10.1 New Products from a Customer’s Perspective
3 min read•june 25, 2024
New products are the lifeblood of innovation, ranging from minor tweaks to groundbreaking inventions. They fulfill unmet needs, solve problems, and enhance our lives. Companies strive to create products that excite customers and drive loyalty.
The spectrum of affects adoption rates. Incremental changes are easily accepted, while radical innovations face slower uptake. Successful launches depend on targeting , managing risks, and navigating market dynamics throughout the .
New Product Development and Customer Perspective
Customer perspective on new products
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- New products are goods, services, or ideas perceived as novel by potential customers
- Can be entirely (self-driving cars, virtual reality gaming) or minor improvements to existing offerings (new smartphone features, updated packaging designs)
- New products fulfill unmet needs or wants, provide solutions to problems or pain points, enhance convenience, efficiency, or enjoyment (smartphone apps for productivity, smart home devices), and offer unique benefits or superior performance compared to existing alternatives
- New products drive customer interest, excitement, and engagement by attracting attention, generating buzz (viral marketing campaigns, influencer endorsements), and encouraging trial and adoption
- Successful new products improve customer satisfaction and loyalty by meeting or exceeding expectations and creating positive brand associations and experiences (Apple's iPhone, Nike's innovative athletic gear)
Spectrum of product newness
- Product newness exists on a spectrum, ranging from incremental improvements to radical innovations:
- : minor changes or enhancements to existing products (new flavors of snacks, updated car models)
- Relatively easy for customers to understand and adopt
- : significant improvements or new features added to existing products (smartphones with foldable screens, cars with advanced driver assistance systems)
- Require some learning and adjustment from customers
- : entirely new-to-the-world products that create new markets or disrupt existing ones (the first smartphone, virtual reality headsets, 3D-printed food)
- Demand significant changes in customer behavior and understanding
- : minor changes or enhancements to existing products (new flavors of snacks, updated car models)
- Incremental innovations typically have faster and broader adoption due to familiarity and low perceived risk, while radical innovations may face slower initial adoption due to higher perceived risk, uncertainty, and learning requirements
- Adoption rate depends on factors such as , , , , and (' theory)
- The illustrates how different customer segments adopt new products over time, from innovators to laggards
Customer Adoption and Market Dynamics
- Early adopters play a crucial role in the success of new products by:
- Providing initial feedback and validation
- Generating word-of-mouth marketing
- Serving as opinion leaders for later adopters
- helps companies identify and target specific customer groups most likely to adopt new products
- The product lifecycle influences marketing strategies and customer perceptions throughout introduction, growth, maturity, and decline stages
- can slow adoption rates due to:
- Perceived risks or complexity
- Incompatibility with existing habits or values
- Lack of perceived value or relative advantage
Risks vs rewards of innovation
- Potential rewards for companies developing innovative offerings:
- Competitive advantage and differentiation
- Market leadership and increased market share (Tesla's dominance in electric vehicles)
- Premium pricing and higher profit margins
- Enhanced brand image and customer loyalty (Apple's brand loyalty)
- Opportunities for growth and expansion into new markets (Amazon's diversification from e-commerce to cloud computing and entertainment)
- Potential risks for companies developing innovative offerings:
- High development costs and resource requirements
- Uncertainty and unpredictability of market acceptance (Google Glass's failure to gain widespread adoption)
- Risk of failure due to technical challenges, regulatory hurdles, or changing market conditions
- of existing product sales (iPhone sales cannibalizing iPod sales)
- Imitation by competitors, reducing the window of opportunity (smartphone market saturation)
- Companies must carefully assess the potential risks and rewards when developing innovative offerings by:
- Conducting thorough market research and gathering customer insights to validate demand and
- Managing development costs and timelines to minimize financial exposure
- Protecting intellectual property through patents, trademarks, and trade secrets
- Planning for effective marketing and distribution to drive awareness and adoption
- Monitoring and adapting to market feedback and competitive responses
Key Terms to Review (19)
Adoption Curve: The adoption curve is a model that describes the rate at which new products or innovations are adopted by a population over time. It outlines the different stages and patterns of consumer acceptance and diffusion of new offerings in the marketplace.
Cannibalization: Cannibalization is a phenomenon that occurs when the introduction of a new product or service results in the loss of sales or market share of an existing product or service offered by the same company. This happens when customers switch from the existing product to the new one, leading to a decline in the sales and profitability of the older product.
Compatibility: Compatibility refers to the ability of a new product to seamlessly integrate and function with an individual's existing products, systems, or lifestyle. It is a crucial factor that influences a customer's willingness to adopt and use a new product.
Complexity: Complexity refers to the state of being intricate, multifaceted, and difficult to understand or analyze. It describes systems or situations that have a large number of interconnected components, with dynamic and nonlinear relationships between them.
Continuous Innovations: Continuous innovations refer to the incremental improvements and modifications made to existing products over time to enhance their features, performance, or functionality. These innovations are gradual and ongoing, aimed at providing customers with a steady stream of enhancements and maintaining a competitive edge in the market.
Diffusion of Innovations: Diffusion of Innovations is the process by which new ideas, products, or technologies spread through a population or social system over time. It describes how and why innovations are adopted, and the factors that influence their rate of adoption.
Discontinuous Innovations: Discontinuous innovations are major breakthroughs that significantly transform existing products, services, or business models. These innovations create new markets, disrupt existing ones, and often require consumers to change their behavior and adopt new ways of doing things.
Dynamically Continuous Innovations: Dynamically continuous innovations are new products or services that represent incremental improvements or enhancements to existing offerings. These innovations build upon and gradually evolve from previous versions, providing customers with familiar features alongside minor upgrades or additional functionality.
Early Adopters: Early adopters are the first segment of the population to embrace and adopt a new product or technology. They are typically more risk-tolerant, tech-savvy, and eager to try innovative offerings before the mainstream market. Early adopters play a crucial role in the product life cycle, consumer adoption process, and how customers perceive new products.
Innovation Resistance: Innovation resistance refers to the tendency of consumers to resist or reject the adoption of new products or services, often due to a variety of psychological, social, and practical barriers. This concept is particularly relevant when considering the introduction of new products from a customer's perspective.
Market Segmentation: Market segmentation is the process of dividing a broad consumer or business market into subsets of consumers or businesses that have, or are perceived to have, common needs, interests, and priorities. Marketers can then design and implement strategies to target these specific segments with offerings that match their unique needs and characteristics.
New-to-the-World Innovations: New-to-the-world innovations refer to products or services that are completely novel, never before seen in the market. These are groundbreaking advancements that create new customer needs and disrupt existing industries, offering a unique value proposition that transforms the way people live and work.
Observability: Observability is a measure of how well the internal states of a system can be inferred from knowledge of its external outputs. It is a critical concept in the context of new product development and the consumer adoption process, as it reflects how easily customers can understand and interact with a new product.
Product Lifecycle: The product lifecycle refers to the stages a product goes through from its introduction to the market to its eventual decline. This concept is crucial in understanding the marketing and strategic decisions surrounding a product throughout its existence.
Product Newness: Product newness refers to the degree of innovation or uniqueness that a new product offers to customers. It encompasses the level of differentiation and distinctiveness a product possesses compared to existing offerings in the market.
Relative Advantage: Relative advantage refers to the degree to which an innovation or new product is perceived as being better than the product it supersedes or the existing alternatives. It is a key factor that influences the adoption and diffusion of new products from the customer's perspective.
Rogers: Rogers is a framework developed by Everett Rogers that describes the adoption of new products or innovations by consumers over time. It outlines the different stages and characteristics of how individuals within a population accept and utilize novel products or ideas.
Trialability: Trialability is the degree to which a new product or innovation can be experimented with on a limited basis. It refers to the ability of potential adopters to try out a product or service before committing to full adoption.
Value Proposition: A value proposition is a clear, concise statement that describes the unique benefits a company's product or service offers to its target customers. It outlines how a company's offering solves a customer's problem or improves their situation, and why they should choose that company over competitors. The value proposition is a critical element in the marketing and strategic planning processes, as it helps a business differentiate itself and communicate its core value to potential customers.