Using innovation testing to create a successful product

How to avoid a failed product 

David Whitelam is the general manager, U.K., EU and APAC at System1. This is an edited version of an article that originally appeared under the title “Avoiding Product Flops with Innovation Testing.” 

Budweiser B, Dyson washing machine, Pepsi Blue – they might not be products you’ve heard of, but they did exist at one point. Despite the mass popularity of the brands producing these innovations, they were discontinued. In fact, 95% of new innovations fail. From research and design to production to testing to marketing, there are many costs that go into product development. So, what does it take to make a product popular – to be one of the lucky 5%? Is there a way to predict success? How can businesses minimize risk?

We dive deeper into innovation misses as well as best practices to give product development and marketing teams confidence in their ideas.

Why some innovations fail 

There are numerous reasons why products fail to take off.

Lack of market research

Companies often enlist focus groups to capture information about consumer preferences ahead of a new product launch. However, focus group participants often choose responses they perceive to be more socially acceptable rather than expressing their true opinions or feelings. They lean into System 2 processing, which is more analytical and rational. It’s usually not the way people behave when making a purchase – System 1 processing is near instantaneous and requires little effort. Additionally, focus groups typically frame questions as “Would you purchase this product?” even though most people are not good at predicting their own future behaviors.

While it’s difficult to know the level of research and type that went into creating products like Coca-Cola’s BlāK, a coffee-flavored cola, or Heinz EZ Squirt, ketchup that was colored green, purple and teal, it’s likely that consumer needs and preferences weren’t met with these discontinued innovations.

Poor pricing strategies

The wrong approach to pricing can be detrimental to success. A price that’s significantly lower than the perceived value of the product can leave profits on the table. Poorly timed or too frequent discounting can also negatively impact the bottom line.

Alternatively, pricing a product too high can turn prospective buyers away. Google Glass was heavily marketed and was even touted as the next big thing in tech but cost $1,500. When coupled with quality issues and privacy concerns, the steep price tag left many consumers disinterested in purchasing the product. If a competitor offers a similar product, pricing gets even trickier. For example, Betamax priced itself above VHS tapes because it felt consumers would recognize its slightly higher quality. Buyers couldn’t and Betamax went from owning the entire video cassette market in 1975 to less than 10% a decade later.

Unfortunate timing

Timing can be another factor that fast tracks a flop. Quibi, named for the “quick bites” video content the streaming service offered, launched in April 2020. Its 10-minute shows were designed to be watched on mobile devices – while you’re commuting, waiting in a doctor’s office, on a lunch break, etc. But the pandemic’s lockdowns meant everyone was at home, looking for longer-form content to watch with family members and roommates on TV. Six months later, the platform was shut down at an estimated loss of $2 billion.

Ineffective marketing

A brand can get all the market research, pricing and timing factors right, but if marketing is put on the back burner, it can take the wind out of a product’s sails. And not just any marketing will do. Investing in marketing that promotes long-term brand building is key. Advertising needs to drive an emotional response in viewers, ideally happiness. Brands also need to select high-attention media channels to reach a broad pool of buyers. PR and social media should be consistently leveraged to drive interest in a product. Sampling can be another effective marketing tactic, especially for FMCG products.

Microsoft’s Zune portable music player launched years after the iPod made traction. While VHS launched as an underdog after Betamax’s entry into the market and eventually pushed its competitor out, Zune did not have the same success. Robbie Bach, who once led Microsoft’s home entertainment and mobile division, noted that Zune’s marketing was too narrow and “didn’t captivate the broad segment of music listeners.”

Creating an effective innovation

Successful product launches support brand building, including during an economic downturn. But there’s a better way to innovate. With testing rooted in “wisdom of the crowd” methodology, brands can accurately predict the sales potential of their ideas. The method exposes ideas to a large, diverse group. Crowds are better at predicting success compared to smaller, niche groups of people, including loyal customers or internal teams with deep knowledge of the brand and its competitors. This is because they don’t have a vested interest in the product or service.

Further, gauging the emotional connection generated by an idea, and the reasons behind that emotion, uncovers triggers and barriers to purchase and shines a light on ways to help marketers and design teams further finetune their innovations or promotional copy before launching to the wider market.