RMG HomeTrend Blog

How to Increase Your New Product "Hit" Rate

Silicon Valley entrepreneur and blogger Andrew Chen recently wrote a blog about the importance of having a culture of “Failure is OK”.  He used industrial design firm IDEO as an example of a company that, in Chen’s words, “takes the central part of a process and assumes failure, and then builds up a support system around it.” 

 

In IDEO’s case, the central part of the process is the new product idea brainstorming that the company does as part of every project.  The assumed failure is the recognition that any individual idea is likely to be bad.  The support system the company has built around the process -- structured brainstorming, rapid prototyping, and field research – enables the company to test new product ideas cheaply and quickly.  That way, they can quickly eliminate the “bad” ideas.

 

In fact, having a system for doing quick and easy testing of new product ideas early in the new product development process differentiates the most successful companies from the rest, according to a best practices study conducted by the Product Development and Management Association (PDMA).  The study compared the new product development processes used by the “best” companies (defined as those that are simultaneously either the most successful or in the top third in their industry AND above the mean in sales and profit success from new product development) with the “rest”.

 

The PDMA found that in the “best” companies, one in four ideas results in a commercial success (versus one in nine for the rest.)  One of the reasons the “best” companies have a better new product “hit” rate is because significant effort is spent on understanding customer needs and the cost ramifications of design decisions early in the development process. 

 

The PDMA study reveals that new product success is closely linked to a set of activities that take place before actual product development ever starts.  Such critical "upfront" pre-development activities as needs assessment, initial screening, preliminary market assessment, and detailed market study. 

 

If you want to increase your new product “hit” rate, take a page from the IDEO playbook: develop a process for testing new product concepts cheaply and quickly – at the initial idea stage, at the product concept stage, and during the development stage.

A paradigm shift in how Americans Spend their Money

In past decades when an economic downturn ended, Americans went right back to spending.  There is considerable evidence that this time Americans are making fundamental and long-term changes in their spending habits. 

Almost three quarters of my proprietary HomeTrend Influentials Panel say they will not go back to their old spending habits when the economy improves. 

A recent Gallup Poll came up with a similar finding.  According to a recent USAToday story, a Gallup Poll in April found that “a third [of Americans], 32%, say they have been spending less and intend to make that their "new, normal" pattern; 27% say they are saving more and plan to continue.”

Why are Americans making fundamental and long-term changes in their spending habits?  I’ll let the HIPsters answer for themselves. 

“We found out that it is possible to live on a little less.”

“It's "just money" -- i.e. what we thought we were all worth was just about paper, not reality. And goods are just money also. Not necessary to a fulfilling life. We try and "run" money now, not let money "run" us.”

“We were spending above our means and we really didn't need to.”

“We've learned how to work with less, we'll continue doing just that. If we have extra, we'll put it in savings.”

“It’s been a good lesson for me that I don't need to spend quite so much and I've been happy with many of the less expensive choices that I've made.”

“We have found that we can really do without some of the things we were spending our money on.”

Michael Maniates, professor of political and environmental science at Allegheny College in Meadville, Pa got it right when he told USAToday, “Perhaps the silver lining (of the recession) is that people are coming to realize they can live with less and their lives are richer for it.” 

Are We Finally Seeing the End of the Recession Tunnel?

Are we finally seeing the end of the recession tunnel?  I've run across several articles recently that seem to indicate that things may be looking up, economically speaking. 

According to the July 15 Marketing Daily, the percent of consumers who say their household economic situation is either the same or better than it was this time last year has jumped significantly since April.  I saw a similar trend when I polled my proprietary HomeTrend Influentials Panel in late June.  63% of the HomeTrend Influentials (HIPsters) said that their level of worry about money and what the future may hold has either not changed or has gone down since late 2008.

HFN reported this week that both new home sales and existing home sales are up.  An uptick in home sales is an especially important indicator for the housewares and home goods industries.  Households that relocate spend an average of 20-25% more on improvements than otherwise similar households that do not move, according to the Joint Center for Housing Studies of Harvard University.

The final piece of good news comes from Unity Marketing whose latest Luxury Tracking survey among affluent luxury consumers suggests that the worst of the recession is over for a near majority of those surveyed. 

 

How to Get Your Feet Wet on Twitter

In my June 22 HomeTrend Forecast e-newsletter, I advised you that “as a marketer, you should sign up for Twitter yourself to get a sense of what it is all about, even if all you do is follow the major news media to stay abreast of breaking news.”

Have you taken my advice and signed up for Twitter yet? 

If you have not, it may be because you are thinking the same thing Times reporter Steven Johnson thought about Twitter when he first started covering it.  Here is what Johnson wrote in his June 5 cover story on Twitter:

The one thing you can say for certain about Twitter is that it makes a terrible first impression. You hear about this new service that lets you send 140-character updates to your "followers," and you think, Why does the world need this, exactly? It's not as if we were all sitting around four years ago scratching our heads and saying, "If only there were a technology that would allow me to send a message to my 50 friends, alerting them in real time about my choice of breakfast cereal."

I recommend that you start using Twitter because I believe that you will discover -- like Johnson and millions of devotees have discovered -- that Twitter has, in Johnson’s words, “unsuspected depth.”  Even if you ultimately decide that you don’t want to have a Twitter account yourself, you really do need to keep your finger on the pulse of this social media tool that Steven Johnson and many others think will “change the way we live.”

You may already have signed up for Twitter.  You may have created your profile.  You may even have started getting notifications that perfect strangers (and some quick-rich-quick schemers) are now following you.  You may either be wondering what you do now or you may be thinking that Twitter is a waste of your time because you really don’t want to know perfect strangers so well that you know their daily routine and vacation plans.

For now, a good way to get your feet wet with Twitter is to look at it as a time-saving way to receive information.  Instead of having to go out and find the latest news, the latest news comes to you via Twitter.  You can follow the major news organizations to get the latest breaking news.  You can follow the American Marketing Association, Marketing Profs, Ad Age, and Marketing News to keep your finger on the pulse of new developments in marketing.  You can follow companies like Razorfish and Mashable and people like Jason Baer and Rick Burnes who are on the cutting edge of social media. 

Or, you can follow me.  In fact, my goal is to become the “go to” person for housewares and home goods marketers.  I want to be the person you follow on Twitter to stay abreast of what’s happening in the worlds of housewares and home goods and in the worlds of product development and design, marketing, and social media.  I promise that I won’t be tweeting about what I ate for breakfast.  You won’t have to scroll through tweet after tweet of trivia and nonsense to get to the good stuff.  I’ll be tweeting about interesting articles and blogs that I’ve come across that I think you might be interested in.  I’ll be tweeting about consumer insight that I am gathering from my HomeTrend Influentials Panel and from other research companies.  I’ll be tweeting about useful tools and resources that you can find on the Riedel Marketing Group web site. 

Want to give it a try?  If so, go to http://twitter.com/AJRat4RMG. If you have already joined Twitter, login.  If you haven’t joined Twitter, click on the “Join Twitter” link at the upper right hand corner of the page.  Then click on the word “follow” under my picture.

By the way, the quickest way to learn more about Twitter is to spend an hour listening to the AMA’s archived webcast “How to Use Twitter for Business” and read Steven Johnson’s piece in Time magazine.

 

 

Americans won't be going back to old spending habits

In past decades when an economic downturn ended, Americans went right back to spending.  There is considerable evidence that this time Americans are making fundamental and long-term changes in their spending habits.

 

In late December 2008, I asked the full 100-member HomeTrend Influentials Panel if they would go back to their old spending habits when the economy improves.  More than half (55%) said that they would not go back to their old spending habits.

 

I asked the exact same question at the end of June.  The percent of HIPsters who say they will not go back to their old spending habits when the economy improves has gone up considerably.  Almost three quarters (73% to be exact) say they will not go back to their old spending habits. 

 

What I am hearing from the HIPsters is consistent with the findings from other market research studies. 

 

·         A 2008 Booz & Co. study of 1,000 households reported that the respondents would continue to eat at home more and cut spending on hobbies and sports activities even when the economy improves.

 

·         Two-thirds of respondents to a very recent study by Performics, an online marketing services firm owned by Publicis Groupe, said that the recession had fundamentally changed the way they think about saving and spending money and 8 out of 10 said the recession will have a lasting impact on them.

 

Why are Americans making fundamental and long-term changes in their spending habits?  I’ll let the HIPsters answer for themselves. 

 

“We found out that it is possible to live on a little less.”

“It's "just money" -- i.e. what we thought we were all worth was just about paper, not reality. And goods are just money also. Not necessary to a fulfilling life. We try and "run" money now, not let money "run" us.”

 

“We were spending above our means and we really didn't need to.”

 

“We've learned how to work with less, we'll continue doing just that. If we have extra, we'll put it in savings.”

 

“It’s been a good lesson for me that I don't need to spend quite so much and I've been happy with many of the less expensive choices that I've made.”

 

“We have found that we can really do without some of the things we were spending our money on.”

 

“Because the habits are now established, painless, and save me money. That's good no matter what's going on in the economy.”

 

Why People Do or Don't Twitter

 

The media is all atwitter about Twitter right now; especially with the role Twitter is playing in getting the word out about the Iranian protests. 

 

Despite its "hot" status with the media, a recent posting from the ReadWriteWeb blog suggests that far fewer people are actually using and contributing to the site than Twitter's recent hype and massive growth would suggest.  In his blog, Doug Coleman cited a study by Web security SaaS company Purewire that revealed that many Twitter users "have abandoned their accounts shortly after creating them, and a significant percentage are not showing signs of account activity". 

 

I recently asked the members of my proprietary HomeTrend Influentials Panel who have signed up for Twitter - as of early May, 30% of the HIPsters had Twitter profiles (compared to 5% of Americans) -- if they are using it regularly or are part of the approximately 40 percent of Twitter users who have not tweeted since their first day on Twitter.

 

About half of the HIPsters who have signed up for Twitter are not regularly users.  They don't "get" it.  Here are a couple of their comments:

"I am one of those non-twitters. I don't really get it. I signed up and played around with it for a little while, but it seems limited in usage. I much prefer Facebook and use it regularly." 

 "Twittered once and haven't gone back. Don't know why I should. And have hard enough time keeping up with Facebook, Linked in, Plaxo, etc - which all take up more time than is worth."

"I joined Twitter and tweeted once. I'm a little freaked out because I started getting notices that people I don't know are following me.  I was following Chelsey Handler because I think she's hilarious. But her tweets always led me to a mini-url and it was too much effort to log into it from my iPhone.  I think if I got into Twitter (i.e., maybe spent some time with it and had someone give me some pointers), I'd like it more. My friends don't tweet much...and if they do, they link it to their Facebook, so I just read it there."

To me, while the statistics from the Purewire study about the number of people who have abandoned Twitter after signing up are interesting, the more important finding from the study is about how people are using Twitter.  According to the PureWire study, "Twitter is used more as a mass medium for receiving information, rather than as a way to interact with others". 

 

That is certainly true for me.  In my first week or so of being a Twitter user, I have stumbled upon some marketing experts whom I now follow so I can stay abreast of what's happening in marketing and PR, and especially in social media marketing.  It's like having a customized clipping service that alerts me to news about marketing.   It saves me time because I don't have to go searching for the latest news about marketing, PR, and social media.  The news comes to me from the tweets of reputable people in the industry.

 

The HIPsters who are big Twitter fans, however, do not use it just for receiving information.  They definitely use it to interact with others as well. Here are comments from two of the HIPsters who are frequent Twitter users: 

"I use Twitter to keep up with my friends, family, bands, organizations, celebrities, etc. I know what's going on in their lives or where they're at.  Plus, since I work in radio, the station has [a Twitter account] (that I keep up) and we follow our bands and listeners and interact with them that way. You can communicate one on one with people or just "listen" to what's going on. Or with the bands, we have instant updates on what they're doing (oh, so and so is stuck on the side of the road right now because of a flat tire - that kind of stuff). Also, most news stations (TV and radio) are on there and breaking news comes across faster on Twitter than it does on the actual mediums themselves (TV and radio)... so it's great for news and info too.  It's just a lot of fun if you put some effort into it. It is overwhelming at first (especially now that it's blown up in popularity), but once you get the hang of it and start interacting with it, it really is great! I tweet when something funny happens, or when I just have something to say random, or when I'm doing something I want other people to know about, etc. It is what you make of it really."

"I am on Twitter constantly. Especially with the Iran elections trend. I am addicted. Plus there are several other ways of getting actual ground breaking news from the people who make them.  I have Lisa Ling on my follow so I can keep up with what's happening in North Korea, following various broadcasters that I enjoy, celebrities that are interesting, my friends, family and companies and products that I love. I love that there are coupons and discount codes to people who follow a certain product, etc. I talked to Wyclef on the phone about his album due to Twitter. He had a call out to those people who were following him and text his number and if you were the X person he would call back, I was one of the lucky X and got to talk about his grassroots launching of his record, what he wants to do etc. I would never have had that opportunity without Twitter."

As a marketer, you should definitely keep your finger on the pulse of what is happening with Twitter.  The best places to start are with "How Twitter Will Change the Way We Live" by Time magazine reporter Steven Johnson and "Twitter on the Barricades: Six Lessons Learned" by New York Times reporter Noam Cohen.  You should also sign up for Twitter yourself to get a sense of what it is all about, even if all you do is follow the major news media to stay abreast of breaking news. 

 

Should you use Twitter professionally?  That is a question I'll address in next week's issue of HomeTrend Forecast.

 

 

Consumer Feedback a Must in New Product Development

Most executives in the housewares industry would agree that one of the most important critical success factors is new products: the development and introduction of a steady stream of new and/or improved products and line extensions. 

Housewares manufacturers certainly introduce a steady stream of new products.  According to a survey I recently conducted with housewares manufacturers, 60% of the survey respondents reported that their companies had introduced more than 75 new products in the past five years. 

But, housewares manufacturers are not introducing a steady stream of successful new products.   Less than 10% of the more than 75 new products introduced by each company in the past five years met the company's success criteria.

Research shows that successful new products offer unique benefits/features to the consumer and are superior to competing products in the eyes of the consumer.  It's no wonder so many of the new products introduced by housewares companies do not succeed.  There is nothing unique about many of the products relative to all the other similar products that are already on the market, nor does the consumer perceive many of these new products as being better than the products that are already on the market.  

 

It is not enough to develop and introduce a steady stream of new products.  That steady stream of products must offer unique benefits to the consumer and must be superior to competing products in the eyes of the consumer. 

 

It’s all about the consumer.  If you want to increase your new product success rate, you’ve got to systematically integrate consumer feedback into your new product development process.

 

Not just a product concept test at the beginning.  Not just a home-use test at the end.  You need to bring consumers into the process throughout new product development.  From start to finish. 

 

·         At the pre-development stage, even before you’ve decided what new products you are going to develop.

 

·         At the new product ideation stage when you are coming up with new product ideas.

 

·         At the product definition stage, when you are deciding what features the product should have, figuring out the most compelling product benefits (the key reasons why consumers will buy this product), and determining the optimal price point. 

 

·         At the product concept stage, so you can find if consumers like the product before you’ve invested a lot of time and money in product development. 

 

·         At the prototype stage before you’ve spent thousands on tooling.

 

·         At the off-tool sample stage to make sure that the manufactured product works as it is supposed to when it is used in real-world situations.

·         At the package development stage so you come up with the package design that is the most effective salesperson for the product. 

 

It’s not easy.  It’s not fast.  It’s not cheap.  But it’s necessary … unless you are satisfied with a new product success rate of less than 10%.

I am launching a ground-breaking immersive research study this summer

I am launching a new research initiative this summer that hopefully will yield "bigger knowledge dividends", "deeper insights", and "bigger innovation opportunities" than the traditional research methodologies we have always used.

 

The idea for this new research initiative comes from a thought-provoking book called The Game-Changer by Chairman and CEO of Procter & Gamble, A.G. Lafley. On page 47, Lafley wrote:

"Several years ago, P&G realized that though it talked to a lot of people, it wasn't really hearing them. It has overcome this barrier by taking one of the industry's more traditional market research organizations and turning it into a consumer-understanding powerhouse and consumer-insight generator. By investing more than a billion dollars in consumer-understanding research between 2002 and 2007 and conducting research with more than 4 million consumers a year, P&G has moved away from traditional, behind-the-mirror focus groups to more immersive research techniques. Spending on immersive in-store and in-home research is up fivefold since the beginning of the decade.

 

This is an important shift. Investing these dollars in smarter ways has paid bigger knowledge dividends, unlocked deeper insights, and led to bigger innovation opportunities.

 

P&G spends far more time living with consumers in their homes, shopping with them in stores, and being part of their lives. This total immersion leads to richer consumer insights, which helps identify innovation opportunities that are often missed by traditional research."

 

Lafley's words really resonated with me. Heaven knows, we need "bigger knowledge dividends", "deeper insights", and "bigger innovation opportunities" in the housewares industry. And I know from all the research studies I conduct each year that traditional market research methodologies sometimes fail to generate really rich deep consumer insight. I can see how the kinds of immersive research techniques that Lafley talks about in his book could really benefit housewares manufacturers. The problem is that few, if any, housewares manufacturers can afford to spend millions a year on consumer market research as P&G does.

 

But what if several companies teamed up and shared the cost of an immersive research study?

 

That is why I am launching this new research initiative.  A team of people including myself and a videographer will immerse ourselves in the daily meal preparation and clean-up routines of HomeTrend Influentials across the country on behalf of a handful of non-competitive housewares manufacturers. We'll spend time with them in their kitchens. We'll watch them prepare meals, serve meals, and clean up after meals. We'll look in their pantries, kitchen cabinets, and refrigerators to see how they store their food products and food prep supplies and equipment. We'll talk to them about how they feel about food preparation, food storage, and meal clean-up. Then, after all of our in-home visits, we'll synthesize our findings. We'll sift through the mass of information, distill out the insights, and deliver those insights to the companies who are sponsoring the research.

 

I will be conducting a test of this ground-breaking immersive research methodology in the Seattle area in mid-July.  Assuming that the study yields the "bigger knowledge dividends", "deeper insights", and "bigger innovation opportunities" that I expect, I will roll it out to other major cities across the U.S. in late summer and into the Fall.

---

Study sponsors will be the only companies who will have access to the "bigger knowledge dividends", "deeper insights", and "bigger innovation opportunities" that this study will yield.  The number of Sponsors will be limited to eight housewares companies.  Each participating company will have category exclusivity (I.E. only one small kitchen appliance manufacturer, only one kitchen tool and gadget manufacturer, etc.)  If you are interested in learning more about Sponsorship, contact me.

HomeTrend Influentials Are Embracing Twitter

Although it has been around since 2006, Twitter is still very much in its infancy.  According to research done by Pew Internet, as of December 2008, 11% of online American adults were using a service like Twitter or another service that allowed them to share updates about themselves or see the updates of others.   A more recent study conducted by the Online Harris Poll revealed that only 5% of Americans (whether they are Internet users or not) are currently using Twitter.  

On the other hand, Twitter is being embraced by HomeTrend Influentials.  In an online survey I conducted with my proprietary HomeTrend Influentials Panel in early May, 30% of the respondents reported that they have joined Twitter.  A third joined Twitter because they were curious or thought it looked fun and interesting.  A quarter of them joined Twitter because a friend asked them to or because all of their friends are on it.   A handful joined because they are following a specific person (for example, one HIPster is a huge fan of Zappos shoes so she follows the CEO of Zappos) or a specific cause or because they want to stay on top of breaking news.

 

So far, most of the HIPsters who have joined Twitter are not "tweeting" on a regular basis.  Several of them joined recently and are still trying to figure out how it works.  Several "tweet" at least once a day.  The majority, however, use Twitter rarely, if ever.  (In contrast, the majority of the HIPsters who regularly visit a social networking web site like Facebook or MySpace log on at least once a day.) 

It could be that the reason most of the HIPsters who have joined Twitter are not using it very often is because they are just not in the habit yet or it could be that Twitter is turning out to be too much of a hassle.  That is what an account executive at an ad agency here in Phoenix discovered when she tried to make Twitter part of her daily routine. Here is what she wrote in her April 24 blog: "I'm never on Twitter long enough to really follow anyone, and when I did "tweet," none of my followers tweeted back. It seemed as though one constantly has to be online with Twitter to really keep up, and since I'm working most of the day, I don't know how that's possible."

Only time will tell whether Twitter will be widely embraced - and more importantly, used - by the HIPsters and the mainstream population.

Does the Fact that Black Friday Weekend Sales Were Better than Expected Bode Well for 4th Quarter 2008?

After months of talk about how bad this holiday season was going to be, analysts were pleasantly surprised as early surveys of retailers indicated that shoppers were out in force last weekend, and spending more than many had predicted.

The National Retail Federation's 2008 Black Friday Weekend survey--which measured Friday and Saturday, and used estimates for Sunday--indicated that some 172 million Americans shopped in stores and Web sites over Thanksgiving weekend, an increase from last year's 147 million. NRF estimated they spent an average of $372.57--a 7.2% jump from the $347.55 spent last year, with total spending projected at $41 billion.

Analysts were quick to caution that a strong first weekend doesn't always translate into strong sales though the holiday season. There are just too many unkowns this year. There are five fewer shopping days between Thanksgiving and Christmas this year than there were last year. How will that affect sales? Now that the Black Friday Weekend with its deep discount specials has come and gone, will shoppers wait to finish their shopping in the hopes that prices will drop the closer we get to Christmas? Will Americans be spending less, buying fewer or cheaper presents this year? Will low gas prices help consumers feel optimistic enough to open their wallets a little wider?

What do you think? What are you hearing? Is this going to end up being an OK 4th quarter for housewares or is it going to end up being the worst 4th quarter in years?