This course is the first in the Customer Insights and New Product Development (CIPD) specialization. It will introduce learners to the tools and process of gathering customer insights for identifying and developing new product opportunities. Through an integrated set of five modules and hands-on project experiences, learners will acquire the knowledge and skills to turn their ideas gained from understanding customer needs into innovative new products.
Why New Products Succeed
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From the course by University of Illinois at Urbana-Champaign
Customer Insights: New Product Development Orientation
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University of Illinois at Urbana-Champaign
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MODULE 1: What Makes a Great New Product
The high risk and cost of new product failure highlights the importance of understanding the reasons for new product successes and failures. In this module, we will identify and discuss the major reasons for new product development successes and failures. You will experience first-hand the value of creativity in developing a new product and examine the best practices of successful firms and entrepreneurs.
Meet the Instructors
William QuallsProfessor Emeritus of Marketing
Business Administration, Gies College of Business
Now that we've looked at why products may
fail and some of the reason that may lead to those failure,
let's look at some of the reasons products succeed.
And there are some basic steps you need to take towards ensuring a product or
service that's introduced in the marketplace to
heighten its chances of being successful in the marketplace.
And I call these the three key principles of new products.
It rests on the answer to three questions.
One, how do you create value?
Are you creating value based upon the latest need in
the marketplace and what technology are you using to solve that particular need?
Now, I'm using technologies in the broadest sense,
not just the technologies of how you
mechanically make a product but your technology, your skill,
your ability to solve a customer's problem may be in the fact that you're
a professional chef and the way in which you develop different types of
meals to meet the needs of the marketplace is how you
create value or how you maybe take food from
the farm to the plate and how you may
contribute to a sustainable planet needs of the marketplace.
So, how will you create value with this new product or service that you introduced?
To identify how you create value,
you need to understand first,
what do consumers value and how do you identify customer value.
The second question is how do you capture that value given
that the customer may be solving their problem with other competitor products?
Each problem that a customer may have with a product or service,
if they're not fully satisfied gives you an opportunity to providing a benefit that
captures value that exceeds the needs that
they have and the benefits that they're currently getting from competitor products.
So, as you develop your new product or service,
think in terms of how you capture the value that you've
identified and how your value is better than what competition is doing.
Is it something competition cannot do,
something that you can do better than competition or
something that competition thinks that it's not worthwhile to do?
Can you contribute to the benefits that the customer receives by
providing the value that supersedes that of competitor products?
The third question is once you've identified that value that
customers have and the fact that you can do it better than competition,
how do you execute on that value proposition?
It's not just the physical product or service but it's
the total experience that you make for the customer in using that product or service.
And executing on delivering on that promise,
on that value proposition will lead to more successful products.
For example, this is a picture of a ensemble that's called Cirque du Soleil.
Cirque du Soleil operates
different performances around the US and does in around the world.
But the value that they offer help to
give them a ledge up in terms of the traditional circus experience.
It has some of the same events,
but their approach to delivering upon that value proposition was better than
competition because they could tailor the events to a particular environment.
So, each show has a theme.
That theme still uses some of the same acts you would see at a circus.
You may see tumbling acts.
You may see acts in terms of them balancing different products.
You may see different clowns but in Cirque du Soleil, they have a theme.
In this particular theme,
you can see it's the little princess type of thing.
The other thing that makes Cirque du Soleil different is
they've reduced the value of maintaining
these types of shows because they've almost
eliminated totally the use of animals in circus acts.
The maintenance of animals were one of the biggest cost that traditional circuses have.
Now, by reducing the cost of the maintenance of their animal,
they can add to the value they offer to the customer by enhancing the environment.
So, you see these big production as
thematic shows that puts you in
that particular experience when you're attending the show.
So, customer value and understanding what's the customer value lead to the success of
Cirque du Soleil as they began to offer
these things in different environments around the world and,
at the same time,
reducing the costs, leading to greater value for the customer.
Targeting customers that have similar value.
So, Coca-Cola is not the only company that does this,
but you can see this in their line of products.
Now, everyone's familiar with the traditional Coca-Cola product.
In addition to that,
they have non-sugar based products,
which is basically Coca-Cola,
in terms of dietary type products,
which has less sugar.
You have Coca-Cola Light that has a different formula than Coca-Cola Zero.
And then most recently,
they've introduced Coca-Cola Life.
In both Coca-Cola Light and Coca-Cola Life,
the basis of the sugar substitutes are different.
So in Coca-Cola Life,
it's kind of a 50 percent sugar-based product and 50 percent sugar substitute.
So, it gives you a different sweetness.
It's kind of combining regular coke with a coke-like type product,
but that's how you target your products to the customer.
You're creating value based upon the benefits that they're seeking.
In this case, a different taste for different markets.
So, if we're developing a restaurant,
we may have different offerings of
the same menu based upon the ingredients that we put into that menu.
So, we're targeting individual customers based upon their taste but adding to
that customer value specifically for
that targeted customer and the differential advantage.
Early on, we talked about BlackBerry and the advantages it
had against the Apple iPhone or the Android-based phone.
And BlackBerry has significant advantages in terms of enterprise support,
as well as in terms of security.
But it didn't look as good as
the iPod and didn't offer as many different ways to use the smartphone.
So, it may have exceeded or have
greatest strengths in terms of its security base features but,
at the same time,
it didn't offer the same entertainment value of a iPod-based phone.
So, BlackBerry's differential advantage is based upon the security,
and they should probably leverage that,
whereas Apple or Android leverages its full capability in entertainment value.
So, they make the camera better.
They make the entertainment system better.
You can watch videos on it.
But a smartphone that's Apple base is targeting a different set of customers.
So, the differential advantages that they have are what makes it unique,
will also lead to different target markets for the product.
So, those three principles, customer value,
targeting a specific market and having something that's unique about the product,
helps to identify a set of customers that
may be willing to buy your products over competitive product,
increasing the chance of,
as you introduce a new product into the marketplace,
by satisfying these three principles,
you have a greater chance of ensuring the success of your product.
So, why do products succeed?
Well, sometimes the product creates a new category.
Some of you may have not heard of the Hamburger Helper.
The Hamburger Helper kind of turned everyone into a cook.
Basically, you take the basic ingredients of a pasta with a certain taste,
boil the thing in the water,
and you can immediately have a dish that looks like a restaurant quality dish.
At the same time,
when they were beginning the shift between feature phone and smartphones,
it actually created a new category.
Whereas, feature phones were based primarily for calling,
some limited e-mail capability,
today's smartphone is actually a total communication system,
where you can not only just talk on the phone,
but you can text,
you can e-mail, you can tweet and,
at the same time, you listen to music,
watch videos, take pictures.
It's a more complete apparatus for satisfying
different needs in one unit versus needing to have multiple units.
So, when they're buying a smartphone today,
they're buying something that's used for
entertainment and not just for the phone capability.
Changes in customer taste.
These may be developed by other network externalities or other factors, but, Sweet'n Low,
there was a report that came out talking about
the substitute ingredients and that led to the development of Equal.
Similar report came out which led to the development of Splenda.
But each one of these lead to customers changing
their taste based upon their knowledge of what the product offered.
So as customers change their taste,
it creates opportunities as you introducing the product into the marketplace if
you're trying to stay ahead of past taste and move towards future taste.
Now, more recent activities that's led to
more successful products is when you get
customers involved in the actual development of the product.
So, when customers actually involved in the development of the product,
they are creating product based upon how they might
use it or how they might generate benefits from it.
Lego, which is a well-known company,
uses customers to help develop different ideas
about the types of sets that they offer into the marketplace.
By having them participate in development and better understanding through observation,
how customers interact with the products,
they're able to stay abreast of customer taste and
introduce consistently new products into the marketplace based upon customers
having participated with it but also increasing the chance that it will be
successful by adapting the taste to those customers that actually use the product.
Product provide superior benefits.
So, if you take pictures,
most of us may take pictures with our phone,
but if you wanted superior capabilities in terms of taking a picture,
you have moved from an analog to a digital environment but now in 35 millimeters,
the basic 35-millimeter camera,
you can use a digital-based technology to take more better and precise pictures.
In the meantime, smartphones are trying to
adapt their phones to take comparable pictures.
So, the earlier versions of 35 millimeters may be matched by smartphones,
but if you really want the better pictures,
35 millimeters may offer superior benefits in terms of those products.
So, these are all reasons that may lead to the success of
the new product and this new product that you're developing,
the new idea you're developing,
if we practice a systematic way of evaluating customer needs,
what they value and how we can make
our product better than what's currently offered in the marketplace,
we can increase the chances that product will be successful in the marketplace.
So, begin to think about some new product ideas that you may have in your mind,
and in the next section,
we'll talk about how to bring those new product ideas to life.
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