Patience: Unlike Target and others who went to small towns only after having saturated the big cities, Wal-Mart took the opposite approach. It entered the small markets—the low-potential markets—first, then went to the BIGGEST MARKETS. Can you do the same? Can you first enter a more minor channel of distribution, sell some, learn a lot, and make improvements in your offering, your marketing, and your plan?
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SCIENTIFIC
ADVICE
THE EASIEST WAY FOR YOU TO IMMEDIATELY IMPROVE YOUR MARKETING RESULTS IS BY MAKING DECISIONS BASED ON A 60/40 WEIGHTING OF PURCHASE INTEREST AND UNIQUENESS
The value of uniqueness as a driver of marketing success is well known. Uniqueness sets off a chain reaction of benefits. When your offering is unique, it’s easier to get distribution and awareness. Your trade customers have a real reason to stock products that are genuinely new, as opposed to simply another variation of the same old stuff. When you’re really new and different, it’s easier to make a profit, as customers have no viable alternative. And with no direct competitor, you don’t have the downward pricing pressure that commodity markets experience.
To dramatically improve your ability to select between two new product options, consider BOTH customer purchase interest and uniqueness.
Research comparing customers’ initial purchase intentions and perceptions of uniqueness with actual marketplace behavior found that a weighting of 60 percent of customers’ purchase intention score and 40 percent of uniqueness perception score is most predictive of actual marketplace behavior.
This approach can be challenging to execute. The vice president of a major beauty care company had two new products to decide between. Concept A had strong purchase interest and horrible uniqueness scores. Concept B had very good purchase interest scores with exceptional uniqueness scores. Despite my pleading to take uniqueness into account when making the decision, the vice president selected New Product A because, as he said, “It’s the safest choice to go with the idea liked by the most consumers.” Fast-forward twelve months: New Product A is introduced and fails. Without a unique product, the trade is reluctant to take the item, and because the product isn’t inherently newsworthy, the brand has trouble generating awareness.
The need to maintain a healthy tension between uniqueness and meaningfulness was shown in a study of 312 project managers. The research found that “meaningfulness” of uniqueness in new products and marketing plans was twice as predictive as “uniqueness” alone in explaining new product sales, market share, relative profitability, and return on investment.
PRACTICAL IDEAS
Get Data Fast and Cheap: If you don’t usually collect this kind of data, here’s the fast way to gather it: Prepare written descriptions of each of your ideas for new products or services. Ask thirty or more potential customers (the more the better) the following questions for each of the new ideas:
1. On a scale of 0 to 10, how likely is it that you would purchase this product/service if it were offered?
2. On a scale of 0 to 10, how unique do you believe this product/service is?
Calculate the average value for each question, then multiply the first question’s value by 60 percent. Multiply the second question’s average by 40 percent, and add the two figures together. Finally, compare the weighted scores for each of the written descriptions.
Mine Archives: If you already have lots of past concepts that you’ve tested, review the results from a fresh perspective. Apply a 60/40 weighting to the purchase intent and uniqueness questions and look for potential big ideas that you might have overlooked in the past.
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SCIENTIFIC
ADVICE
WHEN YOUR STRATEGY IS FOCUSED ON INNOVATIONS THAT CREATE NEW MARKETS OR INDUSTRIES, YOU’RE 9.6 TIMES MORE LIKELY TO REALIZE PROFITABLE SUCCESS THAN YOU ARE BY “PLAYING IT SAFE” AND FOCUSING ON INCREMENTAL INNOVATIONS
Be bold! Be brave! Strategies focused on close-in ideas or “low-hanging fruit,” as they’re called, are for losers. There is no such thing as easy profits. The smart path, the only reliable path to big SUCCESS, is BEING BOLD!
A study of 108 companies found that 86 percent of new offerings were “safe ideas” (line extensions or other variations of current offerings) and these safe ideas collectively delivered 62 percent of sales and 39 percent of the average company’s profits from innovation. Alternatively, the 14 percent of innovation offerings focused on creating new markets or industries delivered 38 percent of sales and some 61 percent of innovation profits. Comparing the ratios of percentage of profits with the percentage of initiatives, we find that products or services focused on creating NEW MARKETS generated 3.8 times more sales and 9.6 times more profit.
Automobile visionary Henry Ford rejected the prevailing view that cars were for “rich people” and saw a future where everyone could afford a car. He described the importance of a focusing on new markets and ideas this way: “Businessmen go down with their businesses because they like the old way so well they cannot bring themselves to change. One sees them all about—men who do not know that yesterday is past, and who woke up this morning with their last year’s ideas.”
Sadly, the depth and breadth of the challenge is huge. Research of 120 brands across 13 different countries found that only 1 in 10 users felt their brand was even modestly different from others. And the perceptions of those who are not brand buyers was only half as strong.
The Harley-Davidson motorcycle company is in business today because of its early focus on new markets. It looked for sales opportunities beyond consumers. It convinced the U.S. Postal Service to move from bicycles to motorcycles. It also found great success with sheriffs, state patrols, and the military. By the end of World War I, all of Harley-Davidson’s production was going to the military.
PRACTICAL IDEAS
How NOT to find unique ideas: Focus groups are the worst way to find big, bold ideas. Customers can only tell you the world as they know it. Quality guru W. Edwards Deming once said, “Customers can’t say what new product or service would be desirable three years from today. New ideas are generated by imagination, risk, innovation, trial and error by the producer.”
How TO FIND unique ideas: Take personal responsibility for the challenge. Get personally involved in your category and in categories near your category. Seek out the “thought leaders” in your industry. Who are the retailers, salespeople, consumers, customers, or even members of the media who are most aware of where categories are going? Seek them out and ask about tomorrow. Ask them what they anticipate the future looking like in three years, five years, and ten years. Don’t be bashful. Just ask those involved in your industry for their ideas and insights. Listen especially closely to those ideas that contradict your established thinking. Radical ideas, different ideas offer the greatest potential for helping you realize meaningful growth.
Think NEW TO THE WORLD, Not New to You. It’s common to confuse “new to our company” with new to the world. Customers don’t care whether you’ve never offered a certain type of product or service before. They’re interested only in what you can do that NO ONE ELSE CAN DO.
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SCIENTIFIC
ADVICE
A STRATEGY THAT ANTICIPATES CUSTOMERS’ FUTURE NEEDS IS TEN TIMES MORE PREDICTIVE OF SUCCESS THAN ONE FOCUSED ON CUSTOMER SATISFACTION
GET IT?