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| Understanding the Psychology of New Product Adoption |
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Kibo
30-07-2007 |
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.
Why such failures? Consumers’ and companies’ mental biases:
• Consumers, 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.
• Companies, 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.
Result? A gaping mismatch between what innovators think consumers desire—and what consumers really want.
How to get your 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 and 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.
To ensure that consumers adopt your innovations, Gourville recommends gauging potential consumer resistance and minimizing consumer resistance.
Use these strategies to limit the extent of behavior change required of consumers:
- Make behaviorally compatible products.
- Target consumers who aren’t yet using entrenched products.
- Find believers
- Manage Consumer Resistance
- Brace for slow adoption
- Offer benefits at least 10times greater than existing products'
WRITTEN BY
John T. Gourville (jgourville@hbs.edu) is an associate professor of marketing at Harvard Business School in Boston. He is the coauthor, with Dilip Soman, of “Pricing and the Psychology of Consumption” (HBR September 2002). This HBR in Brief presents key ideas from a full-length Harvard Business Review article
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