Crunch time for consumer NPD

It’s safe to say that the goal of Lay’s recent “Do Us a flavour” campaign was not to find the next great potato chip flavour inventor. In case you missed it, the contest challenged customers to think of new potato chip flavours. Customers submitted their suggestions, and Lay’s developed and released three of them: Cheesy Garlic Bread, Sriracha and Chicken & Waffles. Customers voted for their favourite, and the participant who suggested the winning flavour – Cheesy Garlic Bread – won $1,000,000. So why go to the trouble of staging this contest instead of concentrating on traditional marketing strategies? The answer is simple: consumers don’t trust traditional marketing strategies anymore, and businesses are getting creative, using consumer-generated marketing – directly involving the customer in the marketing and development of products – to succeed.

Consumer-generated reviews can build trust in businesses
Results from a recent study by Forrester Research suggest that consumer-generated reviews are among consumers’ top three most trusted sources of product information, trailing only recommendations from friends and family and professionally-written reviews. These results are echoed in Nielsen’s Global Trust in Advertising report, which found that 70% of consumers surveyed trust online reviews as a source of product information, second only to earned media (i.e. personal recommendations).

I read a significant number of these consumer-generated reviews, dozens a week, and consider it a hobby of sorts, like reading mystery novels. I’ve noticed an increasing number of companies offering their products to reviewers in exchange for reviews. This is a form of consumer-generated marketing as it increases the amount of non-company-generated information available. The studies cited above find that consumers are more likely to choose a product or business that has a greater number of consumer-generated reviews versus one with fewer. A product or business with few reviews may inspire distrust: if no one is writing reviews about a product then it’s likely that no one is buying it. So if consumers are becoming marketers, what role do they play in the development of products?

Consumer feedback can lead to disruptive innovation
Product development that occurs through consumer-generated marketing is discussed in an interesting article published on the Harvard Business School’s Working Knowledge blog. The article looks at the way online communities and businesses interact in product development and how this interaction often leads to disruptive innovation (products that succeed by differentiating themselves from existing products) rather than leading to radical innovation (products that succeed by representing a significant technological advancement over existing products). These findings run counter to traditional thinking, the article states, as historically it was believed that such input could only lead to “incremental improvements whereas anything revolutionary could only come during the ‘break’ in the dialogue.”

Consumer discussion on social media can build product success
This type of disruptive innovation is something I’ve observed in the running community with the growing popularity of minimalist/barefoot running. Minimalist/barefoot running seeks to place the runner in a more natural form by reducing the “drop” of the shoe, the difference between the height of the toe and the heel of the shoe. By reducing the drop of the shoe, the runner is more likely to land on the forefoot or midfoot rather than the heel. This form of running and the associated shoes have been championed on running blogs and message boards as a means of reducing injury. The success of Nike’s Free line of shoes, as well as similar products by other companies, owe much to the marketing generated by runners themselves. As praise from early adopters spread on running blogs and message boards, hype built, and consumer demand grew. In this way, the consumer-generated marketing of barefoot/minimalist running led to the disruptive innovation of the barefoot/minimalist running shoe category, a category that several companies now concentrate in entirely.

All of this suggests that the role of consumers in the marketing and development of products should not be taken lightly. Consumers are spending an increasing amount of time discussing products online which results in a level of expertise. This expertise is being recognised as a source of product information among consumers and a means for businesses to analyse the path of consumer demand. As a source of marketing, consumer-generated reviews can help bridge the trust gap between businesses and customers – while as a means of product development, consumer input could lead to the next great innovation, or potato chip flavour.

Alex Jones is an analyst with the communications division at Market Strategies International