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How to create products that will be commercially successful?
Launching any project is always a risk, it’s something you do by trial and error. Is there a way to minimize risks and build a safety net? There is! If you are ready to part with illusions and face reality.
We talk to startups and investors, you get the value.
New York 1929. The annual Easter parade has turned into an unheard-of scandal. Sure thing, the debutantes of the parade, daughters of famous and influential families, in the very center of the procession, as if on cue, took out cigarettes and lit up in public — an unthinkable impudence for girls from noble families. The trick received a lot of publicity. On the morning of the next day, the headlines of all the main newspapers were full of a single cry: “American women have lit their torch of freedom.” The Torch of Freedom was the nickname for a noisy campaign that lifted the ban on smoking women in public places, thereby changing consumer behavior and creating a new market segment — tobacco products for women.
Even today, few people know that this campaign was a carefully planned action, behind which was a man named Edward Bernays, who would later become known as the father of propaganda and soft power, as well as one of the hundred most influential people of the twentieth century. Also, few people know that Bernays was the natural nephew of Sigmund Freud, who by that time had already formulated his theory of unconscious motives that actually govern human behavior. It was this theory that became the key to the commercial success of Bernays, who, having gained access to the theory of his uncle, did not fail to use it for his own selfish purposes, which, incidentally, Freud could not forgive him.
What conclusions can we draw from this piece of history? Even if, purely hypothetically, the market is ripe for consuming a product, there are many factors that can undermine all efforts to launch it. Cigarette makers could be as loud as they want about a new type of cigarette for women and waste immense budgets for product promotion, but the social taboo on women smoking in public places would be a barrier that no advertising campaign can overcome. The factors that influence consumer behavior are united by the concept of “context”, it is the context that largely determines the success or failure of a new product, the context is one of the three fundamental concepts of behavioral economics.
The science of behavior asserts that a person acts, that is, commits any actions, exclusively in two situations:
When they have an inner need;
When external circumstances, the very context force them to act.
Understanding this process is critical to understanding market readiness for a product and developing a go-to-market strategy. When these two factors — context and need — coincide, a breakthrough occurs. Context and needs can be manipulated, in a behavioral approach this is called context and emotion design.
Upon receiving an order from the tobacco industry, Bernays realized that feminist sentiments were very strong in American society that was in the midst of a struggle for women’s rights, the context was more than appropriate, only a little boost was needed … and Bernays masterfully implemented it. He attracted a group of powerful girls who shared the idea of gender equality and invited them to light their “torches of freedom”, thereby challenging the male community and claiming their rights to freedom.
Would this strategy work if society were not ready to accept the idea of women’s equality? Definitely not. But a skillful promotion strategy in the right context has paid off.
The concept of context includes not only social trends and moods, but also deeper, cultural and social characteristics of the mentality. By context, we also mean deep attitudes, stereotypes and socio-cultural prescriptions that have formed as a result of certain historical events and which determine the behavior of social groups in the present.
We quite often meet the manifestations of these attitudes in our daily life. As a rule, they are expressed in the form of national stereotypes, traditions and customs. There are so-called focal or central attitudes, which are something like the core of national identity (for example, the idea of the great American dream in the United States), as well as less significant ones, which are in addition to the central one or its continuation. It is very important to understand that such a framework that guides our behavior exists in every social or any other group: for example, a professional group and its identity.
Getting an idea of the context that determines the activities, habits and behavior of a particular group is fairly easy with certain skills. Thus, for example, fundamental macro- or national-level attitudes are fairly easy to identify by analyzing national folklore. Myths, legends and fairy tales, as well as the main ideas of songs, proverbs or sayings — these products of creativity are nothing more than a reflection of irrational motives that are passed down from generation to generation.
By the way, each generation may have its own special stereotypes that can influence consumer behavior. They are quite easy to recognize by their role models — these are significant figures who have a key influence on the identity of the entire generation, being something like a hero of their time: they were, for example, Gagarin, Michael Jackson, Madonna and many others. Every professional community has heroes or role models: Steve Jobs for marketers and entrepreneurs, Coco Chanel for the fashion community, and Sigmund Freud for psychologists and psychiatrists.
It is especially important to keep context in mind when copying a business model or entering new markets. After all, it is the context, as we remember, that is one of the factors that guide human behavior, including consumer behavior. Differences in context can have a critical impact not only on the level of demand, but also on the need for a product or service.
I will give an example from my own practice. Not so long ago, a company approached me with a request to develop an advertising message that would affect the implicit preferences of the consumer, an appeal to the emotions. We are talking about a tech startup that specialized in providing insurance services in the low-cost segment. Its business model was borrowed from the United States. According to the company, advertising communication did not bring predictable results; the team attributed this to the quality of advertising messages.
It should be said that the development of an implicit message is a rather complicated and time-consuming business, this is just that precise design of emotions. Before starting the design, you have to analyze the context, as well as identify the need for a product or service from a potential group of target audience, which must also be identified before.
Here are the questions that the behavioral approach starts with:
Why does your product or service need a consumer?
What purpose, task does your product solve?
What desire does your product fulfill?
And then comes context analysis and the consumer motives analysis, because it is these two factors that govern our behavior.
The analysis of the context in the recently described case revealed the characteristics of the consumption of insurance services that were ignored during the hypothesis testing stage. Insurance in the United States and Russia has radically different motives: for example, in the United States, insurance is something like providing basic security due to special government policies. Simply put, the United States is not a welfare state and any issues related to vital needs are solely on the shoulders of the citizens themselves. In Russia, the situation is completely different: this country is a vivid example of a welfare state, which takes care of ensuring a basic level of security, which significantly affects the characteristics of consumer behavior and attitudes towards insurance services. Add to this the special psychological climate of interpersonal relations in our post-Soviet society, where no one will be left in trouble and never, there will always be compassionate people, neighbors or colleagues who will warm up and save. On the other hand, the unprotected part of society is permeated with distrust of any commercial initiatives, because the recent history of entrepreneurship in Russia knows a huge number of unscrupulous scams and extortions, and therefore, citizens prefer a tit in their hands.
Thus, it turns out that insurance in the United States is a basic need for all groups of the population, regardless of income level, while in Russia it is just an obligation on the part of the state and insurance companies (meaning mortgages and OSAGO), and those who are concerned about the protection of acquired property. Applying the equation of decision making, where dubious prospects are on one side of the scale (it is not known whether something will happen to me or not, and whether I will receive my due payment), and on the other — loss and pain here and now. The outcome is clear.
As we can see, a simple analysis of the context makes significant adjustments to predicting the success of the project and the implementation strategy. In this case, the project is responsible for the formation of the market and the needs, the creation of a culture of consumption of insurance services, and this significantly affects all key indicators, and most importantly, the size and timing of investments, which all key players, including the investor should know.
Ignoring the context, the team runs the risk of launching a project that the consumer is simply not ready for: in other words, the market for this product simply does not exist and the “great idea” will turn out to be nothing more than a “soap bubble”. A very sobering prospect, you must agree. In general, a sober view of reality, without any pink ponies and balloons, is one of the most demanded skills in the era of digital reality, if you like, an axiom of success for all market participants.