I recently facilitated a two-day innovation workshop for a client in Germany. It was a really fun group and the team was committed to advancing new products. They welcomed learning both strategic theory and operational practices to succeed with innovation.
My key takeaway from this creative workshop was a continued focus on customer needs and garnering emotional insights. New product development (NPD) practitioners often come to their jobs from technical careers, such as marketing or engineering. (See a related post on Navigating Your Product Management Career.) As a marketer or engineer, you are primarily focused on data to drive decisions. Statistical analysis is important to understand averages, bandwidth, and variations.
Yet most consumers make purchase decisions based on emotion. In a quick exercise during the workshop, I asked one of the participants why he had purchased his last iPhone. And while he was perhaps the most technically astute person in the room, his response barely touched on specifications or data quality of the new iPhone.
Instead, he replied with emotional words, “I feel I could store more photos,” and “I felt like I could improve the pace of work.” The lesson is that all purchases – no matter how mundane or technical – are driven by emotion.
In this article, we will explore the three main drivers for new product purchases: necessity, convenience, an indulgence.
There are some products we purchase that have less emotional influence than others. Bananas, milk, and other grocery items are commonly purchased of necessity. We all need to eat. Bananas, apples, and oranges can be interchanged as a food category as can hamburger and chicken. Interchangeability is often a sign of a commodity product and may signal that the product is a necessity for consumers.
Consumers purchase necessary products on a regular basis and often select specific products based upon price. Bananas are cheap and are disposable. (See my story of the 19-Cent Banana here.) If you buy a couple of bananas and don’t eat them you have not lost a lot of money. The taste of one brand of banana is not different than the flavor of another brand. Bananas are commodity products and are a necessary product as a food category.
Commodity items are necessary to satisfy our basic needs. Yet as we consider our own purchases, we realize that emotion plays a role for necessities, too. You might prefer the flavor of a Fuji apple over a Granny Smith. Both apples are commodities with similar pricing, but your selection of a necessary product (food) is still based on a personal preference. So, we conclude that even necessary products have emotional influence for purchasers.
Products can command a pricing advantage when they offer additional conveniences above the basic necessities. It is more convenient to grab a 10-pound bag of apples at the supermarket rather than picking through them one at a time, for example.
Innovations that offer conveniences – even with lower quality or fewer features – are frequently desired by customers. The late Clayton Christiansen called these innovations disruptive (read more here and take a short course here.) Disruptive innovations offer access to a market that previously was not able to consume the product, or they offer enhanced convenience to existing consumers.
My husband recently gave me a wonderful gift dash a new Fitbit. I love my new Fitbit for the very reason of convenience. Previously, I wore a daily watch and my Fitbit tracker. I wore a different chronometer watch for running and yet a different watch for counting laps and efficiency when swimming. While nothing was wrong with any of these devices – they all provided necessary fitness tracking and time reporting – the new Fitbit offers substantial convenience. With a single device, I can now monitor time and track running, cycling, swimming, and lifting weights at the gym!
Innovations that offer convenience to customers are valuable and recognize the emotions of a customer. What extra convenience can you add to an existing product to move it from a necessity to an emotionally attractive product for your target customers?
New products that lead with premium pricing are indulgences. People buy these products to feel pampered and luxurious. Some consumers will purchase indulgent products on a regular basis, while others make one-time purchases. Addressing this smaller market, however, can be very profitable from an innovation standpoint.
For example, consider Charmin® toilet paper. Its basic function is the same as a generic product. Charmin is sold in a variety of package sizes (from 4 rolls to 24 rolls per package), offering convenience compared to all other competitors. Yet Charmin asks customers to indulge and treat themselves specially. You might buy the Charmin brand every time you need toilet paper, or you might spend the extra money to feel luxurious only once in a while.
While it is perhaps more difficult to view a necessary or convenient product with emotional pull, indulgent products are designed and developed only for emotional impact. The actual technology doesn’t matter as much as the marketing for indulgent innovations. A consumer must be made to feel special and unique!
Addressing Emotion in Your Innovations
Innovations are successful only when the technical features meet a market’s needs. Innovations in new products are only successful in that they create profit for the organization as well. Profit, defined as revenue minus costs, relies on setting an appropriate sales price and sales volume for the product category, type, and market need.
Necessary products are created or improved daily, and consumers seem to have more “needs” than ever. Innovations designed for necessities are often commodities that sell at high volume and lower price. Competition is fierce. New product development practitioners capitalize on delivering products that meet the changing needs of their target markets.
Products that offer additional conveniences sell at higher prices with substantial market share. These firms innovate around the pain points of consumers to ease their use of a product or service. When the convenience is new or highly adapted, we call it a disruptive innovation.
Finally, luxury products abound to make people feel good about themselves. Such indulgent innovations command high profit margins but are risky in several ways. Trends and fashions change quickly, and luxury products depend on the continued loyalty of a small consumer base willing to pay high prices.
Do You Know the Emotional Pull of Your Innovations?
If not, you need to act now to be successful with innovation and new product development. Pricing strategies are a key component to successful innovation. Read about pricing strategies for innovation in Chapter 4 of The Innovation ANSWER Book (get your copy now!). Also, learn all about innovation in an Innovation Best Practices course (join here for self-study and don’t expose yourself to coronavirus!).