Why all shampoo smells like fear to me
“Here’s to the crazy ones.” — Apple commercial, 1997
For market researchers, a lot of time and effort is put into designing an endless stream of variations on a base product — on the assumption that the base product itself is no longer worth considering: seemingly eternal, taken for granted as much as the air we breathe. The S-curve suggests that, when this practice sets in, it’s best to take a long hard look at that base product: it may no longer be around in five years’ time…
Welcome to the second instalment of Riding the Curve.
Two types of response…
When I talk about the S-curve in my work, I generally get two types of response. The first is “Oh, that one again” and the second is “Hmmm… tell me more”. I also find that a lot of people who think they’ve learnt all they need to know about the Curve nevertheless either apply the concept in a superficial manner, or they’re outright doing it wrong. So even if you’ve heard about S-curves in product-market combinations before, you might want to keep reading.
…from two types of people.
The audience that responds to the perspective I offer also roughly falls into two categories. The first is the entrepreneurial (or intrapreneurial) type: at the helm of a start-up or an experimental department. They have nothing to gain from the status quo, from me-too versions and tweenager spin-offs. Hungry for change they are, as change might mean their revolutionary brain-child may get to have its time in the sun.
The second type is who I’m writing this edition of Riding the Curve for. Consider the following job type: a product group manager at any major brand in FMCG. A position they themselves often perceive as rather rock solid. From their perspective, disruptive change is a threat — but it’s generally deemed so unthinkable that it isn’t worth considering.
The message to both audiences is the same. Either repent or rejoice, depending on your interest, because change doesn’t care. It happens anyway.
Dealing with the unthinkable
Here’s a little thought experiment:
What would happen if we suddenly lost all electricity?
Here’s what I think would happen:
My guess is, we’d be chopping down local trees for firewood within a week. Do we hoard food and water for such an event, though? Of course not. It’s something you don’t prepare for because the mere thought is unthinkable. Who prepares for something that unlikely? Dutch law decrees that every household must own a battery-powered transistor radio in the event that nation-wide electricity and all dependent communications channels cease to operate. Do you own one? Do you know who does?
For a product manager in the shampoo category, the idea that people might one day lose their appetite for shampoo can be called just as unlikely: impossible, unthinkable. Yet, it’s quite possibly happening as we live and breathe. Recent studies have suggested that washing one’s hair every day is not entirely as necessary or as healthy as we always thought. And a society is slowly following suit: the ‘no poo movement’ is slowly gaining traction. Their popular wisdom: we should consider lathering up only every other day. Sounds trifle? Consider what shampooing only every other day means for global sales. A sales drop of 50%. Unthinkable? It’s a change that is already underway. Click any of the links in that sentence to see examples.
Of course, commercial history abounds with examples of rock-solid products becoming all but obsolete, almost overnight.
- Kodak and Polaroid, in the wake of digital film;
- Palm Pilot, in the wake of the smart phone,
- video rentals (I’m looking at you, Blockbuster),
- book stores (Barnes & Noble),
- road maps (Michelin),
- fax machines (Xerox)…
the list goes on. That last example is a gift that keeps on giving, by the way: after losing a major cash cow in fax machines, it now looks as if the entire printer industry is floundering in the wake of the digital revolution.
Better safe than stupid
So, once we have it in the open that the unthinkable might well be inevitable and the question is not if it happens but when it will, two follow-up questions present themselves: 1) how to signal imminent fundamental change in your own product category? And 2)… how to prepare for it? That’s where market research comes in.
Crowded, complex categories are a red flag
If we ask ourselves where the decline of a product (or a product category) sets in, the first observation to make is that the Decline phase is always preceded by Late Maturity. And Late Maturity is characterised by two things: product “complexity” and crowdedness. The process can take decades, but it can also happen quite quickly.
An example of growing complexity that took decades comes from the automobile industry. The industry started out jaw-droppingly simplistic, with Henry Ford immortalising himself when he quipped “You can have a Ford in any colour you want, as long as it’s black.’ Over time, both the category and its language have become intensely competitive and complicated. The image above already targets a subcategory of car enthusiasts — the up-and-coming ‘young business man’.
Considering the fact that not cars, but horses had been the standard for transportation for 5,000 years before — you’ll agree that the speed with which the automobile market arrived at its current level of complexity and crowdedness — just about 50 years — is actually pretty darn quick.
A lot quicker still has been the rise of complexity in a category such as mobile phones. The first mobile phone was built in 1973; since then the complexity has risen dramatically with each new generation. As soon as the market smells a hit, new brands, features and editions pop up everywhere. Pretty soon, there’s a mobile phone for every lifestyle and budget. How about this for a maxim:
As category complexity grows, so does the possibility for radical change.
And when it does, it does so in two ways: discounters and disruptors.
Be wary of discounters…
The first change is to beware the discounter. This is a complete no-brainer: once a market matures to the point where zillions of different options are available, someone is going to undercut the market with a budget variant that once again claims simplicity as a selling point.
But beware the disruptor!
The second cause for alertness in complex categories is that complexity invites disruption. Now, I’m not claiming complexity must lead to disruption; indeed, there are plenty of well-established categories (beer, orange juice) that have become extremely complex — without anyone coming along with an innovation that rewrites the rules completely. What I would claim is that complexity is both a necessary condition for disruption, and a catalyst for it. It’s the only way out for a complex system.
This is where I claim that markets follow a rule that looks a lot like the second law of thermodynamics. Remember how entropy in a system can only ever increase, not decrease? Thought so… Well, I’d think product categories behave rather similarly: the longer they exist, the more complex they get — and this complexity is never reversed. You simply cannot un-invent a variation, once invented. Also, inevitably, someone is going to engineer a change to the base product that is so fundamental that it can be called disruptive. At that point, all bets are off.
How to stay alert in a complex category?
I’d say a proper research-driven approach to dealing with change, for the wise product category manager, falls into two categories:
1. Keep one ear everywhere, and the other to the crowd
Change will manifest itself in the crowd — after all, it’s their behaviour that constitutes the actual change. But the driver of change can be a lot of things — external to the crowd, most of them:
- Scientific breakthroughs
When science publishes a report saying shampooing every day damages your hair, P&G will be wise to take note, But will the crowd respond?
2. Government policies
If government raises the tobacco tax by double digits, BAT will notice. But do smokers care?
When the E3 tech conference launches a new gaming platform, Sony watches closely. But will the gamers move?
4. Iconic behaviour
When stars start wearing beards, Gillette must take heed. But will the hipsters stop shaving? (spoiler: yes, they did.)
Resumé: All of these changes are ‘kicked off’ outside the crowd. So you monitor what happens in science, government, showbizz and whatnot. But sales are of course only actually hurt once the crowd starts moving. So how do you keep that other ear glued to the crowd?
At Winkle, we have several tools in social listening that apply software engines to monitor and analyse the torrential stream of verbatim comments by consumers of a narrowly-defined subject such as a product or brand. We also build groups of well-articulated consumers that are passionate about a certain product, brand or category, willing to engage in meaningful dialogue with those behind it.
2. Go controlled crazy
Despite the somewhat flippant tone of the introduction, I would probably be the last one to say brands shouldn’t invest in pivoting their product to serve new age groups or life styles. It’s often an absolute necessity if you want to stay competitive in your category.
But I’d also be the last to say that you should keep churning out variants without checking to see if anyone’s interested to buy them.
3. Go uncontrolled crazy
The main objection against that option number 2 is that it tends to only walk the safe side of innovation. And while that option will allow you to radiate creativity, and to stay one step ahead of your regular competition, it won’t save you from a radical disruptor, or from a radical disruptive event.
So aside from putting resources in incremental innovations such as ginger-flavoured shampoo, I argue brands should always keep a small, dedicated group of creative minds on hand to explore the unthinkable. Unconventional thinkers that are given the space to tackle the potential category killers: what if water becomes so expensive, we can’t afford to rinse our hair anymore? What if baldness becomes the fashion? Et cetera.
Market research isn’t just the science of building big statistics and using them to drive minor adjustments. It’s also a discipline of making wild observations with far-reaching implications, reading big changes into small signals. And validating that hunch, even those most unthinkable. Being proven wrong. Being proven wrong again. And then, suddenly…. correctly noticing the changing winds before anyone else.
I sincerely hope you’ve enjoyed this instalment of Riding the Curve. We’re publishing on medium.com as well as in my personal network at LinkedIn, so be sure to let us know what you think below in the comments. You can expect the next instalment in about two months. Bye for now…!