I have the world's greatest alarm clock. It's not particularly sleek or expensive (I bought it for $20 on Amazon), but it has a handy "weekend cancel" feature that means I never wake up at a rude hour on Saturday. I'm also able to adjust the snooze time. The standard 9 minutes is just too mathematically taxing first thing in the morning (especially when I'm trying to figure out if I have time for one more snooze). I like my alarm clock so much that I would hunt for the same brand if I needed to replace it. And, yes, I have told my friends about it (at the risk of sounding like a weirdo).

Most consumer products don't inspire this loyalty. Stats tell us that four out of five new products fail within the first three years of introduction. Every consumer products exec that I've ever met knows the value of listening to the consumer, so why does this happen? The problem is that most consumer products companies haven't had the organizational structure or the technology to turn consumer insights into profits. This is changing as empowered consumers and emerging markets demand that CP firms rethink conventional ways of doing business. To remain relevant in this new order, brands must not only respond to but also anticipate consumer needs. We're calling this consumer-focused innovation. Here are the basic principles:

1. Consumers are active co-innovators. Most CP firms are fabulous at pushing innovation to consumers. The industry even has a term for it: brand-building. But more and more, companies are using consumer insights to shape innovation from an embryonic concept to market testing. In France and Japan, Nestlé staffs "relationship centers" with nutritionists, marketers, and senior executives. This cross-functional team fields over 200,000 consumer inquiries a year -- the ideas that bubble up during these conversations feed product development and relationship marketing efforts.

2. Consumers' latent needs are as important as their explicit needs. A few months ago, my colleague Navi Radjou said something that stuck with me: "It's dangerous for a company to be driven by demand exclusively. If they just respond to explicit demand, then they'll never create the products and services that tap consumers' latent needs." Procter & Gamble has been the poster child here with new innovations like Crest White Strips and the Swiffer. In the case of the former, P&G teased out many consumers' powerful -- but unarticulated -- desire for "new luxury" products priced for the mainstream. This type of consumer discovery is a new discipline. Fortunately, there are design specialists like IDEO that teach brands these techniques.

3. Experience trumps products. Jeffrey Immelt, CEO of General Electric, once said, "We're all just a moment away from commodity hell." It may seem counterintuitive, but consumer products firms will avoid the commodity death-spiral by selling experiences -- not products. In the '80s, Harley-Davidson turned a standard motorbike into a phenomenon when it inspired accountants everywhere to take to the open road. More recently, Whirlpool has couched its Gladiator GarageWorks appliances within the bigger experience of designing and building a dream garage. The coolest part of this -- aside from the beer refrigerator that fits in the tool workbench -- is the co-marketing that Whirlpool has done with Lowe's. Consumers who shop at Lowe's online or offline see merchandising that reinforces the entire Gladiator GarageWorks experience and not just individual products. When brands don't control the point of
purchase, retailer collaboration makes or breaks a good experience. At the heart of collaboration is the sharing of new sources of data -- like market-basket information and store-level product movement -- that offer a richer picture of consumer behavior. With privacy concerns increasing, exemplary privacy practices must accompany this data sharing.

During the next few months, we'll be focusing on different aspects of consumer-focused innovation -- from manufacturer and retailer collaboration to technologies that support the approach. If you have feedback on the idea or any suggestions for upcoming research, feel free to email me at christine.overby@forrester.com.


Cheers,
Christine

P.S. If you want a great alarm clock, check out the GE 74894 AM/FM Clock Radio.

Research Referenced In This Issue Consumer Goods Readies For PLM Vendor Shakeout (33138) Consumer-Focused Innovation (36181) CPG Promotions For The Multichannel Consumer (35782) Innovation Networks (34580)    Maximizing Grocery Loyalty Data (36183) Profiles: The Real Value Of Social Networks (34432)    Symbiotic Loyalty (34253) Will Consumers Thwart Left Brain Marketing? (35484)

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