Why Products Fail; The Role of Brand, Inference, and Search

In our research, consumers have told us that the fragmenting of media and the proliferation of products have actually made them reduce the number of brands they consider at the outset. Faced with a so many choices, messages and advertising consumers tend to fall back on the limited set of brands that have made it through the forrest of product messaging.

Brand awareness matters and brands in a consumers initial-consideration set are up to three times more likely to be purchased eventually than brands that aren’t in it.

The Role of Your Brand

The most common cues customers use to infer something about your product quality are price and brand. In a business-to-business setting, signaling information about quality is essentially the only role of the brand. Even in consumer markets, this signaling role is hugely important. However, in some consumer markets, brands may signal more than just product quality; consumers can also use brands to signal information about themselves.

In many circumstances, the more effectively customers can search, the less they will rely on the brand. Moreover, their perceptions of the brand will change quickly as new information comes in. Both factors diminish the importance of the brand. However, in markets where customers cannot search easily and effectively, they are forced to use the brand to make purchasing decisions. One example we can all relate to is buying a car. The choices, features and performance are overwhelming to most consumers. Even though this information is widely available, consumers focus much more on brand preference than the kind of deep research that might alter their decision. The result in car sales is that consumers visit (on average) only 1.6 dealerships before they purchase a car. That means all or most of the decision process is happening on line - before they go to purchase. This is true for most markets where powerful brands have been built around a tradition for quality and/or price and value.

The Power of Search

Once they decide that they want to buy, your customers need to know what products are available and how their features vary from other available market options. Whether you are an airline choosing which aircraft to purchase, a college graduate choosing your first car, or a parent buying diapers for your infant, there are only two ways you can collect this information: you can search, or you can infer. The inference process uses the indirectly related information that you can search for to guess the information that you cannot easily search for directly.

Most companies and entrepreneurs do not think hard enough about how their target customers will decide what to purchase even when they have ample insight into how customers might evaluate new products.

Those developing products and services generally focus primarily on “creating value”, without enough regard to whether customers will recognize this value. This is another common trap – a reason products fail – entrepreneurs don’t understand or appreciate the fact that value definitions and therefore the recognition of value are very different across demographics such as age, gender, and socio-economic factors.

Customer Search Processes

For your target customer, the perceived benefit of searching for a better solution may not be the same as the actual benefit, particularly in markets with little recent innovation. This poses a challenge for significant innovations in such markets; customers may not find these innovations because they do not know to look.

Research suggests that there can be a surprising relationship between the amount of prior expertise a consumer has about a product category and the extent to which he or she searches for information before making a purchase decision. As a result, early adopters, or those most aware of new products can be effective market drivers but they can also confuse your customer signals. Conversely, customers with a lot of expertise may not search, because they think they already know what’s best. At the other end of this spectrum are customers who are clueless. They do not search because they do not understand their pain and don’t even know what questions to ask, where to look for the answers, or how to interpret the information when it arrives.

In general, customers prefer to search. It is only when they are unable to search effectively, either because they lack expertise or because the cost is too high, that they rely almost completely on the brand. This may look like good news but beware! Brands do not automatically have the power they once did because consumers have an ability to look beyond brand. However, in our research, when the choices are more or less similar, consumers choose a branded product because they feel security in the brand. And, when brands add authentic meaning to people's lives, they become a part of a person's identity (e,g, Apple). It is critical to clearly differentiate your products from the better known alternatives to gain market share for any new market entrant.

Consumer Inference Processes

When search is incomplete for any reason, customers shift to forming inferences. They use what they have “know” or observed to infer what they don’t know. McDonald’s offers an example of this. The fast-food chain has long emphasized to franchisees the importance of keeping a restaurant’s parking area clean. Why? Customers do not really care about the parking area. What they care about is the cleanliness of the kitchen, and perhaps the bathrooms. But what can customers see when they drive past? They may use the cleanliness of the parking area (what they can see) to infer the cleanliness of the kitchen and bathrooms (what they care about). What is most surprising is that when you ask customers why they did not choose to stop, they often cannot tell you; they just did not feel comfortable stopping at that restaurant. In other words, this is not a conscious thought process; it is operating at the subconscious level, which makes it both pervasive and powerful.

About us. We work with startups to fund & execute on their ideas. We’re strategists, financial professionals, and software coders ourselves. We’ve spent a lot of time figuring out how to make beautiful, functional products, that people adopt and use. We use our keen understanding of Lean Business in every aspect of our business from product creation to customer acquisition and finding the right channels and partners. We have spent over 30 years at the intersection of Innovation, economic development, and startup creation. Through that experience we have developed a set of processes that keep products lean, focused, and on point with users. Through our process, our clients develop and launch products that receive customer validation early in the planning through launch. Investing in this process up front works, and delivers products that win and pitches that resonate with investors. 

Connect with me on LinkedIn or at [email protected].