Preview

Why Consumers Don't Buy Case Study

Good Essays
Open Document
Open Document
917 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Why Consumers Don't Buy Case Study
Summary
Innovation does not equal success. Unfortunately over two thirds of innovative new products fail once commercialized. The case “Why Consumers Don’t Buy: The Psychology of New Product Adoption,” provides a thorough explanation as to why this is so and then provides some strategies firms could use to combat this observable fact.
As background information the case provides the rules/definition of Prospect Theory and the endowment effect. It uses these concepts to conclude innovations must be significantly better than products currently on the market to overcome biases consumers develop as result of loss aversion. The case also suggests that the successes of innovations are hindered by the inability to compare costs and benefits in timing, certainty, and quantification. Finally it proposes that innovators may not be best suited to evaluate the potential of their innovations.
Depending on the value created and captured products could fall into one of four categories; firms should clearly understand what they are asking of consumers. To increase the number of successful innovations firms can use two broad set of strategies when managing innovations. The first set of strategies requires firms to accept consumer resistance and prepare for it. The second set encourages firms to minimize consumer resistance via different paths.
Marketing Principles Described and Tested
One of the marketing principles described in the case is the Endowment Effect. The Endowment Effect states that people value items in their own possession more than they value items not in their possession. Because of this they will view “giving up” what is in their possession as a loss that looms greater than the gain of obtaining the new item; therefore they are less likely to adapt and buy a new product if it requires them to “give up” a product they already possess. Another issue is that a potential buyer is rarely faced with costs and benefits that are comparable in their timing,

You May Also Find These Documents Helpful

  • Good Essays

    Thoughtworks Case

    • 757 Words
    • 4 Pages

    The targeted consumers identified in the case was the enterprise type, Type A. Type A enterprises “were pioneers of advanced technologies and aggressively adopted high-risk strategies to gain the high-potential rewards, and were frequently among the first companies to pilot innovative technology” (8). Recent studies show that there has been a 50% increase in Type A enterprises. With increases from the initial 15% to 30%, targeting the Type A consumer is looking more promising as businesses are looking for more advanced technology and higher-risk strategies.…

    • 757 Words
    • 4 Pages
    Good Essays
  • Good Essays

    1. How successful do you feel CNS has been in trying to put their product in each of the markets it has entered? How does this success relate to brand equity?…

    • 595 Words
    • 2 Pages
    Good Essays
  • Satisfactory Essays

    In order to enhance consumer motivation, firstly, Umpqua is supposed to get to know its consumer behavior by making itself personally relevant to customers. Secondly, the company should be creative to be outstanding among of its competitors. In details, beside of making different transactions in Umpqua Bank, the customers nowadays can enjoy their time in Umpqua according to a friendly environment which serve drinks for customers and listen to such a great playlist in Umpqua. Moreover, while waiting to be their turn, customers can surf web via internet connection in Umpqua or watch television. More or less, Umpqua Bank seems like a community hub where people can feel like home.…

    • 365 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    Innovations can provide competitive advantages. Therefore, it is important to constantly innovate. However, it is also essential to be prepared for the disruptions created by the competitors and strategically respond to them. Based on Bower & Christensen (1995) and Markides (2006), please answer the…

    • 1606 Words
    • 7 Pages
    Powerful Essays
  • Powerful Essays

    Technological change and advancement is driven by invention and innovation, and it is important to discern between these two very different terms. ‘The former refers to new concepts or products that derive from individual’s ideas or from scientific research. The latter, on the other hand, represents the commercialization of the invention itself’ (Scocco, 2006). There are countless numbers of occasions where good inventions fail to penetrate the marketplace. The Sinclair C5 (Marks, 1990), British Rail’s APT (Potter, 1989) and Sony’s very own nightmare, Betamax (Cusumano et al. 1992), are all examples of inventions that for one reason or another, failed to make the step up to innovation. ‘A fundamental requirement of a focus on technological change is the ability to identify product development opportunities and to translate these into successful products. It is also important that the product development process is effectively and efficiently organized and managed.’ (Maffin et al. 1997 p.53). If there is no market for the product, i.e. the invention tries to solve a non-existent problem, or if the development process is mismanaged and inefficient then it is likely that the product will be a flop.…

    • 3694 Words
    • 15 Pages
    Powerful Essays
  • Satisfactory Essays

    In general, innovation can explain as the development of new products or improvement of original goods which can fulfill more consumer needs.( Carol Stephenson, O.C.,2011) The adoption of an innovation can increase the market share because of responding to more customers’ needs and also can establish a new market as the product range is expanded. Thus, it is important that more consumer perceive the new product, service or idea. Reselling the existing customers is one of the method to let more people realize the innovation.…

    • 296 Words
    • 2 Pages
    Satisfactory Essays
  • Best Essays

    New Product Design

    • 2086 Words
    • 9 Pages

    Consequently, new products are widely categorized as either market-pull products or technology-push products. With a market-pull product, the marketing center of the company will first determines that sales could be increased if a new product were designed to appeal to a particular segment of its customers. Next, the engineering is then to be asked to determine the technical feasibility of the new product idea. This interaction is differing with technology-push product. Marketing will attempts to determine the prospects of ideas in the marketplace once a technical breakthrough opens way for a new product. In many cases, the technology itself may not actually focus to a particular product instead to new capabilities and benefits that could be packaged in a variety of ways in order to create a…

    • 2086 Words
    • 9 Pages
    Best Essays
  • Powerful Essays

    Innovate or Die

    • 2191 Words
    • 9 Pages

    Today, business is nothing less than war and victory is ephemeral. Sustaining a position in the consumers' mind is an on-going battle and victory can be snatched away with the blink of an eye. The continuous battle for the top spot has forced companies to constantly innovate. Very few companies are successful in sustaining their dominant position and those that are, continuously innovating. They have the courage to attack their position in the market. Continuous innovation and self-attack are at the core of competitive strategy for the 21st century companies. Jack Trout and Al Ries (Trout and Ries) in their book Marketing Warfare say that the best way to improve a company's position is to constantly attack it. They feel that a company can keep strengthening its position by introducing new products. To put it more precisely, a moving target is hard to hit than a static one.…

    • 2191 Words
    • 9 Pages
    Powerful Essays
  • Good Essays

    x. They reconcile conflicting performance goalsThey combine low cost, high quality(because of checks and 125 points system), etc.…

    • 995 Words
    • 4 Pages
    Good Essays
  • Best Essays

    New product and service development is an extremely unsafe process for large and small firms. Rates of failure in launching products and services are superior to 50%, and close to 90% in some types of products, services and markets (Kotler & Keller, 2009). Launching of new products and services may fail for different reasons, but one of the most important is the deficient involvement of customers in during the innovation process. Companies could prevent expensive failures just by integrating customers into the process of innovation (Ogawa & Piller, 2006). Some companies and leaders consider so normal to have high rates of failure that they even compel their people to fail (Kotler & Keller, 2009), but the price of failures is finally transferred to the customers through the successful products and services, and billions of dollars are lost by the inefficiencies. Customer involvement in service innovation has been strongly recommended for several years (Christensen, 1997; Edvardsson, Magnusson, Gustafsson, & Kristensson, 2006); yet, despite firms are convinced of its high benefits, they do not pay the costs; most of times for lack of managers’ ability to work together with the customers, and to obtain their cooperation (Edvardsson et al., 2006).…

    • 2147 Words
    • 9 Pages
    Best Essays
  • Good Essays

    Advanced Entrepreneurship

    • 705 Words
    • 3 Pages

    Innovation is an introduction of something that is new. The new product could be a fresh product method, idea, service, and it could even be a device. However, to consider it innovation, it also has to be a replica as well as cost-effective price at the same time it needs to satisfy a specific need (Brianna, S 2013). Occasionally, innovation happens when a company is trying to meet their needs or their expectation of their customers, therefore they will interpret their inventions otherwise their ideas into something that they will be able to make a value (Brianna, S 2013). Innovation will permit the business to stay competitive in today’s global marketplace. However, innovation does come with risk.…

    • 705 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    “Coca-Cola Deleting ‘Classic’ From Coke Label” – Coca -Cola did succeed to remove the word ‘classic’ from its coke label without much noise and “bad attention”. Coca Cola silently removed the ‘classic’ by shrinking the font size in the last decade, and succeeded to not change their world famous label without much notice. The j.n.d was successful and effective, and they changed the label without losing the existing, easy and instant consumer recognition of the Coca-Cola Coke (http://www.nytimes.com/2009/01/31/business/media/31coke.html?_r=0).…

    • 295 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    test12

    • 1808 Words
    • 8 Pages

    Based on this market research, the managers decided to develop a 1.3” drive that would survive a three…

    • 1808 Words
    • 8 Pages
    Powerful Essays
  • Satisfactory Essays

    Innovation- This term is short means the equal of creativity plus implementation (Stamm, 2003). Implementation is key to innovation, and without this you simply have creativity. There are four types of innovations referenced within the reading. Architectural innovation is the framework of a product and its marketing. Market niche innovation deals with new markets opening through the use of technology in order to strengthen already established designs. Regular innovations take what is already there and betters the process to enrich existing skills and resources. Finally there is Revolutionary innovation, this type of innovation flips the currents standard on its ear and completely changes the way we look at a process or product. The implications of innovation on business is what drives competition and success or failure. Understanding the current and future needs of the consumer can go along way into properly creating a successful business plan. An example of Market niche innovation would be with Apple introducing the Ipad. This was not a new idea, but Apple put a human spin on it and made the Ipad a household must have.…

    • 523 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    “New products are essential for corporate survival and long-term growth. However, large proportions of new products introduced to the market fail to achieve desired results and eventually are withdrawn. Among the many factors identified as responsible for new product failure, one that is frequently cited in literature is the inability of launching firms to identify and adequately meet the needs of…

    • 736 Words
    • 3 Pages
    Good Essays