Customer Centricity in New Product Development: Radical Customer Orientation as the Key to High-potential Innovations (essentials) 3662676966, 9783662676967

Table of contents :
What You Can Take Out from this essential
Contents
About the Author
1 Customer Centricity—More Than just Customer Orientation
2 Product Development in Agile Times
3 Understanding Customers—Consumer Psychology for Innovators
3.1 Wanting to Have—Motivational Psychology
3.2 Thinking, Evaluating, Deciding—Cognitive Psychology
4 Developing Products Step By Step
4.1 Customer Insights—The Pivot Point of Innovative Ideas
4.2 What Do We Offer? Customer Benefits Instead of New Features
4.3 Too Good to be True? Building Credibility and Trust
4.4 The Essence—Capturing the Core of the New Product
What You Can Learn From this essential
References

Citation preview

Ute Rademacher

Customer Centricity in New Product Development Radical Customer Orientation as the Key to High-potential Innovations

essentials Springer essentials

Springer essentials provide up-to-date knowledge in a concentrated form. They aim to deliver the essence of what counts as “state-of-the-art” in the current academic discussion or in practice. With their quick, uncomplicated and comprehensible information, essentials provide: • an introduction to a current issue within your field of expertise • an introduction to a new topic of interest • an insight, in order to be able to join in the discussion on a particular topic Available in electronic and printed format, the books present expert knowledge from Springer specialist authors in a compact form. They are particularly suitable for use as eBooks on tablet PCs, eBook readers and smartphones. Springer essentials form modules of knowledge from the areas economics, social sciences and humanities, technology and natural sciences, as well as from medicine, psychology and health professions, written by renowned Springer-authors across many disciplines.

Ute Rademacher

Customer Centricity in New Product Development Radical Customer Orientation as the Key to High-potential Innovations

Ute Rademacher Department of Business Studies University of Applied Sciences Emden/Leer Emden, Germany

ISSN 2197-6708 ISSN 2197-6716  (electronic) essentials ISSN 2731-3107 ISSN 2731-3115  (electronic) Springer essentials ISBN 978-3-662-67696-7 ISBN 978-3-662-67697-4  (eBook) https://doi.org/10.1007/978-3-662-67697-4 This book is a translation of the original German edition “Customer Centricity in der Neuproduktentwicklung” by Rademacher, Ute, published by Springer-Verlag GmbH, DE in 2022. The translation was done with the help of an artificial intelligence machine translation tool. A subsequent human revision was done primarily in terms of content, so that the book will read stylistically differently from a conventional translation. Springer Nature works continuously to further the development of tools for the production of books and on the related technologies to support the authors. Translation from the German language edition: “Customer Centricity in der Neuproduktentwicklung” by Ute Rademacher, © Der/die Herausgeber bzw. der/die Autor(en), exklusiv lizenziert an Springer-Verlag GmbH, DE, ein Teil von Springer Nature 2022. Published by Springer Berlin Heidelberg. All Rights Reserved. © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer-Verlag GmbH, DE, part of Springer Nature. The registered company address is: Heidelberger Platz 3, 14197 Berlin, Germany

What You Can Take Out from this essential

• An introduction to the success factors of new product development • Consumer psychology for customer-centric innovation development • Practical examples and templates for your innovation workshop

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Contents

1 Customer Centricity—More Than just Customer Orientation. . . . . . 1 2 Product Development in Agile Times . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3 Understanding Customers—Consumer Psychology for Innovators. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 3.1 Wanting to Have—Motivational Psychology. . . . . . . . . . . . . . . . . . 13 3.2 Thinking, Evaluating, Deciding—Cognitive Psychology. . . . . . . . . 22 4 Developing Products Step By Step . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 4.1 Customer Insights—The Pivot Point of Innovative Ideas. . . . . . . . . 27 4.2 What Do We Offer? Customer Benefits Instead of New Features . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 4.3 Too Good to be True? Building Credibility and Trust. . . . . . . . . . . . 36 4.4 The Essence—Capturing the Core of the New Product. . . . . . . . . . . 38 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

VII

About the Author

Ute Rademacher Professor of Market, Consumer, and Media PsychologyDepartment of Business StudiesEmden/Leer University of Applied SciencesConstantiaplatz 426723 Emden (Germany) https://www.hs-emden-leer.de/studieninteressierte/ fachbereiche/wirtschaft

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1

Customer Centricity—More Than just Customer Orientation

Don’t find customers for your products, find products for your customers. Seth Godin, Autor und Unternehmer



Among the success factors of companies is their ability to constantly reinvent themselves and drive innovation. Interestingly, in Germany, this is achieved better by medium-sized family businesses than by large corporations. This is shown by a study from the Institute for SME Research, which examined the innovation activities of almost 1900 small and medium-sized family businesses (Werner et al., 2013).

In order to develop new products and services1 that can succeed in the competitive environment, companies must focus more on the needs of their customers in times of ever faster, tougher, and more global competitive pressure (Lemon & Verhoef, 2016). In addition to short decision-making processes and high implementation efficiency, the long-term planning of small and medium-sized family businesses has a positive effect, which favors investments in new product development. Culturally, their innovation approach is promoted by the so-called personorientation in corporate management. The close connection between management and employees makes it easier to gather ideas for improvements and

1 To

facilitate reading, the term “products” will be used in the following, even if it refers to intangible goods, services, or digital products. The principles of Customer Centricity differ only marginally. Where significant differences exist, they are explicitly pointed out in the text.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2023 U. Rademacher, Customer Centricity in New Product Development, Springer essentials, https://doi.org/10.1007/978-3-662-67697-4_1

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1  Customer Centricity—More Than just Customer Orientation

new products and to secure the necessary competencies in the company in the longterm through low fluctuation. Cooperation also extends to suppliers and competing manufacturers, with whom strategic partnerships are formed to optimize processes and marketing of jointly developed products. This strong focus on people rather than tasks also becomes a supporting pillar of the innovation culture. Family businesses usually develop their strengths along customer wishes and less – as with large corporations – along the demarcation against competitors. To develop this strength, service orientation in customer contact is not enough. It is important to establish good contact with customers, maintain it continuously, and thereby gain a comprehensive and solid understanding of their wishes, needs, concerns, and behaviors and conflicts. 

Customers must consistently be placed at the center of all strategic considerations and activities, which has coined the term “Customer Centricity”.

How can this focus be achieved? Market research studies with direct questions about the wishes and preferences of customers only help to a limited extent, because the processes that decide in the supermarket, on the website, or the online shop which offer is chosen are usually not conscious processes. In addition, it sometimes remains unclear in quantitative market research studies why people decide for or against a particular product. Not knowing why someone wants to buy a product takes away the chance to estimate whether the predicted success will also occur under changed conditions (e.g., delivery times have changed significantly). Not knowing why someone decides against a product idea, on the other hand, takes away the opportunity to change the frame conditions or individual product features in such a way that a new product would achieve good resonance. However, if you understand the why behind the purchase decisions and brand preferences of your target groups, it is easier to draw conclusions about how a new product idea or an improved version will be received. This is where consumer psychology comes into play, applying scientifically proven knowledge about what basic needs drive people, how people perceive, process information, and are influenced by others to purchase decisions and consumer behavior. With this knowledge, product developers, marketing experts, and product owners can better classify results from market research studies, as well as observations from the sales team. In exchange with the users of their products in personal encounters or on social media, they can deepen their understanding of their target groups and build on it ideas for optimizations or new offers. At the

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center is the Customer Insight, the knowledge of what unmet needs certain people have in certain situations in the relevant context and what they ideally desire (Wilson, 2018). Marketing experts, product designers, and engineers sometimes find it difficult to put themselves in the shoes of their target groups and create innovative ideas from their perspective. That’s why many companies subject initial prototypes or product concepts to a test in early development stages and obtain feedback from representatives of the targeted groups. It often poses a challenge to present initial and rather abstract product ideas in a comprehensible and technically appropriate manner, regardless of whether it is a verbal description or a prototype developed in Design Thinking. Accordingly, it becomes difficult for the testers to assess how helpful and interesting the product would actually be for them. Innovative product ideas, which are novel and could positively differentiate the brand or company from the competitive environment, may fail the test because their description is difficult to understand or the actual benefit for the users is not adequately conveyed alongside technical innovations. This essential addresses this issue. It familiarizes you step by step with the mindset of Customer Centricity and shows you how to successfully design customer-oriented analog or digital products:

• Chap.2 deals with the frame conditions of innovations and provides an insight into the factors that characterize small and larger companies, which stand out through successful innovations and an above-average number of patents. • Chap.3 familiarizes you with the consumer psychological knowledge that enables you to understand the problem in Design Thinking and develop customer-oriented verbal and product concepts. • Chap.4 shows you, using guidelines and practical examples, how to formulate attractive, understandable, and high-potential new product ideas for your customers. Practical templates for workshops of your innovation team enable you to develop, structure, and transform creative ideas step by step into customer-centered concepts or prototypes together.

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Product Development in Agile Times

Technology is not a linear progression, but searching and tapping with an uncertain result. (Author's translation) Gerd Antos, Professor  of Business Communication

Very different paths lead to innovations in companies. In large or complex companies, formalized processes often regulate how ideas for new or improved products are developed and optimized until they are market-ready. In this way, it is ensured that developments are not being refined at several points simultaneously without bundling the findings in the process. A structured suggestion system and explicit responsibility for innovations may be necessary to form a thread from the diversity of different approaches, the further pursuit of which has the greatest potential. It is often specified in which form initial product ideas should be recorded: Should new products be formulated as a purely verbal description or already contain a rough sketch of their appearance? Or should prototypes be developed in 3D? Is the product described independently of the brand under which it is to be positioned (unbranded), or should the brand personality be included? The standardization of the format provides some orientation and creates comparability for later tests but can also limit creativity. In large companies, there is a risk that decisions become more complex and thus more protracted. As a result, the implementation may lose drive. task-orientation of management also ensures that employees think less holistically and primarily engage in their area of responsibility. The marketing department pursues its vision of how the brand can drive competitors off the market through revolutionary innovations without considering feasibility. Experts from research and development pursue technological aspects with their expertise without considering the tangible benefits users will have. The salesforce is committed to offers © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2023 U. Rademacher, Customer Centricity in New Product Development, Springer essentials, https://doi.org/10.1007/978-3-662-67697-4_2

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that can quickly meet the demand of important customers without considering the values and personality of the brand. The controlling department, on the other hand, wants to find out the costs for each development step in relation to the profit to be achieved. And above all activities, the company management would like to achieve quick successes without great risks. In the worst case, another company has already brought a comparable product to the market by the time all tests have been passed and hurdles have been overcome. Small and medium-sized enterprises (SMEs) usually create  innovations through less formalized paths. “We talk to each other, listen to everyone, collect all ideas and discuss them regularly in the team,” describes Managing Director Albert Schweitzer the innovation process in the Arnold Glas Group (Scheytt, 2021). With almost 800 employees at six locations in Germany and Austria, the family-run group is a leader in the flat glass finishing business with almost 60 patents. Short and fast decisions, participatory processes, and people-oriented leadership, as well as a willingness to cooperate with external business partners, contribute to their success in technological development. However, not all SMEs have such smooth informal processes that manage to seriously consider and discuss ideas from apprentices. In such cases, uncertainty may arise about which innovative ideas are worth further development. Sometimes market research studies shed light on the situation and provide indications of the resonance to be expected from target groups for new product or improvement ideas. However, it is not uncommon for the gut feeling of decision-makers or the personal preference of the managing director to determine whether an idea ends up in the trash or in production. To combine the advantages of both paths, more and more, even smaller companies work with the approach of Design Thinking, even if the implementation in the organizational context requires some changes (Ingle, 2013; Lee et al., 2020; Randhawa et al., 2021). The goal is to develop ideas that are convincing from a customer or user perspective and at the same time market-oriented. The needs of the customers should be aligned with what is technologically feasible and what the business strategy can transform into customer benefits and market opportunities. The intuitive design is balanced with the fact-oriented calculation of feasibility and profitability. To achieve this, ideas for new products are consistently understood as solutions to problems for consumers and users. It is also assumed that problems are better solved when people from different disciplines or departments work together in a creativity-promoting environment. The process of idea generation takes place in different phases (see Fig. 2.1), which step by step lead from the jointly developed understanding of the specific

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PROBLEM

UNDERSTAND

OBSERVE

SOLUTION PIVOT POINT

IDEATION

PROT0TYPE

TEST

Fig. 2.1   Design Thinking Process

problem along the motivations of the target groups to prototypes that undergo multiple tests:

• Understand: At the beginning, a common understanding of the starting point of idea generation is developed and the assumptions—for example, about the target group or technological framework conditions—are defined. • Observe: In the observation phase, a 360-degree view of the initial problem is carried out. Through their own observations, studies, and exchange with customers, the innovation team gains a consumer-centered perspective. • Pivot Point: At this turning point, the problem is redefined from the perspective of the consumers in the form of a “problem statement.” To take into account different needs groups, individualized profiles of various users (personas) are developed. • Ideation: In the ideation phase, as many different ideas as possible are developed in a short time. Creativity-promoting exercises and tools are often used, which encourage engaging with unusual or seemingly hopeless solutions. Questioning techniques and templates for documentation (canvas) subsequently enable the ideas to be grouped and selected into promising solution groups.

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• Prototype: The selected ideas are concretized and developed into a prototype or several prototypes using different materials. In an iterative process of feedback from the target groups alternating with targeted adjustments, these are optimized until a testable version has been created. • Testing: It is determined which decision-critical properties and functions should be tested. These are experimentally assessed in a suitable test scenario. The analysis of the feedback provides information on what still needs to be revised and which prototype is already ready to enter further technical development.

Design Thinking combines fast, collaborative, and equal work on solutions with a structured and systematic process that requires decisions based on clearly defined criteria instead of gut feeling. Particular importance is given to the consistent focus on the problems and needs of customers as well as the attention to frame conditions that promote the emergence of many unusual and innovative solution approaches. Regardless of whether product ideas are designed as prototypes using Design Thinking or are recorded with the help of a verbal concept, the functions of the concepts are comparable:

• Concepts and prototypes determine what constitutes the new product and what purpose it has. It is important that the innovation or optimized product makes sense not only for the company but also for the target groups. An understanding of what bothers, annoys, is perceived as cumbersome, or is missing in existing offerings—also with regard to competitors or own solutions—is essential. • Concepts and prototypes define which features and functions distinguish the new products and which do not. Even or especially when many feature combinations are possible from a technological point of view, it must be agreed upon which product features and functionalities should characterize a new product. The more vague the definition, the worse potential users can provide feedback. If a clear definition is not possible in advance, it is recommended to start with two distinctly different variants and thus explore the limits of what is possible and customer acceptance (testing the limits).

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• Concepts and prototypes determine which properties, functions, and features are fixed and which parameters remain open. The latter are usually defined more precisely in the further development process after sufficient potential of the basic idea has been determined. Or it becomes clear in the exchange with potential users which properties, which may not always appear central from a technological point of view, must be present (must-haves) in order to be considered by them, and which are not absolutely necessary (nice-to-have). • Concepts and prototypes describe or illustrate how the product basically works. It should be understood how technological possibilities lead to customer-relevant benefits and added value. The art of conception lies in not getting lost in incomprehensible technical details while at the same time credibly and understandably conveying how the product achieves what it promises to deliver. Verbal concepts describe and prototypes illustrate how the new product can function.

Concepts and prototypes force the innovation team to think together about these questions and find answers without getting stuck in the pursuit of perfection. This creates initial approaches that can be worked with, whether in the form of an extensive market research study or based on feedback from personal customer interviews. It is essential in both approaches that a standardized concept or uniform prototype is used so that the feedback does not depend on the presentation skills, likeability, or commitment of the presenters, but actually on the potential of the innovation.

3

Understanding Customers—Consumer Psychology for Innovators

Understanding the problem is more important than recognizing the solution because the precise representation of the problem leads to the solution. (Author's translation) Albert Einstein



Which problem do you want to solve? With this question every conversation between the jury and the computer science students began, as they presented concepts for new digital products for the citizens of their city. As a guest lecturer at the prestigious University of Cape Town, I was invited to evaluate the quality of the students’ presentations as a member of the jury of teachers and practitioners. I was thrilled by the diversity of the students’ approaches to making Cape Town a “smart city.” From digital tools to support waste separation and recycling to digital reporting of potholes and road damage to IT-supported management of increasingly scarce parking spaces, the range of improvement ideas was vast (Rademacher & Grant, 2019). Before discussing the details of sensors and programming with the jury, the question always arose as to which current problem of South African citizens should be solved. For without a well-founded answer to this question, it was doubtful whether the development of such a tool would be used in the future and have an effect.

The innovative power of companies depends on their persistence in problemsolving, according to Gerd Antos of Martin Luther University Halle-Wittenberg. For the expert in knowledge communication, the cause of the success of Western research and engineering lies in the attitude “that one must always try again © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2023 U. Rademacher, Customer Centricity in New Product Development, Springer essentials, https://doi.org/10.1007/978-3-662-67697-4_3

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until it works, and success was only the basis for the next step and not the signal to rest triumphantly” (Lotter, 2021). From this persistence in tackling problems, inventors like Justus von Liebig or Werner von Siemens created entirely new disciplines. Today, they would probably be celebrated as disruptive innovators. In addition to a good deal of frustration tolerance, this requires a clear focus on specific problems that is not abandoned until a solution has been achieved. Even if the successful process of technological advancement and innovation consists of an open-ended “searching and tapping,” it always begins with a clearly defined problem. Much like the aspiring social entrepreneurs at the University of Cape Town, innovators around the world face the question: Which problem do we want to solve? It is often claimed that radical inventors like Steve Jobs developed their innovations from within themselves and then triggered a hype of desirability with good marketing. However, without the human need to communicate conveniently with others and to receive helpful information anytime and anywhere, the iPhone and subsequent smartphones would certainly not have become the success story of the early 21st century. The potential of innovations is determined by the extent to which they satisfy unmet or insufficiently met needs of customers in relevant usage situations. To gain insights into where target groups feel ‘the shoe pinches’ (customer insights) and where there is enough discomfort (pain point) to break away from habits and try something new, one must embark on a journey of discovery. Psychological expertise is required for this. This is because the motives for observable behavior usually lie in factors other than those that people indicate in a questionnaire. This is not because study participants have malicious intentions, but because psychological processes rarely occur consciously and are therefore not accessible through reflection. In addition, mechanisms are at work in the perception and further processing of information that lead to systematic and well-researched distortions (see Sect. 3.2). Different formats and tools can help to get an impression of how consumers use products, what problems arise, and how they sometimes deal with surprising solutions. Not a few products that conquered the mass market are based on creative consumer solutions. Example

Tea importer Thomas Sullivan sent his customers a small sample of a new tea variety in a silk bag instead of the then-common tin can at the beginning of the 20th century. Out of convenience, the recipients put the bag with tea directly into the water, instead of brewing the loose tea leaves in the teapot as usual.

3.1  Wanting to Have—Motivational Psychology

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The unplanned usage convinced with its simplicity and efficiency. The tea bag was invented (East Frisian Tea Museum Norden, 2022). ◄ In order not to rely on chance, many companies ensure that their specialists in the marketing and research department do not lose contact with their customers. Encounters at trade fairs, conversations at events, home visits, interviews with selected individuals, or workshops in which the innovation team works together with the target groups on new products are regularly on the agenda for many companies. If there is little internal knowledge regarding the conduct of consumer interviews and their interpretation, institutes offer training and support that specialize in (depth) psychological market research or design thinking.

3.1 Wanting to Have—Motivational Psychology In order to understand how consumers behave, it is helpful to know which basic needs determine human behavior. Motivational psychology has been researching this for many years. According to their findings, two basic tendencies determine our behavior: We want more of pleasant experiences (approach), and we want to avoid unpleasant experiences as much as possible (avoidance). Social and motivational psychologist Kurt Lewin referred to this in his field theory as positive and negative valence of behavioral options (Lewin, 1963). According to Lewin, an individual’s behavior depends on the personal and environmental characteristics of a situation: the currently effective field (see Fig. 3.1). The environment is not defined objectively but is determined by the subjective experience of the person. A need creates an inner tension. Characteristics of the object of desire determine its value for the person in the given situation. This valence can be positive, so that the inner tension leads to seeking proximity to the object. If the valence is negative, the tension causes avoidance of the object. The person and valence together form a force field that discharges in goal-directed actions. Example

For a curious employee, repetitive tasks lead to inner tension, as variety and surprise moments are missing. Alternative activities have a positive valence. The callback from a colleague, tidying up the desk, or changing the task become more attractive the more monotonous the actual task is and the greater the employee’s curiosity. The resulting force then leads to seeking the stimulation necessary for concentrated work. In the best case—for the company—the

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Fig. 3.1   Assumptions of Kurt Lewin’s field theory

NEED NEED

TENSION

VALENCE

FORCE ENVIRONMENT

CONDUCT

employee optimizes his or her area of responsibility, for example, by increasing the level of difficulty or complexity of the tasks. It is more likely that the employee will get the necessary stimulation through social media, games, or extensive conversations with exciting colleagues. In the worst case, the employee’s job satisfaction and performance decrease, and he or she becomes receptive to job offers from competing companies. ◄ The better we know the valence of products for the target groups in relevant usage situations, the better we can predict whether and when they will use them. Such a forecast is usually more complex than it seems. This is because usage usually has several experience dimensions and leads to consequences in different areas. For example, using an app allows you to conveniently, quickly, and anywhere book a specific service. With some providers, there may even be a discount for online booking. At the same time, a suitable device must be available, the app installed, and private data released for this purpose. In this case, a phone call may sometimes seem easier, especially if a service is expected to be used only once or if there are a few questions to clarify before booking. The decision to use or not use an app or other products involves consciously or unconsciously weighing the positive and negative aspects of use. It becomes even more complicated by the fact that consumers in saturated markets usually have to choose between many alternatives. Not only app or phone call are available, but also several apps and phone numbers from different providers.

3.1  Wanting to Have—Motivational Psychology

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When people have to choose between alternative offers, inner conflicts often arise (Bak, 2019; Lewin, 1963).

• Approach-approach conflict: This conflict arises when a decision must be made between positive alternatives that are mutually exclusive. It is impossible to spend the next weekend at two competing festivals simultaneously. Even though the increasing number of “buy now, pay later” offers shift financial boundaries, spatial and temporal limitations remain. The possibilities are becoming more numerous, especially due to the dazzling array of social media offerings. The scope for action has increased enormously in recent decades, along with the fear of missing out. The greater the number of options, the more painful the agony of choice. The so-called fear of missing out (short fomo) may seem like a luxury problem, but it affects many—especially younger, internet-savvy—target groups in a negative way (Akbari et al., 2021). For a company’s innovation strategy, it is therefore advisable not to bring countless new options to the market, but to consider what would be a relief and what would be an overload for the target groups. Replacing a product that is already well advanced in its product life cycle with an optimized variant or a new product can be a better strategy not only economically but also psychologically. • Avoidance-avoidance conflict: In this conflict, a decision must be made between several alternatives, all of which are experienced as unpleasant. Whether the dental prosthesis is made of ceramic, plastic, or precious metal may make a significant difference to the dentist, but for the affected individuals, none of them represent a directly perceptible added value. Instead, the often negatively experienced dental treatment, which one would prefer to avoid altogether, predominates in all forms. However, this is not possible in the long run. Colonoscopies, paying taxes, as well as retirement planning and taking out insurance are perceived by many consumers as decisions in which they do not gain anything, but only minimize their loss. For companies operating in these areas, it is therefore a challenge to compensate for the lack of a tangible added value through emotional benefits (e.g., feeling safe and well cared for) or social-symbolic benefits (e.g., not being a burden to anyone). • Approach-avoidance conflict: In this inner dilemma, the positive and negative consequences of one or more alternatives are balanced. The

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more dimensions are relevant in the evaluation and the more alternatives are fundamentally considered, the more difficult it becomes to make a decision. Commuters, for example, must choose a mode of transportation to get from home to the office daily or weekly. The car is a comfortable and flexible solution, but it is expensive and harmful to the environment. Moreover, driving is often exhausting, and working while driving is only possible to a very limited extent. Train rides, on the other hand, are more cost-effective and environmentally friendly. On longer journeys, the time can be well spent working. However, the high number of unpredictable cancellations and delays are annoying and make it difficult to reliably keep business appointments. Additional options such as riding a motorcycle, carpooling, or car-sharing, as well as alternatives like teleworking or even changing employers, expand the range of possibilities and make the decision-making process more complex. A thorough understanding of which requirements are crucial for which user group can reduce this complexity somewhat. Companies often work with market segmentations or personas (Bernecker, 2020; Häusel & Henzler, 2018; Wirtz, 2022) to specifically target different groups of people (e.g., price optimizers) with specially designed products.

Inner conflicts are unpleasant and urge to find a solution. In many cases, they therefore represent the starting point for the development of a new or improved product. The chocolate that tastes delicious and creamy, but has 20% fewer calories. The pesticide that, using natural bacteria, only kills the caterpillars of pests. The new payment function that makes elaborate transfer forms or waiting in line at the supermarket unnecessary while enabling secure payment. These products fulfill customer desires for enjoyment, gardening pleasure, or comfort and overcome previously given disadvantages of weight gain, damage to pets and beneficial organisms, or the risk of fraud. Enjoyment, comfort, and security—which needs shape the motivation of people? Many motivational psychologists have asked this question and came up with quite different answers. Quite well-known is the hierarchy of needs of the American psychologist Abraham Maslow (Becker, 2019; Maslow, 1954). His model, developed in the 1950s, assumes that human motives, as shown in Fig. 3.2, are hierarchically arranged. Higher-order needs such as self-actualization, according to Maslow, only come into play when all lower-order needs such as social or physiological needs

GR OW

TH

3.1  Wanting to Have—Motivational Psychology

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SELFREALIZATION INDIVIDUAL NEEDS

DE FIC IT

SOCIAL NEEDS SECURITY NEEDS PHYSIOLOGICAL NEEDS

Fig. 3.2   The hierarchy of needs according to Abraham Maslow

are predominantly or completely satisfied. This assumption of a hierarchical order has been falsified by scientific studies. However, Maslow’s distinction between different types of needs has proven itself and is still widely used today:

• Physiological needs ensure the functioning of bodily processes. If the body does not have enough energy available, the feeling of hunger arises. We automatically perceive everything related to food. Other needs and goals take a back seat until we have consumed enough calories and can turn our attention to other things again, feeling ‘functional.’ Hunger, thirst, and breathing take place in a constant alternation of deficiency, need, satisfaction, consumption, and renewed deficiency. For some bodily functions, such as breathing, the change takes place within seconds, while for others, it can take weeks or even months, depending on physical reserves. The constant alternation of satiation and deficiency inspired Maslow to call these needs “deficit needs.” In marketing approaches and design thinking, they are usually referred to as basic needs (see Sect. 4.1). They have in common that their non-fulfillment leads to physical damage or, in extreme cases, death in the medium term.

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• Safety needs are also considered deficit needs and focus on protection from physical or psychological  harm. Depending on the living environment and situation, this can include protection from natural threats such as thunderstorms, storms, rain, cold, heat, or animals. Protection from hostile individuals, theft, or war is also part of this need. In generally peaceful living environments, the need for protection from diseases or the fear of losing what one possesses and has become accustomed to determines safety needs. Interestingly, people seem to become more psychologically vulnerable the more their physical protection is secured (Flaßpöhler, 2021). While food intake used to be associated with the risk of consuming poisonous food or having to defeat dangerous animals, today, food allergies are the main threat. This creates room for product improvements and innovations while simultaneously requiring an examination of which safety features a product actually needs and which are merely nice-to-have. • Social needs shape human interaction. As the so-called need for affiliation or sociability motive, they can also be found in current motivation theories. Aristotle already characterized humans as social beings (zoon politikon): fundamentally oriented towards community and forming communities. The nature of the community can vary. Introverted individuals, for example, prefer close exchanges with a few people, while extroverts feel most comfortable surrounded by many people. We ask others for their opinions on products, seek advice, or want things that we have liked in others. Personal recommendations still have a strong influence on the credibility of product promises (Kantar, 2020). This is one of many reasons why social media cannot be ignored in marketing today, not only when addressing young target groups. However, social needs can also be the source of product innovations. The toy developed together with educators conveys the feeling of being good parents who offer their child the best development opportunities. The digital chat helps to stay in contact with colleagues in the home office. Business decision-makers also do not live in a social vacuum but in a social ecosystem. In the context of product development, supportive forces and barriers resulting from our communality for new product development should be considered. Social needs do not undergo constant change from deficiency and saturation like deficit needs, but according to Maslow’s approach, they are ‘insatiable’. Their satisfaction contributes

3.1  Wanting to Have—Motivational Psychology

to psychological growth and well-being, which is why they belong to the group of growth needs. • Individual needs include the pursuit of appreciation, self-affirmation, success, freedom, and independence. As competence experience and autonomy (Ryan & Deci, 2019), it can also be found in newer motivation theories. The search for independence, self-determination, and success is in our own hands, while we receive recognition, prestige, and status from others. Not only in the field of fashion do products send messages. For example, quenching one’s thirst with a Bavarian Helles makes one appear as a more relaxed and approachable colleague, while enjoying an exotic craft beer creation makes one appear more like a snob (Grüne, 2020). How individual needs are lived out is shaped by social norms and culture. For example, while a salary increase is celebrated at a spontaneous barbecue with neighbors in individualistic North America, it is better not to make a big fuss about it in Germany to avoid provoking ‘social envy’. Accordingly, concepts and prototypes must be sensitive to individual needs and read ‘between the lines’ in customer reactions to avoid crossing the boundaries of what is socially acceptable. • The need for self-actualization is aimed at living out one’s strengths, talents, and potentials and actively shaping life with them. People strive to lead a fulfilling life and to make a meaningful impact and leave something behind through their own achievements. Young professionals increasingly orient their career choices towards the “purpose” as an overarching goal of companies. At the brand level, too, an attitude that can be reconciled with personal values is becoming increasingly important (Annweiler, 2018). The pursuit of self-actualization can also be significant for new product development. Because products can, in the best case, be instruments for realizing our talents and abilities. Be it the versatile marker with which creative ideas, sketches, and observations can be conveniently and colorfast recorded. Or the detergent that allows children to play and romp carefree without fear of stains. In the innovation process, it is advisable to consider what the product enables users to do. What can they achieve directly or indirectly with it? How does it help them achieve their short- or medium-term goals? Caution is advised when establishing connections that are not factually or experientially given for the target groups. Promoting a child’s development with a detergent may be an unusual but resilient motive for its

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use. However, concepts that overstretch this and attribute the potential to achieve life goals or experience exhilarating feelings of happiness to technical products or minimal product improvements will meet resistance. If these direct connections between functional, emotional, or symbolic product benefits (see Sect. 4.2) are not given, the focus should rather be placed on the brand level and the consistency of the product benefits with the purpose of the brand and company should be maintained.

All types of needs are fundamentally relevant when it comes to determining which problem a new product should solve or which previously unmet needs should be satisfied. To achieve resounding success, products must motivate people to buy. However, not every need moves people so strongly that they change their usual buying behavior or dig deeper into their wallets. And the vast majority of existing products work so well that a technical-functional improvement does not create noticeable added value. This is where various brand types come into play, which can provide orientation through a different weighting of customer needs (see Fig. 3.3).

BRAND WORLD: THERE ARE 4 DIFFERENT BRAND TYPES FUNCTIONAL BRANDS Functional brands primarily offer products as (special) problem solvers ▪ The functional / technical and factual benefit of the brand is in the foreground, which is often also reflected in the USP. ▪ Facts are important for the consumer. For example, the latest research and development results, as well as test results and the latest technology. ▪ The consumer has a clear product expectation. ▪ The ease of use of the product often makes everyday life easier and leads to mental convenience when making decisions.

IMAGE BRANDS Image brands live very strongly from active associations ▪ Active associations and emotions are aroused above all through - now often reciprocal - communication. ▪ Differentiation for the brand is achieved through desired image such as joie de vivre/ beauty/ humor/ belonging to a group. ▪ The brand is charged with appropriate advertising, content and through storytelling. ▪ Image brands are increasingly trying to become experience brands

EXPERIENCE BRANDS Experience brands convey real & XR-media experiences in equal measure ▪ The brand offers a holistic customer experience that goes well beyond the original product experience. Brand association is very much shaped by the experience. ▪ Emotions are aroused and consciously controlled and are the focus. ▪ Brands are orchestrated in a multi-sensory manner. The consumer experiences and feels them with different senses. ▪ The orchestration of the brand as an experience is pushed as holistic experience

Fig. 3.3   Brand typology of the Gedankenfabrik consultancy

HUMAN BRANDS It's human again ▪ The brand is approachable and human. And that in all areas. (The human component is part of the brand DNA). ▪ Companies are opening up to the user. Employees can and must act actively - with a clear understanding of the mission. ▪ Direct personal contact / the basic need for human communication is seen as an opportunity. ▪ The consumer is taken seriously as a human being and an equal partner, and can have a say and a say in decision-making. The DAO approach (decentralized autonomous organization) will reinforce this development.

3.1  Wanting to Have—Motivational Psychology

21

Functional Brands  predominate in less saturated markets. They initially dominate in product categories defined by technical functionalities (e.g., “The mobile phone”). With functional brands, the technical and factual benefits for the target groups are in the foreground. They usually take on the role of problem solvers. The deodorant protects against sweat odor, the umbrella keeps rain off, and the car takes you from A to B. No less, but no more. In communication and conception, facts play an important role for the target group. New materials and technologies are essential when developing prototypes in design thinking. Consumers have clear product expectations towards functional brands and are willing to switch if these are not met. The use of the product usually simplifies everyday life and leads to mental convenience in decision-making (see Sect. 3.2). Innovations under the umbrella of a functional brand should be oriented towards this profile and accordingly focus on physiological and safety needs. Growth needs can also play a role if products contribute technically and functionally to their satisfaction (e.g., being able to visit friends with a car or regularly drive to an education course). Image Brands distinguish themselves from their competitors by focusing on a desired image, characterized by, for example, joie de vivre, health, attractiveness, or closeness to nature. Belonging to a social group (e.g., the creative class, the environmentally conscious) can also be charged as an image brand core with appropriate advertising communication, content, and storytelling. Image brands tend to serve primarily social needs and individual needs. Safety needs can be relevant if protection is necessary for the formation of the image. For example, leakage protection in a diaper may be required (but not decisive for purchase) for particularly caring and educated parents. Or the protection of personal data is a prerequisite for a photo-sharing app with lifelike photos of the users that excites those who have had enough of professional influencers. New products must provide a relevant social, emotional, or symbolic benefit (see Sect. 4.2) for their target groups. For example, the innovative photo-sharing app convinces with the authentic character of the photos and the perceived closeness, not the data protection. Experience Brands offer a comprehensive brand experience that goes far beyond the actual sensory product experience. They convey both real and XRmedia experiences. Emotions are at the center and are aroused and controlled by measures of strategic brand management. Experience brands are orchestrated in a multisensory approach (Lindstrom, 2011). The target groups e­ xperience, learn, and feel them with different senses. For example, the RedBull brand offers borderline play and adventure in various areas of life. From mountain biking to motorcycle racing to skydiving from almost 40 km altitude. The RedBull brand

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3  Understanding Customers—Consumer Psychology for Innovators

smells, tastes, and sounds like adventurous extremes and the exploration of human limits. This has little to do with the actual smell and taste of the energy drink. When developing new products for experience brands, the brand image should be strongly considered. Prototypes and product concepts should be presented for evaluation as branded—i.e., with the brand name. The brand image should not be part of the designs themselves, but their social, emotional, and symbolic benefits (see Sect. 4.2) should always be considered and sensually experienced in the light of the brand image (Lindstrom, 2011; Rupini & Nandagopal, 2015). Equally important for the success of innovation in experience brands is that the following marketing activities offer a multisensory holistic experience. Human Brands  are primarily approachable and human. In all areas, the company behind them opens up to the users. The brand presents itself as open, authentic, and vulnerable. Direct personal contact with customers is not seen as a service, but as an opportunity for encounters on an equal footing. Consumers are taken seriously as people and equal partners, can have a say and co-determine. Technology serves as a vehicle for the permanent dialogue with users. With the DAO approach (decentralized autonomous organization), this development will intensify. Human Brands offer services for individual and self-realization needs. Ideas, talents, and desires are picked up and shared. Social needs are strongly involved but do not serve as an end in themselves. In product development, not only what, but how a new offer is made is important. The knowledge of the typical usage situation in Customer Insight (see Sect. 4.1), the tonality of the verbal concept, or the honest handling of technical limitations of the prototype in Design Thinking shape the evaluation of innovations of Human Brands more strongly than is the case with the other brand types.

3.2 Thinking, Evaluating, Deciding—Cognitive Psychology If you think you think, you only think you think. Gunter Gabriel

The human ability to absorb and process information is more limited in capacity than we think. Over the course of evolution, we have developed into highly intelligent beings. However, this is primarily due to the fact that our average 86 billion nerve cells are strongly interconnected, enabling us to perform highly complex

3.2  Thinking, Evaluating, Deciding—Cognitive Psychology

23

cognitive tasks. The capacities of our perception, on the other hand, are surprisingly limited. The processing of information is biologically designed for frugality and mental shortcuts. Consciousness does not function like a powerful spotlight that evenly illuminates every area of a stage, but like a pinpoint flashlight. Only very few pieces of information that hit the sensors in our sensory organs are processed further and shape what we consciously see, smell, hear, taste, think, or remember. 

Human perception is selective, subjective, and strongly influenced by the situation we are in and the goals we pursue (Strobach & Wendt, 2019). When we are hungry, we automatically notice restaurants and grocery stores as we walk through the city center. When we consider buying an eBike, we encounter eBike riders everywhere and our view sharpens for eBike brands and models. This focus occurs predominantly unconsciously, without us intending or becoming aware of paying particular attention to these things.

In many situations, we use only a few pieces of information to form a judgment about complex relationships. The ease with which we remember certain statements or examples guides our judgment formation due to our cognitive frugality (availability heuristic). For example, if we work in a start-up that develops digital health services for allergy sufferers, we overestimate the risk of developing an allergy. Since we deal with affected people every day and allergy experiences are readily available, we overestimate their significance for the general population. This entails the risk of also assessing the potential of our own services too optimistically if we do not use objective statistics and study results as a corrective. The psychologist and Nobel laureate in economics Daniel Kahneman has extensively researched how such mental shortcuts (heuristics) lead to quick judgments and the significant role they play in economic decisions. The default setting of our thinking consists of the rapid and minimal intake and processing of information. What leads to acceptable results in a simple or convenient way prevails in everyday life (mental convenience). Even knowledge of these mechanisms does not protect against the errors resulting from them, as fascinating studies with financial experts and statistics professors (Kahneman, 2016) or new product developers (Weeth, 2017) show. Only when the consequences of our assessment have serious implications or, for other reasons, we consciously invest more time and energy in processing comprehensive information do we make slow and wellthought-out decisions in which the biases listed in Fig. 3.4 occur less frequently.

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3  Understanding Customers—Consumer Psychology for Innovators

Fig. 3.4   Overview of cognitive biases. Image rights: [Wikipedia’s list of 188 cognitive biases; Design: John Manoogian III (jm3); derived from: The Cognitive Bias Codex; License: Creative Commons CC BY-SA 4.0]

The endless stream of information bombarding us is constantly automatically filtered so that we can orient ourselves, respond to stimuli, take action, or make decisions. However, filtering also means that information is lost and not included in the options we choose or what we remember. In the upper right corner of Fig. 3.4, the consequences of limited cognitive capacities (“too much information”) are listed: We mainly notice things that are unusual, striking, bizarre, or have changed compared to their surroundings. Things or people we encounter more frequently or are familiar to us from the past are unintentionally rated more positively than new ones. Accordingly, it is difficult for innovative products to prevail against the familiar. People also strive for a coherent worldview. Experiences and arguments that do not match our assumptions are not experienced as objectively neutral. Cognitive dissonance—the inconsistency of our thoughts—feels uncomfortable.

3.2  Thinking, Evaluating, Deciding—Cognitive Psychology

25

Accordingly, we unconsciously tend to avoid such tensions (Strobach & Wendt, 2019). We are more likely to stay away from people or media that hold significantly different views than ourselves. We are more likely to overlook and forget information that contradicts our assumptions than confirmatory information. On the other hand, we automatically notice and remember facts, events, and opinions that correspond to our beliefs and usually consider them more credible. In product development, it makes little sense to try to win target groups for innovations whose assumptions and beliefs are in stark contrast to the product ideas. A fundamental consistency with the worldview of customer groups must be given so that new approaches can find fertile ground. Working with psychologically oriented market segmentations or personas offers suitable methods to support this fit (Häusel & Henzler, 2018; Wirtz, 2022). People discover connections where there are actually none. This makes our world less complex and seemingly more predictable than it actually is. It is easier to go through life when we feel we can influence our destiny. That is why some athletes tend to not change their clothing during a streak of luck until it eventually breaks. National coach Giovanni Trapattoni allegedly sprinkles holy water on the grass in front of his coaching bench to increase his team’s chances of scoring. Things that happen coincidentally during a longer series of victories become supposed guarantees of success. Through rituals, we celebrate inherently meaningless connections and attribute other causes when we leave the field defeated despite the holy water and winning outfit. In the bottom right of Fig. 3.4, the effects listed under “not enough meaning” are those where we recognize meanings where there are actually none. For example, we believe we know what other people are thinking and simplify facts and connections so that they become manageable for us. The differences between self-assessment and external assessment can be particularly significant for consumer research. 

People overestimate their competencies, especially in areas where they have limited abilities. The better we understand an area, the more likely we are to realize what we do not know and understand. Consequently, competent people underestimate themselves and less competent individuals overestimate themselves in their self-assessment. The first study on this systematic effect was conducted by American social psychologists David Dunning and Justin Kruger in 1999. They focused on abilities in logical thinking, grammar, and social skills (Dunning, 2011). The Dunning-Kruger effect, named after them, was later demonstrated in other researchers’ studies on competencies in economics, politics, medicine, mobility, spatial memory, and reading and writing skills (Mazor & Fleming, 2021).

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Skepticism towards all performance measures obtained through self-assessment is therefore warranted. To assess how well consumers master something, you have to let them do it instead of asking them. For product development, this means that caution is advised when innovations are based on a lack of competence as a customer insight. People misjudge their performance and may see a lower need for support than is objectively given. In addition, people tend to develop a stable and, above all, positive self-image. When we make mistakes or achieve poor results, we are more likely to attribute them to external factors: It simply was not possible in the situation, or the task was insurmountable. For other people, however, we attribute their behavior more strongly to their character and internal factors: The person is untalented or not making enough effort. The situation in which another person finds themselves is taken into account less, especially since we usually have limited insight into the conditions for the behavior of others (Fritsche, 2018; Werth et al., 2020). In the formulation of concepts and product communication, these so-called attribution processes should be considered. If limited knowledge or moderate performance of customers needs to be addressed, it should be formulated in a way that is compatible with self-esteem (see Sect. 4.1). Ultimately, people are not unaffected by what others think and consider appropriate. What is expected in a particular situation or culture shapes our behavior. The so-called social desirability also influences the information provided in surveys (Döring & Bortz, 2016). If we live in a democratic society, it is unlikely that we will speak out against equal rights for different population groups, even if we sometimes think that some groups deserve them more than others. On the other hand, if we live in a caste system, we argue against equal rights for all, even if we personally have doubts about the caste system from time to time. As nutrition-conscious parents, a frozen pizza for children fails our assessment in a product test, even though we are sometimes very grateful for child-friendly ready meals in the hectic family routine. To correct the influence of social desirability on the results in surveys, institutes use various measures. For example, a group of respondents can deliberately answer a specific topic in the way they believe is socially expected of them. Comparing their answers with the answers of a sufficiently large group of other respondents then allows conclusions to be drawn about the effect of social desirability and corresponding weightings of the results. Psychologists are aware of these effects, which systematically distort self-assessments in questionnaires, and therefore increasingly observe actual consumer behavior in the context of innovation development, for example through the approach of Design Thinking.

4

Developing Products Step By Step

The start is half of the full story. (Author's translation) Albert Einstein

The process of Design Thinking starts with a focus on the problem statement. What specific problem of the customers should be solved? Which pain points should the innovations improve? What exactly makes the users of the current products dissatisfied or annoyed? Various tools and templates support understanding (understand), observing (observe), and focusing (pivot point) on customer  problems in Design Thinking (see Fig. 2.1). Insights into unmet or insufficiently met customer needs (customer insights) form the pivot point, both in the process of Design Thinking and in the conception of innovations. Because only those who know where consumers are currently feeling the pinch can design a more comfortable, ergonomic, or beautiful pair of shoes for them.

4.1 Customer Insights—The Pivot Point of Innovative Ideas In a joint workshop, customer needs are first collected in a Need Canvas and then prioritized (see Fig. 4.1). They can either be painfully familiar to users (pain points) or made conscious through external impulses (latent needs). The need state differs depending on whether one wants to launch a new product in an established market or a still-developing market. As described in Sect. 3.1, it makes a difference whether one wants to position an innovation under a functional brand or an experience brand. There are many sources for understanding customer

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2023 U. Rademacher, Customer Centricity in New Product Development, Springer essentials, https://doi.org/10.1007/978-3-662-67697-4_4

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PROJECT

TEAM

LATENT NEEDS

BASIC NEEDS Fig. 4.1   Need Canvas

needs, from conversations with key clients, encounters at trade fairs, group discussions in market research, to the analysis of customer reviews on social media. If these are not available, Design Thinking usually creates opportunities to personally meet customers of the target group or directly observe their behavior. This can be done in the process of new product development through a series of short interviews with selected individuals or during store visits, where customers’ orientation and purchasing behavior in the store are examined. With the consent of the retailer or store manager and while adhering to data protection rules, short interviews can also be conducted after visiting the store. In the team, observations and findings from all sources are systematized in an Insight Mining Canvas (see Fig. 4.2). Stories from everyday life and expressive examples help to adopt the mindset and emotional state of the customers. Quotes and stories (see Fig. 4.2) should be documented in the original language, as formulations in consumer language are often vivid and informative. Furthermore, post-its are used to collect which problems customers describe when using current products. Which of their criteria are not met by current products? How do they experience this? It is important not to evaluate customer behavior according to the motto: They are doing it wrong when they use our product. Instead, only difficulties that customers themselves describe as ­problematic are collected. Under needs, the needs expressed by the target groups

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4.1  Customer Insights—The Pivot Point of Innovative Ideas

PROJECT

TEAM

QUOTES & STORIES

PROBLEMS

NEEDS

CONSUMER BEHAVIOR

Fig. 4.2   Insight Mining Canvas

are gathered. What do they wish for in the context of product use? What would solve the described problem? What provisional or own solutions do they resort to? The field consumer behavior provides space for notes on observed customer behavior. How do different customers use our product? What comes first and which step follows? What is often used and what is less? Where are there pauses or repetitions? It can be helpful to define certain aspects of product use in advance, which are particularly relevant to sharpen the focus for details. The results are discussed and evaluated in depth during the workshop. For further idea development, it can be useful to record in a Design Demands Canvas (Fig. 4.3) which properties innovative products must have (must) according to the observations, what desirable properties or features are (should), which possible additional services or features are conceivable (could), and what should be avoided (won’t). The exercises should lead to several possible starting points for promising new products. At the center is the Customer Insight, which is the understanding of what needs various individuals have in different situations in the relevant context and what they ideally desire. In verbal concepts of new products, this is usually formulated from the perspective of the customers, i.e., as a first-person statement. Some fictitious examples are shown in Tab. 4.1.

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4  Developing Products Step By Step

PROJECT

TEAM

MUST

SHOULD

COULD

WON‘T

Fig. 4.3   Design Demands Canvas Tab. 4.1   Examples of Insight Formulations

Problem

Possible Insight Formulations

Hectic and Example 1: I often have quite a lot on my plate. My family sometimes stressful every- feels the effects. I wish I could stay calm even when things don’t go as day life planned. Example 2: There’s always something going on in my job. I like being challenged. But sometimes I don’t even know where my head is, and more and more small mistakes creep in. Example 3: My everyday life is pretty packed. Usually, I have to push myself from morning to night, and nothing can go wrong. I wish I had a little break to catch my breath and let go more often. Redundant inputs when using online platforms

Example 4: Online services noticeably simplify my job. Certain inputs—like cookie settings or access data—often have to be entered two or three times. It only takes a few seconds, but again and again— that’s annoying! Example 5: Apps and online tools help me every day. Certain inputs— like cookie settings or access data—often have to be entered multiple times. I wonder why an intelligent system can’t handle this better.

4.1  Customer Insights—The Pivot Point of Innovative Ideas

31

The examples in Tab. 4.1 illustrate different verbal possibilities for formulating a need from the customers’ perspective. Convincing insights are characterized by:

• • • •

The short, concise formulation in 2-3 simple sentences The formulation as an I-statement The description of a relevant situation as context The use of consumer language and expressions (e.g., “having a lot on one’s plate,” “stepping on the gas”) • The focus on a central, unsatisfied customer need (serenity, breaks, avoidance of redundancies) • A self-serving description (e.g., by using mitigations such as “sometimes,” “now and then,” “a little” in the problem description) • Describing or hinting at the associated negative consequences (irritability, performance losses, exhaustion) or the inner conflict (see Sect. 3.1).

Various thoughts, emotions, and desires can constitute the problem for customers. A daily routine characterized by many activities and tasks (examples 1-3 in Table 4.1) can lead to irritable behavior and, consequently, tensions in the family or friendships (external). In a professional context, the resulting errors can be problematic. However, it can also be the inner tension caused by high expectations—whether self-imposed or conveyed by others—that represents the actual difficulty (internal). The closer the description represents the customers’ perspective, the better the chances for the development of a promising innovation. Insights can be conceptually broad and affect different product categories. Examples 1 to 3 (in Table 4.1) could form the basis for the development of a novel meditation app, a dietary supplement, or a caffeine-free coffee beverage. Other insights, such as examples 4 and 5, lay the groundwork for specific innovations like a particular digital tool of a company. The feedback that customers provide in the innovation development process in interviews or workshops on the concepts reveals which problem description resonates most with them. It can be challenging to analytically separate criticism of the formulations from weaknesses in the actual content. For example, customers might criticize example 1, saying they don’t long for everything to always go as planned. A linguistic optimization (e.g., mitigation to “I wish I could stay calm even when things don’t go as easily as I would like.”) based on customer feedback with a subsequent feedback round can clarify whether the formulation can be improved or if the stated

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problem does not represent a sufficiently motivating pain point for the target group. The cycle of change (refine), customer evaluation (evaluation), and optimization (improve) characterizes the REI principle in the course of co-creation workshops, where innovation teams work on innovations together with representatives of their target groups (Dell’Era et al., 2020; Roberts et al., 2021). Agile solution development in Design Thinking also works with these loops. Sufficient time should be taken for the conceptual development of the consumer insight. The potential of the entire concept depends on the quality and relevance of the insight. If the description of an existing problem does not hit the nail on the head, the presentation and specification of the solution cannot succeed either. Sufficiently long workshops with a relaxed alternation of teamwork, inspiring creative exercises (see Sect. 4.2), and multiple feedback loops with customers are worthwhile.

4.2 What Do We Offer? Customer Benefits Instead of New Features In the next step, the product itself takes center stage. It must offer a solution to the problem described in the insight. The sensory and technical properties of the product must be designed in such a way that it provides credible added value for the target groups. Here too, development should take place from the perspective of the customers. Technical data, performance features, the mode of operation, or ingredients of the product should only be mentioned if necessary for understanding the resulting functional, emotional, or social benefits. For example, if a new tool is noticeably lighter and therefore allows for longer, fatigue-free work, the reduced weight should be emphasized as an innovative strength in the description of the benefits. Otherwise, this aspect should be tested in a later phase of innovation development when it is clear that there is potential for the basic idea in the first place. Provisional and creative solutions from customers, which were discovered during Insight Mining (see Fig. 4.2), can inspire professionals from corporate research and development. More often, however, it is the case that novel materials or technologies with which the research department is experimenting must be selected according to what is relevant, interesting, and purchase-motivating for the customers. Prioritization according to the criteria defined in the Design Criteria Canvas is suitable (Fig. 4.3). In the flow of Design Thinking, the transition from problem orientation to solution orientation now takes place. If verbal

4.2  What Do We Offer? Customer Benefits Instead of New Features

33

concepts are used, this can be recognized linguistically by the change from the I-perspective to the You/Theyperspective. The innovation team initially develops as many ideas as possible, which relate to the problem defined in the Customer Insight. Creative techniques of idea development (Ideation) can support the innovation team in this process. Here is a small selection of tried and tested, popular techniques:

Overview

• Brain Writing: Each team member briefly notes an idea on a prepared piece of paper or a moderation card. Multiple ideas can also be recorded, but each should be documented on its own card. The card is then passed on or exchanged with another team member. It is easiest if the team sits in a circle and each person passes the card to the person on their right or left after writing on it. The recipients supplement or modify the idea by making notes on the card and pass it on again. If no changes appear necessary, the card is passed on unchanged. This is repeated until each team member has received each card once. Afterwards, all idea cards are placed in the middle and discussed. It is recommended to use the canvas with the design criteria (Fig. 4.3) as a guide. • 8 Ideas in 8 min: This technique can be used without much material and time. Each team member takes a DIN A4 sheet, folds it once lengthwise, then twice crosswise, resulting in a small square. Press the edges firmly and then unfold the sheet. This creates 8 approximately equalsized fields, 4 above the longitudinal fold and 4 below. In each field, the team member draws a rough sketch of a product idea that addresses the problem from the Consumer Insights. They have a total of eight minutes to do this. During this time, no talking should take place, and especially no comments should be made regarding the quality of one’s own ideas or the ideas of other team members. If the person drawing cannot think of a new idea, they should draw an improved version or variations of the idea in the remaining empty fields. All fields should be filled after the time has elapsed. It is essential in this creativity technique to stay in the flow of drawing and thus not give critical thoughts or losing oneself in details a chance. • Most Challenging Assumptions: This technique offers a different approach to dealing with creativity-inhibiting thoughts. The team

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4  Developing Products Step By Step

PROJEKT

TEAM

LEAST RISKY

MOST RISKY

Fig. 4.4   Most Challenging Assumptions Canvas

discusses the assumptions that are considered set and are usually not ­(anymore) questioned. For example, it was long assumed that sparkling wine could only be stored, sold, and tasted in bottles until Paris Hilton introduced “Rich Secco” sparkling wine in a can format (Fig. 4.4). The hidden assumptions that apply within the company, for the brand, or within the product category are openly discussed and noted by the innovation team on post-its or metaplan cards. The team then discusses to what extent these assumptions actually (still) have validity or whether they represent rules that could be broken. In the next step, the assumptions are grouped according to which assumptions would be most challenging for new product development and which would be less so. Challenging ideas tend to lead to very unusual ideas that shake up the rules of the market vigorously and all at once. However, not every disruptive idea automatically has potential. Innovations that visibly break through less challenging assumptions can be worthwhile—at least for a short- to medium-term strategy.

4.2  What Do We Offer? Customer Benefits Instead of New Features

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Table 4.2   Examples of Benefits Formulations

Insight

Possible Formulations of Benefits

I often have quite a lot on my plate. My family sometimes feels it. I wish I could stay calm even when things don’t go as smoothly as would be easiest for me.

Example 1: Now there’s Chillax, the innovative meditation app for every day. Chillax supports you with meditation sessions tailored to your energy level, helping you become a little more relaxed and calm day by day. Example 2: Now the innovative Chillax offers you a herbal dietary supplement that provides your body with high-quality minerals and vital substances that take away stress and hectic. Purely plantbased, free of additives, gluten, and lactose. Example 3: Finally, Chillax allows you to enjoy a stimulating coffee drink without further increasing stress and tension. Enjoy delicious breaks with this new coffee alternative, featuring intense coffee taste and 0% caffeine.

In Table 4.2, product ideas and their benefits are listed as examples, which pick up on a Customer Insight (from Table 4.1) and continue it. In Design Thinking, the benefits flow into the design of the prototypes. In the verbal concept, the product idea (and possibly the brand as the sender) is presented in this element and answers to the customer question are given: What’s in it for me? Different mechanisms can suggest the added value of the innovative approach. Table 4.3 presents various forms and provides examples for the formulation in the product concept.

Table 4.3   Examples of mechanisms of action in benefit formulations

Mechanism

Possible formulations

Promise of effect

Causes…/ enables…/ leads to…/ creates…/ achieves…

Performance improvement (quantitative)

….more… / ….faster… / ….improved… / … more effective

Performance improvement (qualitative)

…cleaner / ….stronger / …healthier / … lighter / …more pleasant / ….more thorough / …longer-lasting

Conflict resolution

…X without Y / …much X with little Y

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4  Developing Products Step By Step

Successful formulations of benefits in the product concept offer:

• A concise formulation in 2-3 simple sentences • A comprehensible solution to the problem or tension from the Customer Insight (e.g., “stimulation without stress”) • A brief characterization of the innovative basic idea (e.g., “novel meditation app”) • A presentation of the added value as an offer without overly promotional tonality (e.g., “supportive and individually adapted meditation”, “delicious breaks”) • A mention of central product features if necessary for understanding the benefits or uniqueness (e.g., purely plant-based, free of additives, gluten, and lactose)

When working with prototypes, this content is conveyed visually rather than verbally. Ideas are visualized two-dimensionally through sketches, drawings, animations, or photo collages. With clay, Lego, cardboard, or craft materials, ideas with their central properties or functionalities are represented three-dimensionally (haptic prototype). Role-playing allows the core of the idea to be clarified in innovative services through the interaction of users with the innovators. In digital prototyping, mock-ups or WordPress & Co. present the idea on the internet to receive feedback. These enable quick and pragmatic initial customer feedback to be obtained and incorporated into further development according to the REI principle (see Sect. 4.1). So-called reasons-to-believe (RTB) support the acceptance of innovative products by making transparent the basis of the product promise (see Sect. 4.3).

4.3 Too Good to be True? Building Credibility and Trust How is this supposed to work? Now it is necessary to illustrate the basic functionality in a prototype or to briefly describe it in a verbal concept. Professionals from research and development often find it difficult not to get lost in details about the required size, acceptable weight, attractiveness of possible ingredients, or price. These aspects are worth reviewing. However, this should only be done once sufficient interest in the basic idea has been determined in the first phase of customer-

4.3  Too Good to be True? Building Credibility and Trust

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centered product development. To gain a rough orientation for further technical development, in some cases, the principle of “testing the limits” is applied. This means that significantly different variants (e.g., in two different sizes, with different ingredients) are designed and evaluated by the target groups in the innovation workshop. Even if customers are generally open and the brand (in branded concepts or prototypes) has a trust advantage, the question of how the product delivers on its promises often arises in the minds of the targeted audience. This is especially true for disruptive or truly innovative products. Therefore, concerns should be cleared up as much as possible from the beginning to take the wind out of the inner critic’s sails. This is all the more successful the more familiar the objections and doubts of the customers are. Certain lines of argument emerge, which, based on experience, make it easier for customers to engage with the product promise:

• Functionalities that relate to the usage habits or makeshift solutions of customers give them the good feeling of being on the right track and now receiving a professional solution—ideally with less effort. • The meaningful and customer-oriented description of a technology evokes associations of how the promised effect is functionally possible. The naming should be legally checked, attractive, and not sound too promotional. • Technical knowledge and expertise from other product categories can be used as RTB to strengthen acceptance for the technology through this competence transfer. • Analogies clarify the mode of action using a linguistic image from a familiar area. • Concrete examples, of what the product is capable of, support personal relevance for customers. The examples must come from the everyday life of the target groups and represent current limits of existing products. • Recommendations from independent third parties or experts in the respective field can also alleviate concerns. • In the German market, serious and independent seals and ratings (e.g., Stiftung Warentest, Ökotest) can also create a trust bonus. Self-created seals, badges, and markings, on the other hand, are increasingly viewed critically.

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4  Developing Products Step By Step

Table 4.4   Examples of RTB formulations

Benefit

Possible RTB formulations

Now there is Chillax, the innovative meditation app for every day. Chillax supports you with meditation sessions adapted to your energy level, helping you become more relaxed and calm day by day

Example 1: Like a personal trainer, Chillax uses an algorithm to assess your current daily form before each session and develops your individual meditation session based on this (Analogy) Example 2: Chillax gently reminds you of your meditation break during the day and offers you different session lengths to choose from. This way, you can regularly take the relaxation break you need (Concrete example) Example 3: Chillax was developed by experts in digital health services. Their 10 years of experience in physical fitness is now also available for mental fitness through Chillax (Competence transfer) Example 4: The Techniker health insurance company recommends Chillax as a digital health service for stress prevention (Recommendation)

Table 4.4 illustrates, based on the previous elements (Table 4.1 to 4.3), four different ways to make the Chillax App comprehensible and credible. Customer feedback on this argumentation not only provides insight into the motivation of the target groups but can also give initial indications for later product communication.

4.4 The Essence—Capturing the Core of the New Product The conclusion of a verbal concept is usually a short sentence that crisply captures the core of the innovation idea and benefit: With Chillax, you send your stress on a break. In terms of tonality, this formulation can be somewhat more promotional than the actual concept. In feedback loops, customers can also summarize their product perception in such statements. It clarifies the essence of the innovation and provides inspiration for advertising communication.

What You Can Learn From this essential

• Suggestions for adopting a client-centred perspective • Central knowledge from motivation, cognitive and brand psychology • Impulses for the successful formulation of involving customer insights, motivating benefits and trust-building RTBs • Tools and techniques for developing prototypes with potential

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2023 U. Rademacher, Customer Centricity in New Product Development, Springer essentials, https://doi.org/10.1007/978-3-662-67697-4

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