| In
spite of tough economic times, many companies still seem
to have paid attention to the importance of innovation
to stimulating real growth in the category, the industry,
and for their brands. The CEO of Pfizer, for example,
pointed to their new product hit Listerine PocketPaks—highly
concentrated mouthwash on a dissolvable strip that has
reinvigorated sales in the staid mouthwash market—as
proof positive of their commitment to innovation. Likewise,
Pepsi proclaimed innovation as its future when it announced
Pepsi Blue, a new berry flavored line extension.
Great
that companies are embracing innovation—as opposed
to mergers and acquisitions or cost-cutting—but,
with more than 90 percent of new products and services
failing miserably, more needs to be done in the new
product /service development area to avoid costly failures
that waste precious resources. We sat down with Greg
McMahon, a senior vice president at Market Facts and
new product forecasting expert, to get his insights
and advice on the new product development process and
ways to improve it.
Copernicus
Mzine: Looking back on some of the new product successes
you have either been a part of or read about, what do
you believe were the keys to success? How about the
disasters, what were the common mistakes?
McMahon:
The keys to new product or service success haven't changed
in thirty years, perhaps longer; but achieving them
seems to have become exceedingly more difficult. A successful
new product fills an unsatisfied need that exists among
a sizable portion of the population. The product is
supported sufficiently so that it achieves strong levels
of distribution and awareness. The differentiating benefits
of the product are clearly communicated by its advertising,
which helps consumers associate its message with its
brand. The product delivers on its promise so that it
generates favorable levels of trial and converts consumers
that try the product into repeat purchasers.
If
one of the common threads across new product successes
is that they solve problems that existing products don't
or they do so in a superior fashion, probably the most
common mistake among the failures is introducing a product
that is highly undifferentiated—a "me too"
product.
Copernicus
Mzine: Over the past 5 -10 years, have you noticed
any differences in the way companies have approached
new product development?
McMahon:
One trend we see is a desire to "cut to the chase",
that is, test and launch new products much more rapidly.
There is a lot of merit to speed, but cutting too many
corners increases the probability of failure. We have
witnessed how "analysis paralysis" can elongate
the time cycle for new product introductions. Often
this results from exhaustive qualitative and quantitative
research, including sequential testing and retesting
of virtually every element in the marketing mix (positioning,
product, price, name, advertising, etc.), after choosing
from only a handful of new product ideas which are not
necessarily the best to begin with.
Copernicus
Mzine: Has the Internet changed the world of concept
and product testing?
McMahon:
Most definitely. Up until a few years ago, mail panel
and mall intercept interviews were the standard data
collection methods for this type of testing. The old
"tried and true" methods have not gone away;
the Internet has simply supplemented them.
Some
have quickly adopted the Internet for most of their
research, largely due to speed and cost benefits. Others
are taking a more cautious stance, sometimes conducting
parallel tests to ensure that differences observed in
test results are linear. We think this makes a lot of
sense. The Internet is a valuable new data collection
tool, but like all tools it is not appropriate for every
purpose.
Interestingly
many marketers don't know that there are two broad types
of Internet data collection methods—Internet databases
and Internet panels. This distinction is important as
only research firms with true Internet panels maintain
detailed demographic (and other) information about their
panel members and balance their samples so that they
match U.S. Census statistics. This is crucial for achieving
sample reliability. Without this there is a high risk
that survey results will lack validity—in other
words, not measure what they are supposed to—and
reliability—in other words, study-to-study consistency.
Copernicus Mzine: If you could offer one piece
of new product development advice to CEOs, what would
it be?
McMahon:
Make "new products" a specialized function
within the organization that utilizes a continuous process
to generate and objectively evaluate as many ideas as
possible. All too often only a handful of ideas are
considered. Judgment is used to narrow this list before
marketing research even enters the picture. Tremendous
time and effort is spent on "wordsmithing"
mediocre—or worse—positionings and concepts
in the hope of making them significantly more appealing.
When
scores of ideas are considered the chances of finding
a winner are so much greater. Also, companies are quicker
to drop new product ideas that have little chance of
success and investment gets channeled toward product
ideas that have high potential.
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