Product Innovation: Customer Feedback and Packaging Strategy

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Product Innovation: Customer Feedback and Packaging Strategy

Business Essentials · Chapter 13: Product Development and LifecycleSection 13.1 · lesson 61 of 10514 min · free with a free account

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In this lesson

What a product really is, how to listen, and how to package it.

  • Describe the 3 levels of a product and the product mix
  • Classify consumer products by how they are bought
  • Weigh 6 sources of customer feedback
  • Explain packaging functions and decisions

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Product Development and Lifecycle

Product Innovation: Customer Feedback and Packaging Strategy

What exactly is a company selling when it sells you a mattress? The answer is less obvious than it looks, and it shapes where competition happens. This section opens a chapter on product development and the product life cycle. We'll look at the three levels of a product, how consumer products are classified, and the product mix. Then customer feedback: six sources, what each reveals, and how each can mislead. We'll see why customers describe problems better than solutions, and why lead users matter. Finally, packaging: its functions, its decisions, and a contested sustainability question. Throughout, the aim is the same. Understand what customers need, not just what they say.

What a Product Is

Anything Offered to Satisfy a Need

Start with a deceptively simple question. What is a product? A product is anything offered to satisfy a need. That includes goods, services, experiences, and ideas. A refrigerator is a product. So is a haircut, or a concert. So is a public health campaign urging people to wash their hands. That breadth keeps these tools from seeming to apply only to objects on a shelf. A consulting firm and a nonprofit both make product decisions, whether or not they use the word. Every product can be examined at three levels. The core benefit is the fundamental need the customer is satisfying, stripped of any particular form. A mattress buyer isn't really buying springs and fabric. They're buying a good night's sleep. The actual product is the form that benefit takes: features, quality, design, branding, and packaging. For the mattress, that's its firmness, materials, brand name, sizes, and delivery packaging. The augmented product is everything added around it, like delivery, installation, warranty, and after-sale support.

Figure 13.1.1

Competition Moves Outward as Products Converge

Here are the three levels for the mattress, drawn as rings. At the center sits the core benefit, a good night's sleep. It rarely changes. The middle ring is the actual product: firmness, materials, brand, sizes, and packaging. The outer ring is the augmented product. That means white-glove delivery into the bedroom, a trial period, a multi-year warranty, and removal of the old mattress. Here's why it matters. Competition moves outward as a category matures. Early on, firms compete on the actual product. Whose mattress is more comfortable, more durable, better made? But good ideas get copied, and the leading firms converge on similar quality. A buyer who can't tell one well-made mattress from another decides on something else. The trial length, the ease of delivery, or the warranty terms. None of them touch the mattress. So a firm still pouring money into a matched actual product is fighting yesterday's battle.

Consumer Product Classifications

4 Ways Customers Shop

Consumer products are commonly classified by how customers shop for them. A convenience product, like milk or a newspaper, is bought often, with little effort or comparison. So wide availability and prominent placement matter more than persuasion. A shopping product, like furniture or a major appliance, is bought less often, and compared carefully. Price, quality, and style get weighed, so comparative information and a persuasive case matter. A specialty product has unique traits or brand identity. Many buyers will make a special effort for it. Think of a particular surgeon's practice, or a specific brand of professional camera. Here reputation matters more than availability. The buyer seeks it out, and won't readily accept a substitute. An unsought product is one people don't think about buying, don't know exists, or avoid thinking about. Life insurance and a burial plot are examples. They need active selling and educational promotion. Industrial products, from section twelve point three, are classified differently. Do they enter the buyer's own product, like components? Or support operations, like equipment and business services?

Product Mix Decisions

Width, Length, Depth, and Extensions

A business with more than one product manages its product mix, along four dimensions. Width is the number of product lines, like cleaning products and small kitchen appliances. Length is the number of products within one line. Depth is the number of variants of one product, like the scents or sizes of a cleaning spray. Consistency is how closely the lines relate in production, distribution, or end use. Each is a trade-off. A wider, longer, deeper mix reaches more needs and occasions. But it multiplies manufacturing complexity, inventory cost, and the fight for shelf space and attention. A line extension adds a new variant to an existing line, like a new snack flavor. A brand extension puts an established brand on a new category, like a shoe maker launching apparel. Both raise the cannibalization question. Does the new item just draw sales from your own products? If so, the new item sells, but overall revenue doesn't grow. That isn't automatically a reason to avoid it. Better to lose a sale to yourself than to a rival. But before calling it a success, separate real incremental growth from a shift between your own items.

Table 13.1.1

6 Feedback Sources, 6 Different Biases

Customer feedback arrives through several channels. Each reveals something different, and each has a bias. Complaints reveal specific failures that frustrated a customer enough to act. But they overweight the most dissatisfied, and miss the many with milder problems who said nothing. Service records reveal recurring technical problems precisely, but only for customers who sought service. Those who tolerated the problem, or threw the product away, never appear. Direct research, from section twelve point two, carries the biases discussed there, including the say-do gap. Sales contact reveals real-time market reaction and competitor information. But it's filtered through what salespeople notice and report, and can overweight the loudest accounts. Usage data reveal genuine behavior, but only what's measured, and never why. Formal co-creation, designing with customers, yields deeply informed input from engaged participants. But those few willing and able to take part may not represent the broader market. Every source is real, and every source is skewed. Rely on just one, and you mistake a skewed sample for the whole market.

Problems, Not Solutions

Customers Describe Problems Better Than Fixes

One limitation runs through nearly every feedback source. Customers describe their problems far better than the solutions that would satisfy them. Picture a customer struggling to carry a heavy vacuum cleaner up a flight of stairs. They can describe that difficulty vividly, and accurately. Now ask what new product would solve it. They're limited by what already exists. So they propose an incremental variation, like a lighter version of the same vacuum. They don't propose a robotic vacuum that never needs carrying. They have no experience imagining it. Asking customers what they want asks them to invent a solution. So the answers come back incremental. The better question asks them to describe a problem, which they're well placed to do. Listen for the problem behind a requested feature. That leaves room for a better answer than the one proposed.

Lead Users and Lost Feedback

Listening at the Edges, and Acting on It

Another way to look past ordinary requests is to study lead users. A lead user feels a need well ahead of the market, with strong incentive to solve it early. Often, a lead user has already improvised a solution with whatever tools were at hand. Take a hospital nurse who has jury-rigged a workaround for an awkward piece of equipment. She has done a large share of the innovation work already. The business's task is to notice the workaround and develop it properly, not start from a blank page. Customers at the extreme of a need surface problems average customers haven't formed opinions about. But gathering feedback achieves little if it goes nowhere. Complaints and sales observations often pile up at the front line, with no route into product decisions. The remedy is a defined process. First, a route from the front line to product decision-makers. Then a routine review cadence, and a habit of checking any pattern against other sources before spending. Without that, a business can be rich in customer information, and poor in customer understanding.

The Functions of Packaging

Holds, Protects, and Presents

Packaging is the container and material that holds, protects, and presents a product. Protection shields it from damage, contamination, and spoilage in handling, shipping, and storage. Containment holds it in a usable, transportable form, especially liquids, powders, and loose items. Information conveys facts the buyer needs, like ingredients, instructions, and safety warnings. Communication conveys the brand's identity and positioning through color, shape, and design. Beyond those, packaging adds convenience, making the product easier to use, store, or carry. A resealable closure is a simple example. It differentiates the product at the point of sale, so it stands out on a crowded shelf. And it's often the last message a buyer sees before deciding. In a self-service store, there's no salesperson in the aisle. The package stands in for one.

Packaging Decisions

Materials, Format, Labels, and Cost

Packaging decisions start with materials, weighing cost, protection, and environmental impact. Materials also signal quality. Heavy glass can say premium in a way thin plastic doesn't. Size and format decisions weigh segment needs, like a single serving against a bulk size. They also weigh the channel. A package that suits a store shelf may not suit a mailing box. Labeling is regulatory. Depending on the product, it may fall under the Food and Drug Administration. Or under the Consumer Product Safety Commission. Each sets its own required disclosures, by product category. Federal rules can be a floor that state law adds to. So a national seller checks every state. Packaging cost is a real constraint. For cheap, high-volume products, it can be a substantial share of cost. Over-packaging uses more material, design, or protection than the product's value, fragility, or customer expectations justify. It adds weight, volume, and cost, and it frustrates customers struggling through needless layers. Where sustainability matters to the target segment, it can damage the brand's positioning too. So size packaging to the real needs of protection, information, and communication, not to signal value.

Sustainability

A Genuinely Contested Packaging Question

Sustainability in packaging raises a genuinely contested question, and each side has a strong form. One position says to reduce packaging, and use recyclable or biodegradable materials. That lowers environmental impact, and can cut material cost over time. It increasingly matches what a segment of customers wants and will pay for, linking to the competitive advantage in section twelve point one. The opposing position says protective, sometimes heavier, packaging reduces damage and spoilage. A spoiled product thrown away before use can waste more than the packaging that would have saved it. So focusing narrowly on packaging material can miss the bigger picture, which is total waste across the product's life. The disagreement has two parts. The empirical part compares a packaging choice's environmental cost with the cost of the product loss it causes. That varies by product. It's a matter for measurement, not assumption. The normative part asks how to weigh cost, customer preference, and environmental impact when they conflict.

Case Vignette

Asking for the Wrong Answer

A final composite case. The company and the person are fictional. Devika, a product manager at Halden Cycle Works, surveys bicycle commuters about the features they'd like. The answers are dominated by two requests: a lighter frame, and more gear options. Engineering could deliver both as line extensions within a few months. Devika could build what was asked, turn to complaints and service records instead, or combine the two. Her budget covers one significant project this year. So it's speed and certainty, against the deeper but less certain value of finding the real problem. The reasoning turns on our earlier point. Customers describe problems better than solutions. Service records and complaints show a recurring theme. Commuters often arrive at work with a damaged or dirty chain after riding in the wet. Both requests were imperfect proxies for unreliable, high-maintenance commuting in bad weather. A fully enclosed chain guard addresses that directly. No surveyed customer had reason to imagine it. The sound decision is to treat the survey as evidence of a problem area, not a specification.

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FAQ

Questions students ask us

About Product Innovation: Customer Feedback and Packaging Strategy

What are the three levels of a product?
A product can be examined at three levels: the core benefit, the actual product, and the augmented product. For a mattress, the core benefit is a good night's sleep; the actual product is its firmness, materials, brand, sizes, and packaging; and the augmented product includes delivery, a trial period, warranty, and old-mattress removal. As a category matures and quality converges, competition tends to shift outward to the augmented level.
What is the difference between convenience, shopping, specialty, and unsought products?
Consumer products are classified by how people shop for them. Convenience products, such as milk, are bought often with little effort, so wide availability matters. Shopping products, such as furniture, are compared carefully on price, quality, and style. Specialty products, such as a particular professional camera brand, are sought out with special effort, and buyers resist substitutes. Unsought products, such as life insurance, need active selling and educational promotion.
What is a lead user in product innovation?
A lead user is a customer who feels a need well ahead of the market and has a strong incentive to solve it early, often by improvising a solution already. A hospital nurse who has rigged a workaround for awkward equipment is an example. The idea is associated with MIT researcher Eric von Hippel. Studying lead users helps a business look past incremental feature requests, because much of the innovation work has already been done.
What are the main functions of packaging?
Packaging protects a product from damage, contamination, and spoilage; contains it in a usable, transportable form; informs buyers through ingredients, instructions, and warnings; and communicates brand identity through color, shape, and design. It can also add convenience, such as a resealable closure, and help a product stand out on a crowded shelf. In self-service stores, with no salesperson in the aisle, the package is often the last message before purchase.

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