THE KEYS TO NEW PRODUCT SUCCESS

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 products as being better than existing products.  

Research also shows that companies with proven track records of new product success have systematic processes for developing new products or "blueprints for action" in place and adhere to the model in a disciplined fashion.   The new product process is deficient in many housewares companies.  Although many managers profess to have a systematic process in place, an audit of what actually happens "in the trenches" reveals many gaps and deficiencies.  A number of the critical activities are omitted altogether, and other key activities are superficially or weakly undertaken.

If you are not satisfied with a success rate of less than 10%, if you want to increase your chances of new product success, there are two things you must do: 1) you must implement and rigorously follow a systematic, disciplined process for developing new products and 2) you must systematically integrate consumer research into the new product development process so that the products you develop offer unique benefits/features to the consumer and are superior to competing products in the eyes of the consumer.

TWO GOOD REASONS TO USE THE HOMETREND INFLUENTIALS PANEL

We do much of our research with our proprietary panel of HomeTrend Influentials (HIPsters) for two reasons:

1.     HIPsters are the bellwether for the mainstream population

HomeTrend Influentials pick up on new home-related trends and embrace new home goods much sooner than the rest of the U.S. population. As such, these influential consumers are the bellwether for predicting changes in the behaviors, habits and practices, and attitudes of mainstream Americans. If HIPsters embrace a new product, very likely it is going to be embraced by mainstream Americans within a couple of years. If HIPsters reject a new product, very likely the product is not going to be embraced by mainstream Americans either.

2.    HIPsters are passionate about participating in RMG research studies

HomeTrend Influentials are well educated, articulate, insightful, and eager to share their opinions with manufacturers. They are savvy consumers. They are passionate about participating in RMG research studies because they are driven by the prospect of being able to "make a difference" to manufacturers and marketers of housewares products.

OVER ONE WEEKEND, THE HOMETREND INFLUENTIALS PANEL HELPED A FROZEN FOOD COMPANY DECIDE WHAT TO NAME THEIR COMPANY

Another benefit of using my proprietary HomeTrend Influentials Panel for research projects is the quick turnaround on results.  The turnaround from the start of questionnaire design to delivery of the final report for an online survey typically ranges from two to four weeks, depending on the length and complexity of the questionnaire.

In some cases - like the case study below - answers to the client's questions can be provided in just a couple of days. 

A new manufacturer of frozen pizza and ice cream had come up with what they thought was a pretty good company name.  But, just to be safe, they wanted to run the name by consumers.  The problem was that they contacted me on a Friday and needed the results by Monday.

At noon on Saturday, I fielded an online survey with my proprietary panel of Home Trend Influentials (HIPsters).  I asked them to imagine that they were shopping the frozen food section of the store and came across a new brand of frozen foods.  I then asked them an open-ended question about what their INITIAL off-the-top-of-their-head reaction was to the name.  Within six hours, half of the HIPsters had responded and the response was almost universally negative. 

The client went back to the drawing board and came up with another name.  By noon on Sunday, I had fielded a second online survey with the HIPsters asking for their initial reaction to this second name.  Again, within a couple of hours, we knew that they did not like this name either.  Because I had asked open-ended questions, I was able to tell my client why the HIPsters did not like either name.  That diagnostic information helped them tremendously in coming up with several other name alternatives.

We fielded the third online survey at 6:00 PM on Sunday.  This time, I used one closed-ended multiple choice question to find out which of four names the HIPsters liked best for a new line of frozen pizza, ice cream, and frozen novelties.  To give us a benchmark, two of the names were the ones we had tested earlier in the weekend.

The final results were in on Monday morning, less than thirty-six hours after the client had first contacted me, and we had one name that was a clear winner. 

KEY TREND: THE NEW FRUGALITY

Fall 2008 marked the fourth time I've brought a handful of HomeTrend Influentials to Chicago to participate in a focus group sponsored by the International Housewares Association.  There was much more discussion about cutting back on spending and on saving money during the 2008 focus group than in any previous year. 

In past years, the person with the lowest household income typically was the only really frugal focus group participant.  Not this year.  Regardless of household income, this year's focus group participants were focused on reducing spending and doing whatever they could to save money.

In fact, it was one of the participants with a higher household income who could be considered the poster child for frugality.  During the focus group, this HIPster bragged that she "gets free stuff all the time".  She bragged about getting $250 worth of merchandise at Walgreens for only $30 through the judicious use of sales, coupons and rebates.

Certainly, some of the emphasis on cutting back on spending is a reaction to the current economic situation.  Almost all of the focus group participants said that the current economic situation had caused them to change their spending habits, especially as it related to impulse purchases. 

It is not just the focus group participants who have changed their spending habits. In December 2008, I asked the full 100-member HomeTrend Influentials Panel if they had made any changes to their spending habits as a result of the current economic situation.  Fully 87% of the HIPsters had. 

Other studies indicate that the money saving behaviors we are seeing among the HIPsters are also being seen among the broader population.  In a study conducted in October 2008, consultancy Allen & Gerritsen found that 65% of the mothers they surveyed were eliminating any purchases that they felt were not absolutely necessary for their lifestyle and 52% were cutting back their spending.

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.  One piece of evidence comes from the HIPsters.  In late December 2008, when 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.

The second piece of evidence comes from a study conducted by Booz and Co.  In an October 20 cover story about "The New Age of Frugality", BusinessWeek magazine referenced a Booz & Co. study of 1,000 households that revealed that the respondents who were eating at home more and cutting spending on hobbies and sports activities reported that they would continue to do so even when the economy improves.

The bottom line is that the new frugality exhibited by this year's group of HIPsters - and by the mainstream population - is not just a reaction to the economic downturn and the financial uncertainty caused by severe decreases in home values, stock portfolios and 401(k)s. It represents a paradigm shift in attitudes towards consumption, materialism, and what is really important in life. 

One HIPster put it this way, "the economic downturn is going to turn out to be a blessing in disguise because it is bringing Americans back to what matters which is family, friends, and relationships."