Give consumers control: Understanding the psychological barrier to adopting new products
By Koh Juan Zhen and Professor Gemma Calvert
Today’s consumers live in an era of vast choice, even in Asia. According to Nielson’s 2015 Global New Product Innovation Survey, there were more than 10,500 new fast-moving consumer goods (FMCG) product launches in India in 2014 alone. On the surface of it, consumers seem to welcome such a proliferation of choices as in the same survey, 63% of respondents around the world said they liked it when manufacturers offer new products, and more than half said they had purchased a new product during their last grocery-shopping trip.
Ironically, very few new products successfully stay on store shelves for more than 12 months. Failure rates of new products are consistently high over the last decade, ranging from 40% to 90% across different product categories. This demand shortfall is of considerable concern for businesses – since consumers self-reported preferences for more choices are inconsistent with the fact that they not routinely adopting new products at anything like the rate suggested by their feedback.
Psychological Factors at Play
There are many factors that can cause new products to fail but even in stable economic conditions and despite innovative product design, the failure rate remains inexplicably high. In recent years, researchers have begun to reveal that there are stable, psychological factors at play that can also create barriers to new product adoption.
A famous experiment conducted by the behavioural economist Richard Thaler and his colleagues found that people irrationally overvalue products that they already possess over the ones they don’t and demand approximately twice the level of compensation to give up these possessions, despite the fact that all items were essentially identical in cost. This bias is called the endowment effect. Furthermore, the magnitude of the bias can increase up to fourfold over time. This explains the prevalence of product familiarity and the impact of the long-standing market leader, as barriers to adopting new products. How companies communicate the ‘gains’ consumers can receive from the new products become more important than ever. Businesses should strive to quantify how the benefits of the new product far outweigh the cost of giving up a familiar brand, to initiate adoption.
Product Communication: Giving Consumers the Sense of Control
Innate personality traits of consumers may also become a psychological barrier to new product adoption. In a recent study conducted by Dr. Ali Faraji-Rad, a Fellow of the Institute on Asian Consumer Insight, and his colleagues, one consumer personality trait, the desire for control, was tested to examine the impact on new product evaluation.
In one experiment, 619 male and female respondents recruited via the Mechanical Turk platform were asked to complete a personality scale that measured a variety of traits including their desire for control. Two weeks later, respondents were presented with an advertisement, which included a headline and bullet-pointed information on smoothies. The headline was varied across four conditions (new vs. traditional and control-reducing vs. control-increasing). In the new-product condition, the headline, “Let the new sensation blend take charge of your taste buds”, was used to create the control-reducing scenario and the headline, “Take charge of your taste buds with this new sensation blend”, was used to emphasise a greater sense of control. In the traditional-product condition, “New sensation blend” was replaced with “Classic blend”. Participants then indicated their attitudes toward the advertised smoothie.
It was found that consumers who are high in desire for control, an innate motive or need to personally exert control over one’s surrounding environment, are more hesitant to adopt new products. By creating an environment that enhances consumer’s sense of control, participants with high desire for control evaluated the new product more favourably than in a control-threatening condition. Such framing does not affect the new product evaluations amongst consumers with lower desire for control.
What does this mean for businesses? With many product launches appearing in the global marketplace, businesses tend to over-emphasise the novelty factor, without considering consumer’s need to feel assured and in control when approaching a new offering. As this control-enhancing communication strategy does not affect the new product evaluations amongst consumers with lower desire of control, the research may offer a potential solution to overcoming the psychological barriers to new product adoption, regardless of the consumers’ levels of desire for control.
Business owners and marketers alike have long acknowledged the fact that consumers want to be in control – to feel empowered. As early as 1974, Burger King’s slogan ‘Have it Your Way’ was conceptualised to give consumers flexibility and put them in charge. Nowadays, financial services, such as DBS Bank in Asia, also use messages to encourage consumers to “Take control of your retirement planning”. This communication strategy is increasingly important in today’s technology-driven world, accompanied by accelerating complexity. Companies can explore control-enhancing interventions through communication and active consumer participation to mitigate such threat to consumers’ sense of control.
Does one’s desire for control vary across different cultures? Interestingly, this research study also explored cross-cultural differences in desire for control and new product acceptance, particularly in India and China.
In one study, it was found that Indian-born participants in the United States reported greater desire for control relative to Chinese-born participants (who did not differ in evaluation). Similarly, when control-increasing versus control-reducing conditions for a new product were introduced to students at universities in China and India respectively, the product was evaluated more favourably for a control-increasing condition in India, but there was no effect in China.
These results suggest that Indian consumers may possess a higher desire for control than their Chinese counterparts and could be less receptive to new products.
China and India are two of the world’s most important emerging markets. Even though both countries reside in Asia, they are different on many fundamental dimensions. In terms of economy, residents in China and India have vastly different income levels, preferences and spending attitudes. According to Goldman Sachs 2016 report, India’s 2015 GDP per capita at $1,650 is comparable to China’s in 2005. India’s economy may be lagging behind China’s but they are definitely catching up fast.
Such differences in social and economic climate might be the contributing factor for the countries’ differences in desire for control and potential receptiveness to new products. As the world progresses, we will see consumer digital technologies, such as driverless cars and artificial intelligence, taking control away from consumers and moving them over to the passive passenger seat. These scenarios are likely to induce a higher drive state for control among consumers making it harder to penetrate these new markets.
As companies continue to invent effective and innovative products and target culturally diverse markets, marketers need to be cogitant of creating a control-enhancing environment for consumers to mitigate consumers’ innate and situationally induced desire for control. Only when businesses listen in to consumers’ psychological needs will they be able to break down these innate barriers to new product adoption.
Authors: Koh Juan Zhen and Professor Gemma Calvert
Date: 21 June 2017
About the Authors
Koh Juan Zhen is a Research Assistant at ACI. Prior to joining ACI, she was an Assistant Marketing and Business Development Manager in the tourism industry and led various integrated marketing campaigns and partnership initiatives to drive reach and sales. Her research interests lie in the area of consumer behaviour and how emotions and subconscious mental processing influence decision-making.
Professor Gemma Calvert is the Director for Research & Development at the Institute for Asian Consumer Insight and Professor of Marketing at the Nanyang Business School, NTU. A pioneer of neuromarketing, she helps companies to break into Asian emerging markets through deeper understanding of Asian consumers using brain and psychology-based research methods.