4 lessons from pricing conference by Simon Kucher & Partners

I was recently invited to be one of the speakers at Simon Kucher & Partners conference held in Warsaw on the 28th of September. The conference focused on the importance of pricing and innovation in the organization. One of the highlights of the event was Georg Tacke’s speech on innovation. Georg presented striking numbers from the recent study by Simon Kucher & Partners.

As much as 89% of companies in Polish edition of the survey reported increase in price pressure. 57% of them see new products as a best measure against price pressure, however they hit a very high failure ratio – 76% of all new products miss their profit targets.

In light of such results the obvious question is what went wrong in all those new product developments.

Here are four lessons from Georg’s speech, that every innovator should take into consideration when he or she begins to design a new product.

  1. Beware of feature shock – the new product fails, when it has too many features or the wrong features. As the result the product is too costly, too complicated and the sales don’t kick off.
  2. Avoid the flop of “minivation” – the new product fails to realize its’ full profit potential when it is under-priced or under-volumed.
  3. Watch out for the effect of “hidden gem” – this is the situation when the company “under-rates” its’ new product – it has an advantage indeed, but the company doesn’t recognize it.
  4. Be careful of the flop of “undead” – it refers to products that should have never hit the market. It’s because they either are wrong answers to the right question or are answers to a question no-one ever asked.

The innovation shouldn’t be treated as the act of guesswork. We can radically improve the odds that it will succeed once we put the customer in front of the process. We can read more about the new paradigm of making successful new products in Georg’s book „Monetizing Innovation”.