In an earlier post, I alluded to the importance of putting the shopper – and the retailer – into the innovation process. Today, I’d like to elaborate a bit on this topic.
The fact is that across countries and categories, people have an appetite for new products and services. But big organizations struggle to quickly sense and respond to new opportunities. The result: they fail to put to market innovations that can turn into a sustainable business. According to industry specialists, 9 out of 10 new products launched in the United States fail within 2 years.
For most organizations, innovation is still hit or miss. “Companies know a lot about the characteristics and attributes of their customers, but they don’t understand what causes customers to buy their offerings,” says Clayton M. Christensen and his colleagues from the Harvard Business School. “And without grasping causation, they can’t be sure whether their R&D spending will yield a winning ticket.”
In the book, “Competing against luck”, Christensen et al. propose that companies get to understand causation by asking customers, “What job did you hire that product to do?” Building on Theodore Levitt’s famous drill example, they developed together with an approach to innovation they called the theory of jobs to be done – in short form, the ‘Jobs Theory’.
The ‘Jobs Theory’ states that to create a product or a service, you must first understand why your prospective customers will “hire” it. Then, you must translate that understanding into specifications: “what do I need to design, develop, and deliver in my new offering so that it does the consumer’s job well?”
In other words, you can create a product that perfectly meets the needs of the consumer but it’s the shopper who ultimately buys. And there are multiple barriers between the shopper and a new product or service. If you don’t take purchase barriers into consideration early on, you may design a product everyone loves but nobody buys. Ooops.
Bringing the shopper – and the retailer – into design-thinking
Shopper marketing can help organizations be more successful with innovation, by incorporating the points of view of both the shopper and the retailer into the process. Here are five practical tips based on experience:
- When you build your cross-functional team to attack market opportunities, make sure the shopper marketing team is represented together with R&D, supply chain, consumer marketing, finance, and external partners.
- As part of the market immersion, make sure your team spends time in retail – but not just cool places in Shoreditch, Brooklyn or le Marais. Put on comfortable shoes and visit ordinary stores, observe what’s going on, talk to shoppers to find why they buy what they buy. Visit e-commerce sites too.
- Ask your project team to find out how the needs of the consumer and the shopper could be fulfilled in a new way: core business, intermediaries, new usages. Is there a job we can do better than the products and services people currently use? Is there a gap that can be filled? Are there underserved needs?
- Think about go-to-market and channel strategy early on. Retailers love innovations as soon as they fit with their strategies. Because unless you plan to sell direct, you will have to partner with a retailer to list, stock and merchandise your innovations in the end. So, understanding what can make them tick is as critical as satisfying consumers and shoppers.
- Finally, when ideas, concepts, and prototypes are developed, make sure shoppers are part of the test plan. Home tests are great to assess consumer love but they cannot predict shopper purchase. Do a real market test in a few physical stores or a ‘smoke test’ online. Results will be a better indicator of future sales than purchase intent.
Putting the shopper at the core can help design and deliver new products and services that retailers want to put on their shelves and shoppers in their carts. If you do so, you are likely to hit higher success rates for your new product and service introductions. Which means you build a bigger business, and faster. And ultimately a better ROI of the innovation spend.
[This post is the current state of a reflection that started a year ago as I was working on a breakthrough innovation project for a major FMCG company. Thank you Julie, Philippe, Shantanu and Tomas for giving me the opportunity to participate in this project]
Think Shopper 