Editor's Note

For 30 years, I’ve been totally focused on marketing consulting; finally, I have broken down and chosen to produce a newsletter.  Why?  I’ve done so because of my passion for new products.

New products are the life blood of companies, big and small. They are the “real deal” engine of financial growth.  Yet most companies have a less than stellar track record with new products.

When I entered the business in the 1970s, nine out of ten new products failed.  Some three decades later, not much has changed. Our research - confirmed by other firms - shows that nine out of ten new products still fail today.

I intend to have an impact on the success of new products, and I believe this bi-monthly newsletter will do its part.  At Markitecture, we focus on working with a wide range of companies on their new products from Inception to In-Market™ launch.  I think we are a special resource for a neglected but critical success factor for businesses – new product innovation.

I hope you enjoy this first issue of Blueprints for New Product Innovation; if so, please pass it along to a friend or colleague.  Also, let us know how you feel – we will try to share your insights with other readers.  CLICK HERE TO GIVE US FEEDBACK

Robert Shulman Founder Markitecture

What's Inside:

1. Technically Speaking - Made Colloquial
2. Blueprints New Product Spotlight
3. Ponder This
4. Newsworthy…or not
5. Point of View
6. Guest Feature Paul B. Brown – NY Times Writer
7. Announcements

1. Technically Speaking - Made Colloquial:

One of the main reasons for the failure of new products is that marketers don’t explore enough options to how best design the product or service.  By design, we mean pricing, packaging, size, benefits promised, etc.

A great marketing science tool, Conjoint Analysis, enables such a design exploration.  It allows for a small sample of consumers to sort through options and guide the design of the product or service.

In our work we take it a step further and build in the capability to forecast the sales potential for alternative designs.  There are typically no shortages of options to consider for a new product. However, the misguided “need for speed” usually produces a product design that is far less than optimal.

I think Tom Peters and Bob Waterman perpetrated one of the biggest crimes ever against corporate America when they declared: do a little homework, get the product in the marketplace fast and make corrections based on market feedback - a concept they called ‘ready, fire, aim.’

There is a large body of literature that says being a second mover can be even more powerful than a first mover. You don’t have to be first.  Speed to market is a killer concept in the negative sense. It absolutely kills new products.

You don’t want to make your mistakes in public. To launch a product before it is ready with a $40 million advertising campaign is just idiocy.  The problem is that it isn’t seen as idiocy;  it’s seen as one of the costs of doing business.  And that’s what’s sad.  People who do this should not be seen as bold. They should be seen as bad marketers.

Conjoint Analysis is not an arduous process – it takes about six weeks, it is not particularly costly, and it provides you with a sales forecast for the new product or service.

The moral: “Better selling through marketing science.”

Click here to learn more about the Conjoint Analysis technique

2. Blueprints New Product Spotlight:

Blueprints New Product Spotlight shines on POM Wonderful pomegranate juice.

The wonderful pomegranate – who would have thought it would be in the Blueprints New Product Spotlight?

Positioned as “the real antioxidant superpower™”  the juice has crafted a powerful message for itself – one that meets our criteria for positioning success:

1. Touts a highly desirable benefit – “antioxidant power” to fight a myriad of diseases
2. Its uniquely well suited to deliver against it’s promise:
   • Medical research support
   • 50% of the pomegranate acres under cultivation in the USA - captive production
   • Premium price
   • Unique, award winning package design
3. Competition is weak – other than blueberry juice there is little competition and blueberries are way behind!

Our advice – everything we see suggests an attempt for broad appeal, with a super-premium position.  More clearly defined target segment(s) will better serve the business over the long haul.

3. Ponder This:

We have found a strong relationship between the number of new products launched and corporate performance. Imagine if all these new products were successful?

4. Newsworthy…or not:

The train has left the station on MP3 Players, like the IPod or other small, more compact portable entertainment units that deliver music.  Now the move is rapidly towards the delivery of video (TV or film) via the smaller screen to the consumer. 

Podcasts can be easily delivered to these video players.  There is an assumption among many marketers that this will be a strong demand by consumers, since those podcasts will add value to what they have read in a magazine or seen on TV.      

My question is:

1. Have you (assuming you own an MP3 player with a screen) downloaded video content in the past three months?
2. Have you downloaded a podcast in the past three months (assuming you own a MP3 player)?

Click here to take this survey

The answer to this poll will be shown in the next issue of Blueprints. 

5. Point of View

It’s the Brand, Stupid

October 3, 1951, the Polo Grounds, New York. The score of the third and final National League playoff game is 4-2, Brooklyn, in the bottom of the ninth inning. Two New York Giants are on base and Giant slugger Bobby Thomson, representing the winning run, looms at the plate.  Dodger hurler Ralph Branca, pitching in relief of Brooklyn starter Don Newcombe, fires a fastball down the middle, which Thomson takes for a strike.  The next pitch is high and inside. Thomson, with a chopping swing, whacks it for a home run. The game is over. The Giants win. Years later, Branca encounters former Giants ace Sal Maglie, who pitched eight innings in that epic playoff finale, at an off-season baseball dinner. Maglie asks Branca what he was trying to accomplish with those two fateful pitches to Thomson. Branca replies, “I was trying to set him up for the low outside curve.”  Maglie responds, “If you wanted to throw him a [bleeping] curve, you shoulda thrown him a [bleeping] curve.”

Price discounting, like Branca’s ill-fated high hard one to Bobby Thomson, doesn’t work.  Decay and disaster are the only likely results.  As has been proven time and again   the vast majority of Americans don’t buy on price alone.  Of course, they want a good price, but they also want value.

Value can mean different things to different people but more often than not innovation enters into the equation  There is an inherent thirst within the American psyche for “new” – people like to try new things and the attraction of new is largely impacted by its innovativeness.

All you have to do to understand the importance of innovation is look at all the problems in Detroit.

Scrambling to lure car buyers back to their showrooms, General Motors and Ford announced substantial price discounts for their U.S. models, along with plant closings and tens of thousands of layoffs.  This discredited approach will accelerate the migration of Americans to innovative, design-rich non-U.S. competitors whose built-in-America brands annually grow more muscular.

While GM and Ford opt for brand-eroding discounts, their competitors, supported by astute new product research that has outpaced U.S. automakers for years, are laying in a fat pitch for American car buyers who eagerly await the latest value proposition (innovations for a good price) and have come to expect that from non-U.S. carmakers, not from Detroit.

The marketing graveyard is filled with discounting strategies gone awry, with brands corroded by short-sighted commoditized pricing, as well as by line extensions of faded brands and by brand cannibalization, all of which are strategies traditionally – and disastrously -- employed by GM and Ford in the carmakers’ slide from global prominence, their once proud brands and franchises outflanked and undone by more nimble and innovative competitors.

Recently at the New York Auto Show, Carlos Ghosn, Nissan’s CEO, was quoted as saying “rebates need to stop.”  Among the many reasons, is that he estimated car markers are spending $60 billion a year on incentives – enough to develop 120 new vehicles at a cost of $500 million a piece. 

The solution is one that Sal Maglie would have appreciated: Don’t distract buyers with self-defeating strategies like price discounting. Innovate.  Build the brand with well-researched new products.  Determine the market that will pay for value and then develop new products that address that market’s needs. As Sal Maglie might have said, “Throw the pitch you mean to throw when and where you mean to throw it.”

New Thinking about New Products Ought to Be Job One

“What’s a good car design?” Until recently, that’s not what U.S. automakers have asked. Instead, the prime objective has been, “How can we keep our plants busy?”  Job one for the carmakers has been plant efficiency, not product innovation. If a car model was a little more efficient but was shunned by car buyers, no matter. “We’ll change,” the automakers said, “but only to accommodate plant efficiency.”

Our research has shown repeatedly and dramatically that U.S. consumers like and want new products that meet their changing needs in an innovative way. Paradoxically, however, companies, including U.S. car manufacturers, in their zeal to avoid new product failure opt instead for low-risk brand draining line extensions over new-to-the world new products. For U.S. automakers, that has meant continuing adherence to short-term engineering imperatives that have little or nothing to do with brand building, and line extensions of brands whose best years are long gone.

Change is being forced on GM and Ford, but is it too late?

6. Guest Feature – Paul B. Brown – New York Times Writer

Read Paul B. Brown’s article on Innovation
What’s Offline – Solving the Innovation Shortfall
NY Times, April 29, 2006

7. Announcements:

Featured Webinar – Retail Innovation
Learn how leaders in the retail industry are leveraging customer insights into developing effective new products, improving merchandising layouts, and creating store concept strategies. Sign up now for a Webinar hosted by Robert Shulman, Markitecture Founder and Columbia Business School Professor of Marketing.  Click on Retail Innovation: Finding the Next Retail Opportunity to reserve your spot.

Forthcoming Book
This Fall from the Association of National Advertisers Titled "The New Products Marketing Revolution". Click here to receive a free chapter preview.