation which was highly appropriate for this hedonic product."

Initial resistance
Meanwhile, the iPad's perceived rivals, the Kindle and other e-readers, have also grown in popularity, despite initial resistance to the idea of them replacing printed books. However, the manufacturers are aware of the need to keep educating consumers in a still relatively new market. Omar Gurnah, the Reader Marketing Manager for Sony, recently told Marketing Week: "There is still a lot of education to do as most customers haven't seen or touched an e-reader yet. Getting that across wherever we can is far more important than shouting about reading e-books on mobile phones or driving prices through the floor." Dr Feiereisen says: "Like digital cameras, the Kindle's uses will become even more apparent as the market develops around it, and as Amazon introduces different selling strategies that allow people to buy a single chapter, or children's books." What has emerged is that the more innovative the product, the more straightforward and focused on the consumer the initial marketing and advertising has to be. Who cares how groovy a product is if consumers cannot see how they would use it? "When introducing really new products, companies should think carefully about how they expect the products to be used and how they communicate this to consumers," Dr Feiereisen concluded. "As our research shows, different strategies need to be employed depending on whether the product is more hedonic or utilitarian."

Caroline Scotter Mainprize is a writer on management issues.