John T. Gourville

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 <h4 class="ideainbrief-title">The Idea in Brief</h4>
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  <p>Despite billions invested in innovation, 40% to 90% of new products fail. Consider TiVo’s digital video recorder. Though it has garnered rave reviews from industry experts and users since the late 1990s, TiVo amassed $600 million in operating losses by 2005 because demand trailed expectations.</p>
  <p>Why such failures? Consumers’ <em>and</em> companies’ mental biases:</p>
  <ul>
   <li><strong>Consumers,</strong> finding comfort in familiarity, irrationally overvalue the benefits offered by products they’re already using. And they loathe having to change their behavior to use an innovation—such as mastering new software to edit digital photos. Consequently, they often reject offerings that are objectively superior to those they’re using.</li>
  </ul>
  <ul>
   <li><strong>Companies,</strong> knowing their innovation is better than what’s out there, overvalue the benefits it provides—wrongly assuming that consumers will leap at the chance to buy.</li>
  </ul>
  <p>Result? A gaping mismatch between what innovators <em>think</em> consumers desire—and what consumers <em>really</em> want.</p>
  <p>How to get <em>your</em> new products adopted? Gourville advocates anticipating—and managing—consumers’ resistance to the changes your innovations will require. For example, Toyota enhanced the appeal of its hybrid Prius by outfitting the vehicle with internal-combustion <em>and</em> self-charging electric engines—reducing required behavioral changes. The resulting driving experience virtually matched that offered by gas-only cars. The Prius became the first alternative-fuel vehicle to win popular acceptance in the United States: consumers snapped up 100,000 of them in 2005 alone.</p>
  <p>The Idea in Practice</p>
  <p>To ensure that consumers adopt your innovations, Gourville recommends these strategies:</p>
  <h2>Gauge Potential Consumer Resistance</h2>
  <p>All new products require change. To gauge the <em>degree</em> of change required by your offering, decide which category best fits your innovation:</p>
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  <h2>Minimize Consumer Resistance</h2>
  <p>Use these strategies to limit the extent of behavior change required of consumers:</p>
  <ul>
   <li><strong>Make behaviorally compatible products.</strong> Toyota’s Prius gives consumers a significant increase in gas mileage, while enabling them to retain all the benefits of the entrenched alternative—gas-only vehicles.</li>
  </ul>
  <ul>
   <li><strong>Target consumers who aren’t yet using entrenched products.</strong> Burton Snowboards targets young winter-sports enthusiasts who haven’t yet become seasoned skiers—and thus aren’t pooh-poohing snowboards. Burton has grown the snowboarding industry from virtually nothing in the 1970s to a point where snowboarders outnumber skiers in the United States.</li>
  </ul>
  <ul>
   <li><strong>Find believers.</strong> Identify consumers who prize the benefits they’ll gain from your innovation or only lightly value those they’d have to give up by switching to your offering. For example, makers of hydrogen-powered fuel cell vehicles could target consumers for whom access to central refueling stations isn’t irksome—such as island dwellers who might never drive more than 20 miles from the center of town. These people might value existing networks of gas stations less than mainlanders do and appreciate emissions-free transportation more. Iceland is using this strategy to spearhead development of a fuel cell society.</li>
  </ul>
  <h2>Manage Consumer Resistance</h2>
  <p>Many worthwhile innovations, in particular Long Hauls, require inescapable behavior change. Consider these approaches to managing consumer resistance to such change:</p>
  <ul>
   <li><strong>Brace for slow adoption.</strong> Accept that your Long Haul innovation may not catch on immediately. Avoid depleting your resources too quickly. For example, TiVo may be burning through its capital by trying to quickly market a product that’s a Long Haul innovation.</li>
  </ul>
  <ul>
   <li><strong>Offer benefits at least 10 times greater than existing products’.</strong> For example, MRIs offer such dramatic improvement over X-rays that consumers accept the new behaviors (such as lying motionless for a long time in a large tube) required to get an MRI.</li>
  </ul>
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</article-ideainbrief><p>More than a century ago, Ralph Waldo Emerson is reported to have said, “If a man can write a better book, preach a better sermon, or make a better mousetrap than his neighbor, though he build his house in the woods, the world will make a beaten path to his door.” If only marketing innovations were that simple.</p>

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<p><span class="reprint">Reprint: R0606F</span></p>
<p>Companies that introduce new innovations are the most likely to flourish, so they spend billions of dollars making better products. But studies show that new innovations fail at a staggering rate. While many blame these misses on lackluster products, the reality isn&#8217;t so simple. The goods that consumers dismiss often do offer improvements over existing ones. So why don&#8217;t people purchase them? And why do companies keep peddling products that buyers are likely to reject?</p>
<p>The answer, says the author, can be found in the brain. New products force consumers to change their behavior, and that has a psychological cost. Many products fail because people irrationally overvalue the benefits of the goods they own over those they don&#8217;t possess. Executives, meanwhile, overvalue their own innovations. This leads to a serious clash. Studies show, in fact, that there is a mismatch of nine to one, or 9x, between what innovators think consumers want and what consumers truly desire.</p>
<p>Fortunately, companies can overcome this disconnect. To start, they can determine where their products fall in a matrix with four categories: easy sells, sure failures, long hauls, and smash hits. Each has a different ratio of product improvement to change required from the consumer. Once businesses know where their products fit into this grid, they can manage the resistance to change.</p>
<p>For some innovations, major behavior change is a given. In those cases, companies can either wait for consumers to warm to the product, make the improvement so great that buyers get past their apprehension, or try to eliminate the incumbent product. Firms can also try to minimize buyer resistance by making products that are compatible with incumbent goods, seeking out those who are not yet users of the existing product, or finding true believers.</p>

Eager Sellers and Stony Buyers:&nbsp;Understanding the Psychology of New-Product Adoption

Reprint: R0606F Companies that introduce new innovations are the most likely to flourish, so they spend billions of dollars making better products. But studies show that new innovations fail at a staggering rate. While many blame these misses on lackluster products, the reality isn’t so simple. The goods that consumers dismiss often do offer improvements over existing ones. So why don’t people purchase them? And why do companies keep peddling products that buyers are likely to reject? The answer, says the author, can be found in the brain. New products force consumers to change their behavior, and that has a psychological cost. Many products fail because people irrationally overvalue the benefits of the goods they own over those they don’t possess. Executives, meanwhile, overvalue their own innovations. This leads to a serious clash. Studies show, in fact, that there is a mismatch of nine to one, or 9x, between what innovators think consumers want and what consumers truly desire. Fortunately, companies can overcome this disconnect. To start, they can determine where their products fall in a matrix with four categories: easy sells, sure failures, long hauls, and smash hits. Each has a different ratio of product improvement to change required from the consumer. Once businesses know where their products fit into this grid, they can manage the resistance to change. For some innovations, major behavior change is a given. In those cases, companies can either wait for consumers to warm to the product, make the improvement so great that buyers get past their apprehension, or try to eliminate the incumbent product. Firms can also try to minimize buyer resistance by making products that are compatible with incumbent goods, seeking out those who are not yet users of the existing product, or finding true believers.

Eager Sellers and Stony Buyers: Understanding the Psychology of New-Product Adoption

Summary.

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