The ebb and flow of Sliced Peanut Butter, iSmell, and Sirius XM
At a quick first glance, I very much bought into the concepts of sliced peanut butter and iSmell from DigiScents, whereas I was skeptical of the satellite radio by looking through using Roger’s Fiver Factors. I use this blog to analyze how and where I got it wrong.
Sliced peanut butter is supposed to have high market diffusion potentials by applying Roger’s Fiver Factors. It has a relative advantage as it is more convenient and easy to carry. It is compatible with existing peanut butter products which require little adaptability. It is certainly not difficult to use and should not require additional training. The product could also easily be distributed for tasting samples. It does not have the best observability given the size of the product, but the issue can be mitigated through better branding and packaging.
iSmell also seems to have medium-to-high market diffusion potential by looking at Roger’s Five Factors. It has a relative advantage as it offers customers a multidimensional experience by smelling things on the computer – a truly unique experience. It is highly compatible as it only requires a device to connect to the computer, which is easily accessible at the time. It should not be complex to use as it just needs to be plugged-in to the computer. It should also have high trialability given the device can be easily distributed and tested in the market. Lastly, it is also highly observable as smell serves as a sensory component which is visible to customers.
On the other hand, I thought satellite radio to have medium-to-low market diffusion potential based on the Roger’s Five Factors. It lacks relative advantage, compatibility, and trialability. While it offers a decent selection of channels on varied music and talk, it charges a $10 monthly subscription fee in addition to a $300 cost for retrofitting the vehicle. Most of the retrofit work had to be done in the dealership which makes it even harder to acquire new customers. At a first glance, I thought satellite radio would only be applicable to diehard music fans or truck drivers who are constantly on the road.
iSmell did initially raise $20m in funding from major investors in the field including P&G, Givaudan and Real Networks. The prototype was introduced in 2001 CES show but was never made it to the market. Under a closer scrutiny, it did not offer any relative advantage. While it provides the customers a unique experience (digital smell), it is not an experience that is desired by the customer. It did not meet any need from the consumers and it certainly did not create a new one. In fact, the company did not do any customer survey to gauge the potential demand while working on this product.
Sliced peanut butter did make it to the market back in early 2000s, but it quickly disappeared off the shelves and the website has been put up for sale on GoDaddy. At a closer look, the product also offered very little relative advantage given the customer group and little observability due to poor packaging. The product is meant to help save time so that one does not have to use knife and a jar of Skippy every day. However, the biggest consumer of the sliced peanut butter is kids, and they have their food prepared by their parents most of the time. Parents would almost always want their kids to consume fresh food instead of processed product. The only time that would come in handy is during traveling, which does not take place often. In addition, peeling a piece of peanut butter onto a slice of bread is weird. If they package in cone-shaped or in a squeezed bag, which squeezes out like frosting, it probably would work better versus peeling off from a rectangle shaped bag.
Sirius XM is most successful out of all four products up till now, with a $5bn revenue and a $750m net income in 2016. It did initially experience a very tough start due to the problems that were identified previously. But the company manages to identify those problems after the merger. It negotiated new contracts with auto manufacturers to incorporate satellite radio antennas in an increasing percentage of new vehicles since 2012. As the result, the car owners do not have to go to the dealership to do a retrofit. In addition, it started to provide free trials to customers so that they could compare with the traditional radio stations that are full of commercials. It saw a remarkable increase in its customer penetration ever since. As a non-driver myself, what I also failed to recognize is that how strong of a demand there is for commercial-free radio stations.
http://foododdity.com/peanut-butter-slices-yes-they-did-exist/
http://www.startupover.com/en/20-million-burning-smell-like-just-ask-digiscents/
https://www.siriusxmdealer.com/programs/adassets
