Tuesday, August 30, 2022

New Product Development - Corporations versus Startups


It is interesting to compare and contrast how we approached new product development within Hallmark's Product Discovery & Development division versus how startups that I coach through RIT's Venture Creations business incubator do it.

Hallmark is a large corporate entity that is marketing-driven, but also risk adverse. While the startups that I coach are created by entrepreneurs who are willing to risk much to see their startups succeed. Most of these entrepreneurs have technical backgrounds, but little to no understanding of marketing including marketing research.

Given Hallmark's high profitability hurdles, risk aversion, and large marketing research department, we often succumbed to analysis paralysis. 

At Hallmark, we would explore trends through our resident environmental scanning manager, who would report a new societal trend in depth each month. We would also hold new product ideation sessions for each market or trend that we identified as "high potential." We conducted more than one hundred focus groups a year to explore different potential markets. When one of our new business strategists came up with an idea, we would have that person develop a concept statement and later an "ad-form" concept statement (including a visual), which we tested against a normative database (ConScreen was one of them) to determine market need and gap and to project potential sales volume. Each concept needed to explain the product concept including its primary benefit or benefits simply and without any modifying superlatives. 

After the concept testing, we would often refine the concept, and if it seemed that it had enough potential, we might conduct a few more focus groups to refine it even further and then test its marketplace need and gap again against a normative database.

The Hallmark new product development process is based on the concept of a screening funnel with most new product concepts dropping out at some phase of the evaluation process. We often developed product prototypes. We sometimes performed attitude and usage (A&U) studies to size a new market and determine its sales potential for a specific category of products. We used conjoint analysis to refine product functions and features. Sometimes we would conduct market segmentation analysis. And sometimes we would test product package designs.

The final step in the funnel process for the successful product concepts that had made it that far was a full-blown market test in which the product was developed and tested in a test market. A component of those tests was testing different marketing approaches for the product to determine which might work best for the full product launch.

Now I want to contrast Hallmark's approach to new product development to that of our mostly younger entrepreneurs. We have to work hard to get those entrepreneurs to develop unique value propositions for their products. And we push them to conduct "customer discovery." Sometimes, that consists of only ten interviews with potential customers, although it should consist of far more interviews than that to increase the likelihood of success. 

One of the flaws, but also one of the advantages, of entrepreneurs is that they often (but not always) jump into their startups without much knowledge of what they are getting into regarding industry, product category and business functions outside of their general knowledge or academic training. This makes me think about the Dunning-Kruger Effect, which recognizes that the people who are the most ignorant about something are often also the most confident about it. This can lead to many stumbling blocks and mishaps, but it can also lead to novel solutions for problems that industry experts and others with more knowledge assumed had no solutions. This, in turn, can lead to true breakthroughs as there are no preconceived notions that align with those of industry insiders.

Entrepreneurs often start with what is called minimum viable products (MVPs) and incrementally add functions and features to the products as dictated by early adopter feedback and as their resources allow. 

I hope this illustrates the two ends of a continuum regarding how new products can be developed. One end is based on exhaustive, methodical research. The other end is based on learning as you go, nimbleness and rapid pivoting. 

Thursday, August 4, 2022

The Essence of Marketing in One Paragraph

 



Recently, a Venture Capital intern asked me to explain marketing to him at the end of our two-hour interview. While I have spent more than 40 years working on hundreds of successful marketing campaigns for almost as many brands, and while I could spend days talking about the nuances of marketing research, brand strategy, brand architecture, PR, pricing strategy, distribution strategy, digital marketing, marketing automation, package design, retail merchandising, etc. - I believe in simplicity. So, I explained the essence of marketing to him in less than one minute, which can be articulated in one paragraph. This is what I said...

The first step in marketing is being able to completely put yourself in the customer's shoes. What are her hopes, fears, beliefs, attitudes, values and behaviors? What are her pain points? What does she need and what does she desire? What problems is she trying to solve? Then you must craft a product/service solution that uniquely meets those needs and then articulate that unique value proposition as simply and powerfully as possible. Your brand's unique value proposition must be presented to her in as many ways as possible as often as possible to build her awareness of and emotional connection to your brand. And finally, you need to possess common sense to say and do the right things at the right times to move her from brand awareness to brand purchase and then ultimately brand loyalty and even brand advocacy. 

It's as simple as that. All of the rest of marketing is just tactics, which can be taught.