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PSM Individual 9

The document discusses how innovations often require behavioral changes that create psychological and economic costs for consumers, making many innovations difficult to adopt. It then analyzes different degrees of behavioral change involved in products and strategies like minimizing resistance through compatible products and targeting unendowed consumers. Finally, it discusses how Steve Jobs initially had doubts about the iPad but focused on simplicity, initially faced resistance, and ultimately transformed media with the fastest selling product in Apple's history.

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Aashni Chandran
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49 views1 page

PSM Individual 9

The document discusses how innovations often require behavioral changes that create psychological and economic costs for consumers, making many innovations difficult to adopt. It then analyzes different degrees of behavioral change involved in products and strategies like minimizing resistance through compatible products and targeting unendowed consumers. Finally, it discusses how Steve Jobs initially had doubts about the iPad but focused on simplicity, initially faced resistance, and ultimately transformed media with the fastest selling product in Apple's history.

Uploaded by

Aashni Chandran
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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PSM INDIVIDUAL ASSIGNMENT PCS AASHNI 1811076

EAGER SELLERS AND STONY BUYERS

Why only less than 40% of new innovations succeed in market?


This is majorly due to the behavioural change required by the consumer causing a psychological and economic
switching cost.

Psychological cost Economic cost


1. Loss aversion- Losses have more impact than a 1. Transaction cost - cost paid when shifted from cable
similar sized gain. tv to dish tv’s

2.Endowment effect - To give up a product, a customer 2. Learning cost - When shifted from two wheeler to a
expects more than the value to compensate car, driving classes are the extra learning cost

3. Status Quo- Giving up what the consumer already own 3. Obsolescence cost- When moved from film camera to
is more painful digital camera, the films became useless

Balancing Product and behavioural changes


Innovations create value for consumers, but also create behavioural changes most of the time. Bigger the
change in behavioural change of consumer, greater is the resistance for the new product.

EASY SELL
SMASH HITS
Accepting resistance :

H Degree of behavioural change

Dove conditioner with cap at Whatsapp was with significant


the bottom requires less features, but usage was similar 1.Being patient - It is important for slow adoption of new
behavioural change(opening), to normal sms. The product innovations. When company assume faster adoption, they
but gives high value to went viral due to easy usage run a risk of depleting all their resources

consumer with extraordinary features 2.Strive for 10X improvement - To make the relative benefit
of new product much higher than the existing one owing to
the endowment effect

SURE FAILURE
LONG HAULS

Windows 8, even though had Personal computers or


3.Eliminate the old - When facing unavoidable consumer
great features, it caused huge smartphones with many resistance, company can eliminate incumbent products

behavioural changes due to features and huge behavioural Minimising resistance


missing of start button, my change. Even though it took 1.Make behaviourally compatible products - Small
computer & many apps time, now it is unavoidable behavioural changes easy to adopt

2.Seek out unendowed -Target the non users of the


product

L Degree of product change involved H 3.Find believers - Find consumers who believe in the value
new product gives even though the value is small

TECHNOLOGY READINESS INDEX


• The role of technology has been increasing in both products and services but these developments have made it
complicated for the customers due to large behavioural changes.

• In different models of marketing between the employee, customer and company, the interaction between
company & employees (internal marketing) and employees & customer(interactive marketing) has less impact of
technology.

• Understanding the TRI helps in segmenting the market. We can accordingly design product or services using
technology thus maintaining the customer- company & employee-customer relationship.

The iPad
• iPad was born, when Apple was looking for a low cost notebook computer, even though Job had a
misconception that tablet wouldn’t appeal to customers due to lack of keyboard. And once again Job had
focused on simplicity. It was designed to feel casual, friendly and naturally scoop & whisk it.

• Desire to control every aspect of a product, compelled Job to license the ARM architecture rather than Intel and
also resisted apps from outside developer, but in order to differentiate iPad, Jobs allowed few developers apps
after testing and approval.

• iPad was not received well initially, starting from the name to the product features and making the customer a
passive user compared to mac. But the simplicity of the product attracted the customers once it was launched
with reviews saying it’s a magical product which even a 6 year old can use and Job creates a product for which
he realises the need even before the consumers. Thus iPad became the fastest sold product of apple.

• With iPod, Jobs had transformed the music business, and with iPad, he wanted to transform all media including
television, journalism and entertainment.

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