Beat the Odds eBook

BEAT THE ODDS:
HOW TO WIN THE NEW PRODUCT GAME
A.J. RIEDEL
Sr. Partner
Riedel Marketing Group

95%That’s the percent of heavy bettors
– those who placed the largest
number of total wagers over a two
year period -- who lost money.
It’s 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

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.

There’s 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.

Knowing causes of new
product failure can screen
out ill-fated ventures
before too much time and
money has been invested.

Let’s take a look at three
of the biggest flops in
history.

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.

THE APPLE NEWTON MESSAGE PAD
1993

THE APPLE NEWTON MESSAGE PAD
1993
• Under John Sculley’s leadership, Apple started work on the Newton in 1991.
• By today’s 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 didn’t work
properly in the debut models. Handwriting recognition was supposed to be
Newton’s killer feature, but it was the feature that probably ultimately killed the
product.
• The Newton Line didn’t sell in huge numbers. What’s more, Steve Jobs hated
it. He raged against the device for its poor performance (and because it was
Sculley’s innovation). And so when Jobs’ at last wrested back control of his
company in 1997, he scuttled it.

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 won’t see is consumers zipping around on their own
personal Segways.

Why did
these new
products
fail?

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.

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.

PRODUCT THAT DIDN’T MEET
CONSUMER EXPECTATIONS
• You couldn’t 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.

Why Do New
Housewares Products
Fail?

Manual Fruit & Vegetable Choppers

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.

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

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.

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.

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.

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.

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.

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.

What does this clip of the exchange
between Curly & Mitch have to do with
new product failure?

Curly said that there is one secret to life.
“One thing, just one thing. You stick to
that and everything else don’t mean shit.”

There is also one secret to new product
success.

Your new product must meet a
NEED or solve a PROBLEM
for the consumer.

If the Laserdisc, Apple
MessagePad, and Segway had
been priced more reasonably
and didn’t 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.

Why is it so important
for a product to meet a
NEED or solve a
PROBLEM for the
consumer?

If consumers don’t think the
product will meet a NEED
or solve a PROBLEM for
them, it is HIGHLY
UNLIKELYthey will
purchase it.

There is an almost perfect
correlation between
perceived NEED and
PURCHASE INTEREST

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!
““

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.
“ “

THE ONE THING: Your new
product must meet a NEED
the consumer..
NEST got it right.
IKettle did not.

How Do You Get That
ONE THING Right?

How Do You Get That
ONE THING Right?
The best way to
answer that question
is with case studies.

DOWNY SINGLE RINSE
Source: Game-Changer by A.G. Lafley, former Chairman and CEO of Procter &

DOWNY SINGLE RINSE
• 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.

DOWNY SINGLE RINSE
• 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.

DOWNY SINGLE RINSE
• The big “ah ha” was discovering how valuable water is to lower income
Mexicans.

DOWNY SINGLE RINSE
• 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.

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.

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.

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.”

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.

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?”

Consumers sometimes say that they will buy a
product but when it comes to actually spending their
hard earned dollars, they don’t 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.

THE ONE THING: Your new
product must meet a NEED
the consumer..
P & G got it right.
Scott got it right.

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 he’s 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.

Step Two: They identified a problem to solve.
• P&G gleaned insights from their in-home visits and used
those ‘ah ha’s’ to identify a problem to solve.
•
• Scott talked to wine enthusiasts about wine preservation
and tested competitive wine preservation systems.

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 steps—wash, 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.

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. .

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.

Will your new product meet a
NEED or solve a PROBLEM
for the consumer?

Can You Answer These
Questions?

Questions?
What consumer problem does your new product
solve?

Questions?
Does your new product solve that problem
better than the products that are on the market
today?

If You CAN’T Answer The
Questions …
I CAN HELP YOU GET THE ANSWERS.
CALL OR E-MAIL TODAY TO FIND OUT HOW.

HOW TO CONTACT A.J.
(602)840-4948
ajr@4rmg.com
4rmg.com

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Editor's Notes