by: John Caddell
June's Harvard Business Review features an article from John Gourville, associate professor of Marketing at Harvard Business School, that discusses how end-customer psychology affects the adoption of new products.
Citing research from behavioral economists such as Nobel laureate Daniel Kahneman, Gourville shows that customers view changes in products in terms of gains and losses. A new benefit is a gain. A change in how they use the product is a loss.
Customers and product developers see these tradeoffs very differently. Customers value losses up to 3x the value of a similar gain, while product developers, being so intimate with the benefits of the new capability as well as the drawbacks of the present solution, undervalue losses vs. the gains.
The result? New product adoption rates that far undershoot projections. And lots of head-scratching among product managers.
Gourville's simple prescription is to focus on maximizing the value of new features while minimizing customer behavior changes required to use the product.
A useful example, cited in the article, is the Toyota Prius vs. the GM Insight electric car. The Prius offered significantly higher gas mileage while allowing customers to drive and fill up the cars as they always had. While the Insight offered limited mileage between recharges and very few recharging stations. Which one was more successful in the marketplace?