Crisis Management

Uber, New Product Strategy and the Critical Moment

11 Mar , 2013  

Launching a new product isn’t easy. You have to come up with an idea, validate the concept, assemble a business model, develop a supply chain, create or break into a channel of distribution, begin production and get customers to notice you.

The most important thing, however, is creating a positive trial experience. Trial is the critical moment.

People have to be delighted when they try your product. This is the only way you will get repeat purchase. And to survive you need repeat.

Driving trial is costly; you often have to provide big incentives to motivate people. So trial purchases are rarely financially positive. The only way a new product will survive is if people make a second or third purchase without significant discounts.

People are usually curious and open-minded the first time they buy a new product; they recognize it as something new so they notice little things. If all goes well they will be delighted to have found something that will make their life a little better. If things go poorly, however, they will likely declare the item a disappointment. When this happens they won’t be back; getting someone to try a product for a second time is a challenge indeed.

You can do everything right on your new product but if the trial experience goes poorly you will fail. This is true even when you have a good product. A new pharmaceutical with excellent trial results, for example, won’t succeed if physicians have a bad experience when they first try it with a patient.

This week I tried Uber for the first time. Uber is an app that helps you find a taxi or car service. You type in your location and the app contacts nearby drivers. I was traveling this week so decided to give it a shot.

How did it go?

It was fabulous. I set up my account and asked for a cab. The driver pulled up in four minutes and I was off to the airport.

I like two things in particular. First, the interface is charming; it tells you exactly how long it will take to locate a car and shows you all the cars in your area. It is incredible. Second, the app gives you the name of your driver along with a photo. This is very comforting; it creates a feeling of security. And if I leave something behind I think there is a reasonable chance I might actually get it back.

So I’ll use Uber again. I’m sold. I might even tell other people about Uber.

If you are working on a new product launch, make sure people have a good trial experience. Everything else is secondary.

*  *  *

Expert Marketer Magazine named Defending Your Brand one of the finalists for marketing book of the year. The next round is determined by vote; please cast your ballot this week at http://www.marketingbookoftheyear.org/

I’m just back from Colorado and Germany. I have several classes in Chicago this week, then I head back to Dusseldorf to teach for another two days in the Kellogg-WHU Executive MBA Program. Then I go to New York to lead a corporate seminar on building strong brands. I enjoy the travel but I’m happy I don’t do this every week.


3 Responses

  1. Thanks for your post Tim. I agree 100% first time user experience is huge, we put a lot of thought into making it awesome but there are always areas of improvement too. Appreciate the support!

  2. Kobi Dwek says:

    Hi Tim, interesting post! You should try Lyft and SideCar (not sure if they operate outside San Francisco tho). Very interesting business idea and customer experience, however low barriers to entry…

  3. Richard Low says:

    Tim,
    I liked your blog very much…..very good advice especially in an industry like pharma where this basic is often overlooked somewhat.
    Richard

Leave a Reply

Archives

Conversation Across the Site

  • Eric { It's all about experience, just like Apple, but in a even more luxury way. } – How Porsche Builds Its Brand
  • Eduardo Oliveira { I live in Brazil, where the govt is "active" on regulating almost everything and increases taxes like no other govt. The result - and current... } – A Marketer Looks at Capitalism
  • emitahill { Fascinating, and it makes sense. If what is certain is really bad, why not risk uncertainty?We're all gamblers at heart, we just don't act on... } – Why Greece Said No
  • timcalkins { Rahul--My sense is that people will sacrifice if there is a better future ahead. The problem is that many in Greece don't seem to see... } – Why Greece Said No
  • Rahul { Hi Tim, You bring up two interesting thoughts: 1) Does it mean that the opposition did a bad Marketing job of not being able to... } – Why Greece Said No
  • timcalkins { Thanks for reaching out. I would be happy to learn more about your research...this sounds like an interesting framework. My email is t-calkins@kellogg.northwestern.edu } – P&G's Risky Brand Strategy
  • Read more Comments »

Collaborate with Tim

Tim helps companies around the world build great brands. To schedule a program or event click here. To learn more about Tim’s books, click here.