CB Final - Quiz article: Why Great New Products Fail

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Questions and Answers

What is a key reason why many innovative products fail?

Customers don't recognize their value (correct)

Poor product quality

Lack of sufficient marketing

High production costs

According to the article, what do companies often fail to consider when launching new products?

Production efficiency

How customers make purchasing decisions (correct)

Customer desires for variety

The competitive landscape

What are two main ways customers collect product information?

Reviews and advertisements

Word-of-mouth and influencer marketing (correct)

Surveys and in-store visits

Search and inference (correct)

What did the example of United Airlines' aircraft purchase illustrate?

The role of branding in B2B sales Signup and view all the answers

What challenge did the British shower manufacturer face?

Customers unaware that a better shower was possible Signup and view all the answers

In which situation are customers more likely to use inference?

When they trust the product's brand Signup and view all the answers

What role does brand play in customer inferences?

It serves as a proxy for product quality Signup and view all the answers

Why is search less likely when customers have significant expertise?

They already know what's best Signup and view all the answers

How did McDonald's use parking lot cleanliness as a cue?

To infer kitchen cleanliness Signup and view all the answers

Which of the following is a subconscious factor in customer inference?

Parking lot cleanliness Signup and view all the answers

What is a potential downside of relying on inference for product quality?

Customers may misunderstand the cues Signup and view all the answers

What did customers at McDonald's infer from the parking lot cleanliness?

The cleanliness of the restaurant Signup and view all the answers

What is a risk for companies that innovate without considering customer perception?

Customers may not understand the innovation Signup and view all the answers

In the "Checker Shadow Illusion" example, what did customers struggle to realize?

That square A and square B were the same color Signup and view all the answers

What is the role of the brand in markets where customers cannot easily search?

To serve as a quality signal Signup and view all the answers

How has the Internet impacted the cost of searching for product information?

It has reduced the cost of searching Signup and view all the answers

When are customers most likely to conduct thorough searches?

When buying a high-cost or important product Signup and view all the answers

Why might customers ignore great new products?

Unfamiliarity with the product's features Signup and view all the answers

According to the article, what should companies focus on to increase product success?

Helping customers recognize the product's value Signup and view all the answers

What does the example of the Aqualisa shower system illustrate?

The importance of customer awareness of improvements Signup and view all the answers

When customers can recognize product greatness, companies are more likely to:

Achieve higher sales Signup and view all the answers

Which factor can diminish the importance of brand in customer decisions?

Easy access to product information Signup and view all the answers

How do customers often make inferences about unobservable product features?

Based on visible cues and brand reputation Signup and view all the answers

What is a consequence when customers shift from search to inference?

They are less likely to recognize product innovations Signup and view all the answers

What question can help companies predict if customers will embrace a new product?

Are customers motivated to search for a solution? Signup and view all the answers

Study Notes

Key Reasons for New Product Failures

Lack of sufficient marketing
Customers don't recognize the product's value
High production costs
Poor product quality

Consideration for New Product Launches

Customer desires for variety
How customers make purchasing decisions
The competitive landscape
Production efficiency

Customer Product Information Collection

Surveys and in-store visits
Reviews and advertisements
Search and inference
Word-of-mouth and influencer marketing

United Airlines Aircraft Purchase Example

Illustrated the importance of impulse buying
Highlighted the length and cost of the search process
Showcased the role of branding in B2B sales
Revealed the impact of digital marketing

British Shower Manufacturer's Challenge

Faced low product quality
Customers were unaware of potentially better showers
Customers showed little interest in water pressure

Customer Inference Situations

Customers are more likely to use inference when the product is widely available
When the cost of searching is too high
When the product is a basic necessity
When customers trust the product's brand

Brand's Role in Customer Inference

Brand plays a crucial role in customer inferences

Search Less Likely with Expertise

Customers with significant expertise are less likely to search extensively
They often rely on pre-existing knowledge
They may prefer new innovations
They might have limited access to information

McDonald's Parking Lot Cleanliness Cue

McDonald's used parking lot cleanliness as a cue to infer kitchen cleanliness
This strategy aimed to create a sense of welcome and cleanliness for customers
Reducing advertising costs was also a goal, as customer inferences reduced the perceived need for more advertising

Subconscious Factors in Customer Inference

Advertising is a subconscious factor influencing customer inferences
Store location is another such factor
Visual factors like color also represent subconscious cues for customers to infer
Parking lot cleanliness is also a subconsciously noticed factor

Potential Drawbacks of Inference for Quality

Potential downsides to relying on inference for product quality include reduced sales, costly implementation
Customers might misinterpret cues, leading to decreased brand loyalty

McDonald's Parking Lot Cleanliness Inference

Customer inference about service speed and cleanliness of the restaurant
Customers inferred restaurant quality and food quality based on parking lot cleanliness

Companies Innovating without Customer Perception

Companies that overlook customer perception when innovating face risks
Customers may not understand the innovation
Costs of manufacturing might increase significantly
Existing competitors might take advantage of the lack of customer awareness to launch rival products.
Delays in product launch is another possible problem

Checker Shadow Illusion

The "Checker Shadow Illusion" example highlights customers' struggle to realize that square A and square B have the same color
These struggles show a lack in customer understanding of subtle differences

Brand Roles in Markets Without Search

Brand plays a key role in markets where search is not easy
Companies should provide direct comparisons to help customers
Brands can serve as a quality signal
Focusing on local advertising can enhance customer awareness

Internet Impact on Product Research

The internet has significantly reduced the cost of searching for product information
It allows for quick and easy access to product reviews, comparisons, and detailed information

Customer Search Likelihood

Customers are more likely to conduct thorough searches when buying high-cost or important products
They also search if purchasing low-cost or basic items

Reasons Why Customers Ignore New Products

Customers may ignore new products due to their unfamiliarity with the products' features
Limited store availability can also play a role in new product failure to gather customer interest
New product's high pricing could discourage customers from purchasing

Key Focus to Increase Product Success

Companies should focus on helping customers recognize the product's value
Expanding product lines
Reducing product costs

Aqualisa Shower System Example

Illustrates the importance of customer awareness of product improvements
Effective advertising highlighting improvements can promote sales

High Costs Lead to Product Failure

High costs can lead to product failure because they make product less appealing to consumers
Innovative products should be visually appealing to consumers

Achieving Higher Sales

Customers recognizing product greatness is likely to lead to achieve higher sales
This can be done through good marketing strategies

Brand Diminishing in Customer Decisions

Easily accessed product info can decrease the importance of brand
Expensive products may also lessen the importance of brand in customer decisions

Inference about Unseen Product Features

Customers use visible cues and brand reputation to infer about product features

Impact of Search to Inference Shift

Shifting from search to inference makes customers more inclined to buy expensive products
They may not recognize innovative product features when relying on inference

Questioning Customer Product Acceptance

Companies can predict customer acceptance of a new product by checking if customers are motivated to search for a solution
If customers are looking for a solution, then the product could be appealing to them
Asking if the product is appealing to younger consumers can also indicate whether the product appeals to a wider audience
Assessing whether the company will feature the product in stores is crucial, too.

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