Public Blog, Knowledge Bank Blog, New Product Launches

How to Launch New Products #5

This is the final blog in our series on How to Launch New Products.  If you would like help developing a new product launch plan based on the principles we are talking about, please get in touch.

Right, onto the blog…

Getting bought AGAIN

In March 2006, professors Joseph Nunes and Xavier Dreze published the results of an experiment.

In the test they gave out loyalty cards to 300 customers at a car wash.

Every time a loyalty card holder used the car wash, they would get a stamp.  When they had collected enough stamps they would get a free car wash.

Half of the customers were given a card that required 8 stamps to get a free car wash.  The other half required 10 stamps to get a free car wash.  But they were given cards with two stamps already on them.

So, both cards required the same number of extra stamps to get the free wash.

They found an interesting result.

19% of the customers with the 8 stamp cards made enough purchases to earn a free wash.

34% of the customers with the 10 stamp cards (2 already stamped) made enough purchases to earn a free wash.

The professors called this ‘The Endowed Progress Effect’.  It’s a posh name for a simple tactic.

The more you give people a head start towards their goal, the more likely they are to achieve that goal.

Why are we talking about this?  The sustained success of any new product launch is down to two key metrics.

The first key metric is getting bought.  Too often the focus for new products is on awareness.  The big communication blitz at launch.  It often works.  Awareness is high. But, conversion is low.  Shoppers know about it but they don’t buy it.

The second key metric is repeat.  Many new products do get shoppers to buy them.  But they only get bought once.  Shoppers buy you in the launch phase.  When you’re on deal.  But they don’t come back.  They don’t buy you again.

This often means short-term success.  High initial sales.  But long-term failure.  Low ongoing sales.

To succeed you need to trigger and then build the habit of buying.

So, how can you do this?

Getting Bought.  Every new purchase carries a risk for shoppers.  That they don’t like it.  That they waste their money.  That they are left with product they don’t want.  These are all barriers to trial.  So, you need to reduce the risk of trial.

This could mean reducing the price.  The smart way to do this is through introductory pricing.  It encourages shoppers to try without compromising your base price in the future.  The Peroni Capri launch last year was a good example of this.  Base price £5 for a 4 pack.  Introductory price £4.

It could mean reducing the volume shoppers have to buy.  This is important for anything that contains multiple products or servings.  Shoppers are much more likely to try the 5ml miniature than the 700ml standard bottle.  The 3 teabag sample pack than the 80 bag box.  A single-serve cereal box than the 750g one.

It could mean leveraging your leading products.  Using lead SKUs to drive awareness and trial of new SKUs.  For instance, Heinz Ketchup using stickers on pack telling shoppers about a new sauce.  Or Knorr stock pots giving shoppers a money off coupon for the new product when they buy an existing product.

The easier you are to try, the more likely shoppers are to buy.

Getting Bought Again (and again…).  This is the true test of any product.  Don’t just look at the penetration numbers (despite what some experts tell you.)  Look at the repeat numbers.  The % of shoppers who buy you again.

To drive these numbers, you need to link trial to repeat.  So, don’t just give shoppers an incentive to buy you for the first time.  Give them an incentive to keep buying.  Graze do this online.  The first, fifth and tenth boxes are free.  A lot of meal kits providers (e.g. Hello Fresh, Gousto) do something similar.

What if instead of running a half price promotion at launch, then running another a few weeks later, you gave shoppers coupons for 20% off each of their first three purchases?

What if you got current buyers to help you recruit new buyers? Encouraged them to share incentives to buy with their friends.  Who then share with their friends.  Who then share… You get the picture.  For instance, BrewDog rewards existing BrewDog buyers if they recommend a friend.

What if you rewarded shoppers for aggregate spend? Rewards that encouraged shoppers to hit spend thresholds.  On a single product or across your range.  Think Yeo Valley Yeokens.

You need to have a ruthless focus on getting bought.  Then getting bought AGAIN.  And AGAIN.

Getting bought once is important.  Getting bought again (and again…) is ESSENTIAL.

A PowerPoint presentation bringing the principles to life with examples is available to companies that subscribe to the Insight Traction Knowledge Bank, along with a lot of other great content.  Please email if you are interested in subscribing or want to find out more. 

Leave a Reply

Your email address will not be published. Required fields are marked *