Consumer Habits are Hard to Break--Even Good Ones

For a moment, consider yourself once again... a teenager. You have convinced yourself, quite easily, that you desperately need one of those new personal robots you heard about from a friend. For a mere $799.99, this robot helps with everything from household chores to social calendars to tutoring--"teaching the leaders of tomorrow the art of delegation, today." All you need to do is get your parents to buy it, right? Piece of cake (you think). Just continue to tell them how great it is--hourly--mixed with a few tried and true "but all the kids have one" messages, and they should eventually concede.

However, after weeks of pleading, you are left feeling like only kid in town whose family is living in the robot-less dark ages. The Parkers next door have one, so you wonder, "What could the Parkers' kids have said that was so convincing?" You even convinced your parents to check out a "DelaBot" at your local mass merchandiser (through the plastic window of the packaged product), you showed them the website--you did it all!

What you don't know is that while shopping in their favorite specialty store, the Parkers experienced the benefits of DelaBot first hand during a special demo day. DelaBot not only completed all of their holiday shopping in 20 minutes, she (you can also choose a "he") also explained her tracking satellite system, which allows anytime parental video monitoring of teenagers--24 hours a day, 7 days a week. She also showed a video that included testimonials from parents. Mr. and Mrs. Parker went home, revisited the website (paying closer attention this time), and bought their family a DelaBot the very next weekend.

Yes, the story and product are both fictional (at least to the best of this writer's knowledge). However, the lesson is one we observe our clients learning over and over again, as they take new innovations to market. The lesson is this: high-investment products or those intending to invent new behavior in a new consumer space (often referred to as new-to-the-world or discontinuous innovation) have the highest chance of success when the following happen:

1. Targeted, educational, and sustained advertising
2. Strong in-store support
3. Realistic expectations

Targeted, Educational, and Sustained Advertising

A targeted communication strategy

• Identify a target group and focus messaging on what motivates them.

Sustained advertising (versus front loading)

• Advertising can lose effectiveness in longer purchase cycle categories such as consumer electronics and "big box" durables; hence, why many device manufacturers tend focus their spending on in-store "pull" activities such as display, demos, and direct sales support. However, highly inventive products require both significant advertising spending to generate seeking behavior as well as strong in-store support.
• Seeking behavior and adoption will be slower for new to the world products. As such, advertising should sustain beyond the early months.
• Advertising should also direct consumers where to look for the product, often an exclusive partnership (for example, the Home Depot and Behr Paint).

An educational focus

• In the new-to-the-world sector, the brand is usually new and there is less opportunity to make an average idea good with advertising. Consumers first and foremost need to understand how it works. Too much story can distract from the main idea and lead to confusion or disinterest.

Strong In-Store Support

Secure partnerships with specialty retailers at a higher margin to ensure stronger in-store support.

• The natural inclination when setting a launch strategy is to consider channels and marketing activities that will result in the broadest awareness. For many marketers, this means "go mass," because there is already significant business with and leverage from retailers like Wal-Mart and Target. However, mass channels do not typically have the space to market a new, innovative category effectively. In fact, Ipsos Vantis has not observed any case where a highly innovative product took off because it had initial distribution in the mass channel. Some very successful inventions--iPod and Roomba (robotic vacuum) being two examples--committed to staying out of mass outlets until critical mass was achieved among the early adopter group. In fact, Colin Angle, CEO of iRobot (the maker of Roomba), indicated specialty venues were chosen "because of their willingness to run tapes of the product in action, offer demonstrations, and provide other support typical of specialty shops" [Inc. magazine, July 2003].
• Ipsos Vantis has observed several cases where a product did launch in mass channels and the sales were significantly lower than expected. Low sales in these cases are often attributable to the following:

1. The point-of-sale experience fails to motivate consumers to buy, typically due to ineffective in-store support.
2. Consumers are simply not seeking the product in mass channels.

Realistic Expectations

• The broader the distribution strategy, the less support provided by retailers at point of sale. Too often, manufacturers overestimate the support they will get. Inventory turns for new-to-the-world products are typically not fast enough to satisfy mass retailers, whereas specialty channels have a lower threshold for turns to maintain distribution.
• Aggressive distribution builds do not necessarily equate to fast trial builds. Normally, we would expect a new-to-the-world product to achieve half to one-third of the year-one trial a similarly priced but non-discretionary product would achieve. However, this does not mean net present value (NPV) will be lower in the longer term, primarily because not everyone will buy until sufficient word of mouth builds. This is classical diffusion and underscores the importance of targeting early marketing efforts to maximize NPV.
• Think beyond years one or two when informing decision-making and strategies.

In short, the most successful strategies pull early adopters through targeted advertising directing them where to buy, include partnerships with specialty retailers at a higher margin to secure strong in-store support, and initiate a controlled rollout strategy where direct marketing and/or a limited channel strategy are initiated, followed by broader distribution further out (with or without a lower price/revised positioning). The trade-off for slower penetration is more aggressive adoption at a higher price among the most motivated segment. Higher profit margins then provide retailer incentive to continue supporting the product.

Of course, this is not to say that every person who interacts with products like Satellite Radio, Dualit, Roomba, iPod, or our fictional DelaBot will decide to buy. However, the opportunity to interact with DelaBot gave the Parkers the education they needed to make an informed decision. You're a teenager again. Recall that your parents in our fictional story were aware, but not fully informed. Why? First, the education they received from you--while certainly enthusiastic--was not tailored to their interests, and as such, they paid little attention to the details on the website. Even if your parents are far from being early adopter types who would be likely to seek out new ideas like household robots, advertising focused on the buyers' interests might be an initial hook to get people seeking more information. It might even make your parents more inclined to hear your pleas. Third and most important, their in-store experience at a mass merchandiser was not educational enough. Had your parents learned about DelaBot in a high touch channel, they still might not have purchased, but they at least would be more fully aware should they be convinced through word of mouth to buy once the price of Delabots comes down in the future.