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Succeeding at a Premium 9 Feb 2004 Last week’s update by Tim Jones of Innovaro looked at two products that succeeded despite much higher prices than existing offerings. Smints prices are as much as four times higher than other breath mints, while the Dyson vacuum goes for twice the price of competing models. Tim’s explanation for success: Charging premium prices for higher benefits is a classic approach to new product introduction. In the case of Smints and Dyson, this approach has been very successful; for products like Gillette’s new pulsing razor, the prospects are less clear. Smints and Dyson each took very different approaches to achieving success. Smints innovations were broader-based than product benefits alone. Dyson, on the other hand, provides a cautionary tale of the time required to create a success from benefit-based innovation alone. Smints
Smints is the breath mint that is outselling established competitors in most markets where it is sold. It comes in a variety of flavors, is advertised in unusual places, and sells at prices as much as four times the price of other breath mints.
Smints Breath Mint Higher benefits are only one of several ways in which Smints bests the competition. The company’s approach also reduces barriers to purchase. In fact, Smints excels in three of the four segments of the four factor model. The innovative advertisements raise visibility, and the expansion of purchasing opportunities in areas like vending machines and cafes make Smints much easier to buy than competing products. The uniquely designed 'one-at-a-time' dispenser makes Smints easier to use as well. Thanks to Smints, you can get a mint practically wherever you need one. The product delivers higher benefits, in the form of new flavors and novelty, with wider distribution. Customers are paying a premium for a product that innovates across three dimensions.
Dyson
The innovation in Dyson vacuums is almost purely based around improved benefits. The product vacuums better than its competitors, and it does so in a way that is highly visible, thanks to the clear dirt collection chamber in the product’s design. As one woman wrote on Epinions: Dyson’s vacuum cleaners don’t excel on any other dimension, however. Compared to its competition, Dyson vacs are more expensive, have the same distribution, and require some learning to master. Because of this, the Dyson vacuum does not have a successful profile in the four factor model:
Dyson Vacuum Cleaner For many years, the product was not a winner in the market. Its success came only after a decade of perseverance and investment on the part of James Dyson’s company. Once the product began to show promise, Dyson had to battle companies like Amway and Hoover who violated his patents. Dyson’s story fits in the archetype of the romantic product developer. James Dyson is an inventor whose mission in life is to make the world a better place by developing and selling better performing products. Like Dean Kamen with Segway, Nolan Bushnell with Chuck E. Cheese, or Steve Jobs with Pixar, James Dyson made his fortune with one product and then developed a new product in a different area. Very few companies would have the patience of someone like James Dyson. Gillette is expecting its new M3 Power vibrating razor to succeed on launch. It cannot afford to have a product that requires 10 years to achieve market success. Yet that might be an appropriate expectation for a product that excels only on the benefits dimension of the four factor model. More information: |
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