MANAGING ACCEPTABILITY

MANAGING ACCEPTABILITY

INTRODUCTION

Success in the marketplace is never guaranteed, even for companies that understand that the marketing team must innovate just as much as the R&D team. There are simply too many imponderables that can get in he way of success, and predicting customer behavior has never been and will never be an exact science. However market failure cancertainly be assured when companies ignore the essentials. The paramount element in the 4 A’s framework is “Acceptability". While all four factors are necessary, the core requirement of any marketing effort is to ensure that the offering delivers true, unquestioned value to target customers. If the product or service doesn't achieve high marks on the Acceptability scale, customers won’t even begin to consider Affordability, Accessibility, and Awareness. Companies may achieve some short-term success with sub-standard offerings through saturation advertising campaigns and massive pre-launch hype; they can also buy sales in the short run by making the price attractive enough. But sustained success means the the offlering must achieve and maintain a high level of Acceptability.

Whlle the product it self is obviously a key part of the picture, achieving Acceptability does not end with creating a superior product; many other elements come into play. For example, when it was launched in I975, Sony's Betamax was in most respects superior to rival ofterings from JVC and other machines based on the VHS standard. However, what made the Betamax unacceptable to most customers had little to do with the product's quality, features, or capabilities. The VHS camp simply enjoyed an overwhelming advantage in terms of the availability of pre-recorded content.

Betamax's decline was hardly an isolated incident. To cite one among many other examples, by the mid-1990s, a similar standards-based disadvantage had relegated Apple's personai computing products, widely acknowledged as superior in terms of quality and ease of use, to a marginal position.

Other factors that can lower Acceptability, for otherwise fine products include inordinately high or incorrect customer expectations; poor service elements surrounding the product's purchase and use; a shortage of "high touch” elements for high tech products; and a lack of compatibility with other, related products that the customer already owns.

How can a low score on Acceptability negate high scores on Affordability, accessibility, and Awareness and ultimately scupper a product's potential for success? Consider a product offering in the late 1970s that launched as an over night wonder the Vegamatic. As anyone who caught the Vegamatic's breathless and ubiquitous television commercials could tell you, this Swiss Army knife for the kitchen “sliced, diced, grated, and shredded" any piece of produce that came in its way.

Homemakers were certainly made aware of the many wonders of the Vegamatic, which promised to make kitchen appliances obsolete. The product was sold in all the major department and arppliance stores, and by mail order, making it readily accessible. It was priced within reach of most consumers-less than a single electric kitchen appliance and not much more than the price of a good knife or vegetable peeler. However, the product's initial design did not meet the expectations of its targeted customers; young women who were looking for fast and easy ways to get through their kitchen work. Product safety was also a concern; it only took one slip of the hand to lose considerable skin from one's knuckles.

It wasn’t until a later release of the Vegamatic 2-0 that its producers incorporated safety features such as a handle to prevent users fiom injuring themselves. Even so, it was too Iittle too late. While the initial offering captured a small portion of the target market, the product never became the ultimate kitchen appliance that it set out to be.

Had the Vegamatic's marketing team truly analyzed the product's Acceptability, they would have thought beyond its quality or functionality, and tried to anticipate how the market would react to their newfangled appliance. Instead, they learned a difficult lesson: a "superior" product (based on objective measures) does not always win. Rather, it's the product that fits best with the needs of the target market-needs that may be unarticulated and thus difficult to decipher. For example, some product are overengineered or have too many features, whereas customers may be looking for something simpler and easier to use. (Later in this chapter, we discuss the failure of the Apple Newton, which suffered from this problem).

For consumers to truly accept a product or service, the total offering must deliver real value to the target market. And that means companies must understand what their target market desires and then design the product and its accompanying elements (such as service and accessories) to best meet those needs. Of course, recognizing and fulfflling the customer's needs is not so easily accomplished. But once achieved, the hard part is over.

Delivering on the Acceptability requirement is especially vital in these times of rapid technological innovation. At first blush, many techno-driven products appear highly attractive, but further investigation reveals little likelihood of consumer acceptance. In recent years, widely heralded technological innovations, such as web-based grocery shopping and videoconferencing, have floundered despite offering added convenience and savings. Most consumers instinctively resist innovations; it is up to marketers to figure out how to overcome such skepticism.

When marketers take a product-centric view they tend to focus on the device’s color, shape, size, functional features, and other attributes. When taking an “Acceptability-centric" perspective, they must focus on the offering's tangible and intangible aspects and assess the total impact on customers. As Boeing has demonstrated with its aptly named Dreamliner 787, intangibles like time- and space saving innovations could well be the factors that ultimately determine whether the product.is not only acceptable, but desirable.

BOEING,S DREAMLINER: BETTER AIR TRAVEL, AT LAST

If ever there was an object lesson in how not to excel at experiential marketing, the airline industry seems to provide it in abundance. This is an industry that for a long time has managed to abuse not only its employees and customers, but also its investors.

Air travel has seen few improvements of note in the past few decades. Other than ill-fated experiments with very expensive in-flight calling (the now defunctAirfone) and cramped and highly expensive zupersonic flight (the late unlamented Concorde), the only tangible improvement, from just a handful of airines, has been the gradual introduction of more entertainment options. But that paltry offering has been more than offset by reduced seating comfort, greatly diminished in-flight service and ever more harrowing airport security measures. No wonder air travel has gone from being a pleasurable experience to a dreaded ordeal. The vast majority of travelers care for little more than getting the lowest price on every flight.

What is the way out? For decades, airlines have been content to spend their marketing resources on meaningless slogans and irritating jingles, from United Airlines' "something special in the air" and "Rising" to American Airlines' "We love to fly and it shows." some of the blame must go to the industry’s two main suppliers, Boeing and Airbus, which have offered few substantive improvements in airplane design. Boeing fired nearly 30,000 people between 2001 and 2006 and lost its industry leadership position to Airbus. The latter company gained market share largely due to the backing of the several European governments that are its part owners, as well as preferential purchasing by Europe's national airlines.

But it appears now that Boeing might come storming back to reclaim its industry leadership. It is doing so by designing a new airplane – the 787 "Dreamliner" - that  represents the industry's first instance of truly fresh thinking in decades. While Airbus has been pushing its mammoth, 555-seat A380, which promises reducated per-passenger costs to airlines but only more aggravation for travelers attempting to board or deplane the enormous plane, Boeing has chosen to simultaneously focus on better meeting the needs of travelers and airlines. For airlines, the new 220 to 300 - seat plane will offer 20 percent lower fuel consumption, lower maintenance costs, and increased range. But the new plare's most important innovations are all squarely aimed at increasing the functional and psychological acceptability of air travel.

A fruitful way to increase Acceptability, is to identify, from the customers' point of view, the aspects of a product that are most aggravating or disappointing. In the Dreamliner, Boeing has addressed every one of a traveler's pet peeves and then some. For example, today's planes maintain the relative humidity in the cabin at just four percent. This arid atmosphere dehydrates travelers but is necessary to prevent corrosion in the metallic fuselage. The Dreamliner's fuselage, howeever, is made of light-weight, composite plastics that do not corrode, permitting the humidity level to be set at a far more agreeable 20 percent- It also allows the cabin pressure to be set at a level equivalent to 6000 feet above sea level, instead of the current 8000 feet. The difference is significant, allowing travelers to feel less jet-lagged at the end of their journey.

Ither customer-delighting innovations include wider aisles and seats, much more overhead storage space in lockers that descend for easy loading, a smoother ride, much less engine noise larger windows that can be rendered opaque at the touch of a button, and indirect LED flight-emitting diode) lighting. The LEDs permit color to be adjusted, so that, for examplg red lighting can be used at mealtimes to bask food in an appealing glow. To help passengers adjust their body clocks. the entire cabin can mimic nighttime, with LEDs in the ceiling that twinkle like stars.

Boeing $ 10 billion investment in the Dreamliner will pay handsome dividends for years, perhaps decades to come. After Boeing started taking orders in April 2004, 44 airlines worldwide placed 567 orders woth more than $75 billion by April 2007, making the Dreamliner the most successful commercial airplane launch in history By December 2009, rvhen the plane had its much-delayed maiden flight, Boeing had nearly 1000 advance orders.

The Dreamliner's sky-hlgh pre-sales demonstrate that there's no substitute for Acceptability-that a resolute focus on the factors that truly make a difference in how customers experience a product will pay handsome dividends for many years to come. Catchy slogans and pretly tunes do not have nearly the same capacity to drive superior, long-lasting performance in the marketplace.

WHAT IS ACCEPTABILITY?

As we defined it in Chapter 2, Acceptability refers to "The extent to which the firm’s total offering meets and exceeds the needs and expectations of customers-in the target market. It includes the dimensions of functional and psychologic acceptability."

To better understand its role in tHe marketplace, let's unpack Acceptability's key elements:

Total offering For an offering to be truly acceptable, it must offer more than the product. Many intangible factors, such as service and installation, determine whether the product is truly acceptable.

Meets and exceeds customer needs and expectations: Crafting a highly acceptabable market offering begins, but does not end, with surpassing the customer's expectations. This requires that companies, before they develop their offering, have a deep understanding of their customers and that they thoroughly test before the launch. However, this is a necessary but insufficient condition for success. Customers can often articulate their desires, but rarely their needs. Because technologies ceaselessly, continually evolve, companies are often in a position to solve problems that customers do not know they have. The trick is to achieve a balance between technology's push and the market's pull, to avoid creating products and services that fail to resonate with customers.

Unfortunately, Boeing has experienced numerous delays due to supply chain problems critical with the Dreamliner. As we mentioned in Chapter 2, Accessibility is equally important.

Customers’ expectations are most commonly influenced by a company's advertising and promotional daims, as well as by available competing alternatives. Companies need to analyze their advertising messages to ensure that they do not promise more than they can consistently deliver. If its advertising is "succeeding" in creating Awareness but not leading to higher sales, the company must cast a cold eye toward the design of its products and services, and also look for opportunities to improve its production processes.

Acceptability has many components, but they can all be grouped into two main categories: functional and psychological.

Functional acceptability; Functional acceptability includes the attributes that are commonly associated with the product class's target market. For example, today’s luxury cars must possess certain attributes: ieather upholstery sun roof, six speakers or more satellite-based navigation system; anti-lock brakes, dual air bags, keyless entry, roadside assistance, wood grain paneling, V-6 or higher engine, and an integrated communications capability. Functional acceptability also includes factors such as ease of use, quality, and reliability.

Psykological acceptability. While every product or service aspires to achieve a basic functional value, attaining high Acceptability means that marketers must pay attention to the quality of the customer experience in consuming the product or service. Subjective issues can be very important in determining Acceptability A person's needs, motivations, and general perceptions about value all impact Acceptability. Another essential: an understanding of the customer's subconscious needs and desires. For example, when the Mazda Miata first came out, its "bugs-in-the-teeth, wind-in-the-hair, classically. British-sports-car" personality had such a high level of appeal to its owners, some would "pet" it and say good night to it before going to bed.

A company’s "higher purpose"-the notion that it should embellish the greater goods as well as its bottom line-is also an important part of psychological acceptability. Newman's Own has become a spectacularly successful brand and family of products by combining great taste and healthy ingredients, and by donating all after tax profits to charity.

The two dimensions-functional and psychologicai acceptability- can also be thought of as "performance" and "personality." To achieve very high levels of overall. Acceptability, the product must perform and it must be personable. However, customers may trade off between functional and psychological acceptability, especially for products that are relatively low in price. For example, Chrysler's successful compact, Dodge Neon, made up for its so-so performance with its magnetic personality. Such a strategy can succeed, but only when a competitor offers customers both high levels of functional and psychological acceptability.

A high level of Acceptability is reflected in customer comments such as:

-       This product fills a need better than any other product.

-       This product is quite distinct from others in its category

-       After I saw this product's advertising, I wanted to buy it right away.

-       This product changes the way I feel about the activity for which it's intended (for example, Gillette's Venus razor for women makes shaving a restorative experience; BMW puts the thrill in driving).

Like all the A's, Acceptability is a dynamic concept; it can change due to external factros. For example, GM found that many of its larger cars became unacceptable in the early 1980s, as gasoline prices rose and attractivg fuel-efficient cars became more widely available. This was repeated ln 2008 and 2009 after the Great recession, and led GM to file for bankruptcy protection.

KEY ACCEPTABILITY PRINCIPLES

Product with excellent features may speak for itself, but to succeed, it first must speak to the customer. All too often, marketers fall in love with their products and lose focus of that customers really want-a malady that Harvard Business School professor Theodore Levitt called "marketing myopia-" In striving to build "a better mousetrap," marketers fail to attract the mouse. Recall how customers deemend the 1996 Ford Thurus unacceptable, Iargely because of its overly radical design. And  then there was the disaster called Crystal Pepsi, a clear cola that unnevered consumers.

The following detailed examples illustrate three important principles to keep in mind when thinking about Acceptability:

-       Offerings should be innovative but not too radical.

-       Offerings must surpass customer expectations.

-       Offerings should not be overly complax.

The Ford Edsel: Too Radical by For

Consider the grandaddy of all marketing failures. In 1957, after a decade of planning and investments reaching well over $250 million (almost $2 billion today) Ford launched its Edsel line of cars. Business Week reported that the Edsel was the most cosdy consumer product launch in history. Certainly, no one could accuse Ford of thinking small. From the outset, Ford built seven distinct models of Edsels; two oversized, expensive lines called the Corsair and the Citation; the slightly smaller Ranger and the Pacer; and three station wagons, dubbed the Bermuda,Villager, and Roundup.

Nor could anyone argue that Ford skimped on consumer research. The company hired Columbia University's Bureau of Applied Social Research, at a cost of 550-000, to conduct in-depth, one-hour interviews with 1600 car owners. The resulting data helped Ford position the Edsel in the middle of the market, aiming at "young executives on the rise-" However, the surveys didn't gauge consumer attitudes toward the Edsel itself, and therefore failed to offer any insight into the car's chances for success.

Nevertheless; both Ford and the media believed the car would be a blockbuster Indeed, Ford viewed the Edsel division as the key element in its drive to overtake General Motors in market share- The 1958 editior of True's Automobile Yearbook raved about the upcoming launch: "The smart money both in and out of Detroit is solidly behind Ford's new Edsel. It's about as sure to succeed as a straight flush in a two-handed stud game ...."

So why, then, did the Edsel fail so spectacularly? Consumers judged it unacceptable on three fronts:

Overly radical design: For a car aimed at mainstream customers, the Edsel had too many quirky design features.The overchromed vehicle with the vertical "horse collar" grilie was considered garish, even in the era of tail-finned excess. Time described the griile as resembling "an Oldsmobile sucking a lemon;" others likened it to a toilet seat.

Unwanted product innouarions: The 1958 Edsel featured two imaginative innovations that nevertheless left the buying public cold-a gyroscope-style speedometer that spun under a glass dome, and a push-button gear selector mounted in the steering wheel hub.

An unappealing name: Ford's ad agency, Foote, Cone & Belding, considered more than 6000 names before Ford's chairman, Ernest Breech, decided to name the car after Henry Ford I's only son, Edsel. Subsequent name-association polling revealed that “Edsel" brought to mind such unflattering words as "Pretzel" and “Weasel."

The magnitude of the Edsel's failure rvas colossal by any standard.The company sold 109,466 units in 26 months, only quarter of its two-year goal. Ford lost an estimated $350 million on the car (approximately $2.4 biilion in 2005 dollars). To put it another way, it would have cost Ford less money to have simply given away 100.000 comparable cars from its Mercury line.

There's a reason why popular cars like the Honda Accord and Toyota Camry sell so well-their ho-hum, plain-vanilla designs largely conform to the mainstream consumer’s expectations. The same could not be said of the Edsel, whose "out-there” design proved a turn-off for middle-of-the-road car-buyers. While obvrous, it’s also true: for a mainstream product to succeed, mainstream conzumers must broadly accept it.

Ford appeared to have learned some valuable lessons from the Edsel's failure, most importantly that it could not dictate what customers should buy. With it’s launch of the Mustang several years later, Ford focused on developing a car that was rakish and sporty, but still fell within the bounds of what people expected in a roadster. After losing its way for a number of years in the 1970s, Ford again redis-covered its formula for success with the launch of the 1986Taurus-a car designed to give mainstream car buyers everything they could ask for in a family sedan. However, the radical 1996 restyling of the Thurus once again proved too much for buyers, and Ford lost considerable market share as a result.

Given that consumers’ tastes are constantly changing, achieving and maintaining a high level of Acceptability is far from easy, but absolutely necessary.

Apple's Newton: Unfulfilled Expectations

Unlike the Edsel, the Apple Newton MessagePad was aimed squarely at a well defined segment of technology-savly early adopters. However, it, too ranks as a major failure, due again largely to problems with Acceptability (and to a lesser axtent, Affordabllity). Like many products that score poorly on Acceptability, Apple’s personal digital assistant" was almost too successful with the other two elements (Awareness and Accessibility), which ironically contributed to its failure.

Apple launched the Newton with incredible fanfare, fueled by a $12 miilion introductory advertising campaign and a host of celebrity user endorsements. As a result product w'as eagerly anticipated, not only by the mac faithful but also by legions of Windows users. Apple's aggressive distribution strategy ensured that customers could quickly and easily obtain the product. After introducing the Newton at the MacWorld trade show, Apple quickly expanded distribution nationally to authorized Apple dealers, computer superstores, and campus resellers. Such was the enthusiasm surrounding the product that a chain of specialty stores was founded specifically to sell Newtons-Newton Source, with outlets in New York, San Francisco, and Los Angeles.

The market was primed but unfortunately, the product was far from ready for prime time. Launched August 2, 1993, the Newton aimed to help people organize their work and communicate ideas with great speed and clarity, anywhere in the world. However Apple overpromised and underdelivered in numerous ways. Aside from its portly look and poor usability, the original Newton's biggest disappointment was its extremely poor handwriting recognition. One Newton retailer reported that when you wrote “Apple Newton" in "fairly neat blockletters," it came back as "It Pie Warm" Because the writing technology was considered one of Newton's biggest selling points, the flaws quickly alienated high-tech buyers. The handwriting recognition failure was widely reported and ridiculed in the media, including in a series of memorable Doonesbury cartoon strips. Where once it was an object of fascination, the Newton quickly became the butt of countless jokes.

Though Apple recognized the problems, it took two years to release the improved Newton 2.0 operating sysiem, which was based on extensive customer feedback and testing. Then in 1996, approximately three years after the first-generation launch, Apple introduced the Newton MessagePad 2000, with access to the Internet and the ability to share data with Macs and Windows PCs. While improved, the product could never get past its earlier shellacking from the critics and ultimately delivered too little, too late. And yet, Apple kept at it, launching the MessagePad 2100 in 1998. PC Magazine was just one among many publications that gave the 2100 a thumbs-down review. Finally recognizing the handwriting on the wall (something the Newton could never do), Apple pulted the plug on the line.

What do we learn from this failure? A few lessons stand out:

Get it (almost) right the first time: ltis extraordinarily difficult to recover from a fiasco like the one the Newton endured. The "pioneer advantage" that Apple sought by being the first to launch a robust, PDA platform was no guarantee of enduring success; research has shown that there are plenty of opportunities for fast followers to succeed where first movers stumble, as Palm later proved in this same category (see below) Lacking extensive testing and bulletproofing, the Newton simply couldn't survive the onslaught of criticism that quickly foliowed its launch.

Iterate rapidly: No first version of a product can be perfect, though it must strive to come a lot closer to that standard than the Newton did. The key to continued success is to come out witl Version 2 rapidly literally within months of the first version. Sony has historically done this well, the company gears its engineering and product development efforts to fast learning and rapid iteration in the marketplace.

Share the crown jewels: Apple, as it has done through much of its history refused to share its propriethry technology, and license its operating software to third party developers. Had it done so, a number of other companies would have stepped up to continue Newton's development, and the Newton OS could have emerged as a de facto industry standard, operating on a number of different hardware platforms. Instead, Apple quickly ceded market ieadership to Palm.

The Palm Pilot : The Power of Simplicity

Achieving high acceptability means delivering the right amount of the right attributes, not the maximum amount. Simplicity is a key design objective, as simpler product are almost always preferred over complicated ones. Apple's ipod succeeded not just because of its aesthetics and "cool factor," but also because of its extraordinarily intuitive interface. With the cost of computing power falling so dramatically, companies can now build interfaces that adapt to the way that customers like to do things, rather than forcing customers to learn new ways.

Founded in 1992, Palm Computing built much of its strategy around its less-is-more approach to design when it launched the Palm 1000 and palm 5000 organizers in March 1996, the devices were an instant success, becoming the fastest  seliing computer products in history. Not content to rest on its laurels, PaIm introduced two next-generation devices in March 1997: the PalmPilot. Professional and PalmPilot Personal Edition models.

Palm accomplished with its organizers what Apple couldn't with the Newton it put a useful handheld computer in millions of pockets and purses. The key to the marketplace success resided in its extraordinarily high level of Acceptabllity in the marketplace.The Wall Street Journal echoed many other rave reviews, asserting that the Palm “ispired a new design principle: size and simplicity are more important than whizzy technology"

The Palm was a perfect example of a user-centered design that delivered valuable solutions to huge seginents of the population. Customers responded to the Palm precisely because it gave them easy access to a few essential features that they could use in real life. In contrast to the Newton, which confused people by trying to do too much (and not very well at that), the Palm Pilot focused on doing just enough. An important element in its success was the fact that the Palm was designed as a companion PCs, not as a replacement. The device's ability to easily synchronize its contents with a desktop application on a PC or a Mac was a breakthrough in the seamless, synergistic blending of two technologies.

Another key to Palm's simpiicity and convenience was the fact that it was so portable. All Palm models were light and small, fitting conveniently into pockets and purses. All featured instant-on power and ran on a single battery charge. Most Palms also offered a nifty "gee whiz" feature-the ability to wirelessly zap, through an infra -red link, electronic busines's cards and data files to other Palm users.

Last but not least, Palm was savvy about the need to create a broad community of users and developers around its standard. The company encouraged third party application development, with the result that literally thousands of boftware applications soon became available for the Palm platform. This helped Palm stay in front of its competitors, since the software could only be used on Palm devices- And starting in December 1997, Palm licensed its operating system to companies such as IBM, Symbol, Handspring, and Sony, thereby increasing its chances of surviving against Microsoft's competing Pocket PC operating system.

Palm did virtually everything right to make and keep its offering highly Acceptable. As customer needs and expectations grew, Palm responded by adding color screens, expanded memory and Internet connectivity, but it never succumbed, to “feature creep"  by trying to do too much. By 2004, over 40 million Palm OS devices had been sold worldwidg largely because Palm made its handhelds higly Acceptable by keeping things simple.

WHEN SMART COMPANIES DO DUMB THINGS

Even smart companies are not immune to blind spots when it comes to achieving a consistently high level of Acceptability for their offerings. Consider the performances of 3Com and Sony- 3Com was the Ethemet networking pioneer and the company that acquired the Palm business from US Robotics in 1997 and then spun it out as a stand-alone company in March 2000. Sony, of course has been synonymous with stylish, well-designed technological marvels in consumer electronics for almost 50 years.

Around 2000, both 3Com and Sony decided to target a niche in the computing marketplace that had been much discussed in the trade press but had not yet seen any successful product launches: the Internet appliance.

As envisioned by many, the Internet appliance would be a low cost device that consumers could use to surf the Internet and communicate via e-mail. It was though  that such a device would appeal to experienced PC users and novices alike. The former could use it to make Internet access and e-mail capability available in "critical areas" around the house Non-PC users would get Internet access for web surfing and e-mail without having to buy a larger and more expensive device. Technology pundits predicted that many of the purchases for the latter group would in fact be made by PC owners-the "let's buy one for Grandma” notion. Everyone, it seemed, was convinced that such a gizmo would be the next big thing.

3Com took the first plunge into the market with its October 17, 2000 launch of Audrey, named for the actress Audrey Hepburn. Envisioned as the first in its line of Ergo Internet appliances, Audrey was a smell toaster-shaped box crafted by the famed IDEO design house. The device sported a color touch screen, a wireles, keyboard, a microphone for voice e-mail, and other enticing features.

3Com envisioned Audrey as a convenient device for keeping a family wirelessly connected and virtually informed from anywhere in the house. This would be accomplished in three ways: 1. Convenient and immediate access to favorite preselected Internet content; 2. Quick and easy e mailing or voice mailing by recording a messege sending it with the tap of a stylus, 3. Seamlessly tracking and coordinating plans, appointments, and special events on a family-calendar.

The device's launch was accompanied by high expectations within the company and much hoopla in trade publications. But a short six months later, 3Com dropped the curtain on Audrey and offered full refunds to anyone who had purchased the appliance. What went wrong?

While Audrey sported some sexy features, it also had many shortcomings. Among them:

-       A poor display-the type of screen "found only on the very cheapest of laptops, only smaller.

-       Web pages that weren't reformatted on Audrey's browset so users needed to scroll horizontally to view the entire page.

-       Only nine, pre-set Internet channels were available for viewing-guaranteed to frustrate the avid Internet surfer.

-       The system processor uras so slow that it took a long time to load pages.

-       The cramped keyboard made typing difficult.

-       The device lacked infra-red hot synching capability, requiring Palm owners to buy extra cradles or make Audrey their primary computer.

-       Audrey couldn't connect with three of the day's largest Internet Service Providers.

So while Audrey was sleek, stylish, and smartly targeted to its core market-the reasonably affluent, technologically adroit family-its many failings rendered it ultimately unacceptable. No surprise, then, that Audrey bombed.

What about Sony's eVilla Network Entertainment Center, an Internet appliance launched in June 2001 (a few months after Audrey's demise) Surely, sony would not repeat 3Com's mistakes?

As it turned out, not only did Sony do a rerun of some of 3com's blunders, it added a few of its own.

Weighing in at 32 pounds-and sporting a boxy design that resembled a vintage Mac desktop-the eVilla was not exactly svelte. However, its bulk was offset by its excellent flat panel display, which was configured vertically, in the portrait orientation, rather than the landscape orientation common in most PCs.

But then there were the problems. The eVilla had a weak 266 MHz processor and a mere 54 megabytes of memory. Users locking for secondary storage had to settle for the Memory Stick, Sony's proprietary and expensive storage technology. Worst of all, the eVilla used the obscure, BelA operating system instead of windows and could only accommodate a narrowband 56 Kbps lnternet connection-a huge drawback at a time when broadband access was rapidly becoming more available and affordable. That wasn't all:

-       Users were stunned to discover that they could not customize the seven preselected websites, which were chosen by Sony and favored its business partners.

-       Parents could not filter the websites for children.

-       The eVilia did not support any version of instant messaging.

-       Customers had to sign up with Earthlink (for $21.95 a month) they could not use any other ISP. This represented an additional cost to those who were already using another ISP.

As 3Com did withAudrey, so Sony did with eVilla: it pulled the plug just months after the device's launch. Thus, Audrey and eVilla joined other Internet appliance failures such as Gateway's Touch Pac and Netpliance's l-opener. Perhaps the debacle was just a classic case of a product category that existed everywhere except in customers' minds. More likely, the failures were due to the unassailable fact that no company figured out a way to deliver an Internet appliance that truly offerred high levels of functional and psychological acceptability to consumers.

SUCCEEDING IN MATURE PRODUCT CATEGORIES

The Acceptability threshold rises with category maturity and competitive intensity 3Com and Sony tried and failed in targeting "blue ocean" categories that had not yet been exploited and lacked a template for success- On the other hand, companies that can create high levels of Acceptability can succeed dramatically even in mature product categories where opportunities for new product innovation appear limited. To succeed in a competitive market, an offering must go beyond basic Acceptability: companies must provide surplus value over alternatives and sell solutions rather than products.

Consider the women's shaving market, long treated as an afterthought by the shaving industry's mostly male leaders. For many, years, the industry viewed a woman's razor as simply a pink version of a man's razor, perhaps with an unimaginative tag like "Lady'; added to the product's name. Trouble is, women's shaving needs are very different from men's shavnt needs, and men's products hardly appeal to women. Women usually shave in far from optimal conditions (such as in the shower), whereas men generally shave in front of brightly lit mirrors that are often magnified. And women must shave, sight unseen, the parts of their bodies that are hard to reach and difficult to navigate.

It took a while, but Gillette, the shaving industry kingpin, eventualiy recognized the wide-open opportunity to craft a razor specifically for women. In 1992, Gillette launched the Sensor for women. Despite a hefty price tag (with replacement blades costing over $2 each), the Sensor was an unqualilled success, accounting for 50 Percent of the sales of all reflilable razors within three months of its launch. By the end of the decade, the company had sold 100 million Sensor razors and 1,1 billion refiil cartridges. The industrial Designers Society of America and Business weeb even hailed the Sensor as one of its “Designs of the Decade”, citing it as "the first razor to reaily address women's shaving needs”.

Gillette continued to raise the product's Acceptability level, coming out with the Sensor Excel forWomen a few years later and the Venus in early, 2001. Protected by more than 50 US patents, and sold with the tagline "Reveal the goddess in you”, the venus features advanced triple blade technology, a rounded, pivoting catridge head that molds to a woman's curves, rubbery oval cushions designed to stretch and smooth skin, an indicator strip that wears off when the cartridge needs to be replaced, and a no-slip handle. Who knew that so much engineering could go into the humble razor?

Gillette's meticulous attention to the details of what constitutes Acceptability for its target market is noteworthy, and accounts for the company,s extraordinary succes in this market. Gillette also focused on the psychological aspects of Acceptability. The company recognized that women do not think of shaving as a grattfying experience, but an afterthought- So the company sought to put some glamour into shaving and make it less of a chore, by creating a product that tries to make women feel feminine, confident, and empowered.

Consider another example of an exciting new product in a dull mature product category in this case, a great product that literally rescued a company that was teetering on the brink of bankruptcy. In 1997, Apple was widely given up for dead. Its line of computers had steadily lost market share for many years, no prospects of a turnaround appeared imminent, and by January 1998 its stock price was in the basement, languishing at $6.

In May 1998, however Apple's fortunes began a dramatic turnaround, as CEO steve Jobs announced the launch of the iMac, a bold new redesign of the company’s flagship Macintosh computer. The unigue shape, translucent colors 40 percent performance edge over the fastest PCs and a host of other product enhancements led to a frenzy of consumer demand. The iMac quickly became the biggest computer launch in compUSAs history, outselling all desktop PCs combined in its first month. Amazingly, 50 percent of iMac buyers were first-time userq sparking a sharp upswing in the company's stock to $20 by January 1999 and nearly $70 by early 2000.

MANAGING TO FAIL IN GROWING MARKETS

While Gillette and Apple offer compelling lessons on how to succeed in mature, seemingly unattractive market we can often learn more by digging into failures That's why we present, in this section, examples of major companies that launched promising new products into fast-growing markets and still found a way to slip up.

In 1995, the PC industry was growing at 30 percent a year, and Microsoft's grip on the market for operating systems was tightening into a stranglehold. And yet, the company hadn't locked in the significant number of potential customer uses who were indifferent towards technology. Microsoft set out to attract them by creating what it called a "social interface”. The result was the oddly named Microsoft “Bob" an interface designed to make PCs easier to use for people who were new to computers and even intimidated by them.

Bob was installed on top of the windows operating system and came with eight tightly integrated applications, including a Letter Writer, Checkbook, Calender, Household Manager, and so on. When users fired up their PC, they confronted a virtual home for launching applications. Unlike the windows interface with its icons and pull-down menus, users saw a room filled with common objects- Clicking on an object would start a particular application. For instance, clicking on the calendar on a wall would launch the calendar program; clicking on the writing desk would launch the letter-writing program.

Bob also featured a cartoon character that asked the user questions (via speech balloons) to determine what he or she wanted to do. Users could select from three home styles and seven different rooms; they could also select from a cast of 12 animated cartoon characters, including a purple elephant named Hank and a green worm named Digger. Each guide had a unique personality; Rover the dog was particularly helpful, while Scuzz the rat seldom provided any advice- A family could share Bob, with each member having his or her own room.

The full force of Microsoft's formidable marketing machine launched Bob as a blockbuster program, which retailed for $99 (the same price as a windows upgrade or a mainstream application such as Word). However, while the price seemed right, the market decided that Bob wasn't the best man for the job- Microsoft lowered the price to $55, but to no avail. The target market remained disinterested, and the product was soon withdrawn.

Bob failed because it Cid not meet the test of Acceptability with consumers in several ways:

-       Inane interface: Bob's interface seemed geared to young children, who were perfectly comfortable with the graphical user interface already available on windows. Adults hated the cartoon characters, whose constant questions and encouragement came off as condescending.

-       No need for it: At the end of the day, even newbies had no need for a "social interiace". They could get by just fine by purchasing highly-readable user guides (such as the Dummies series), viewing videotapes, or relying on tips from friends and family.

-       No way out: While all Windows programs had a consistent interface and menu structure, Bob presented a unique (and unfamiliar) way to interact-There was no other program like it, and that was a problem. For neophyte users who were ready to graduate to Window's, Bob amounted to a dead end-there was no pathway to migrate from Bob to other programs.

-       Demanding hardware and software requirements: Worst of all, Bob was a resource hog that required many customers to buy new computers or upgrade their existing machines with new processors and extra memory.

In the end, Microsoft's wast resources couldn't sway Bob's target customers, who pronounced the product psychologically unacceptable (read: irritating cartoon characters) as well as functionally unacceptable fread: dead-end program). And no amount of price cuts could bring customers back.

Bob seemed to be a case of trying to solve a problem that didn't really exist, and doing a poor job to boot.

SUMMARY OF ACCEPTABILITY LESSONS

We have looked at a large number of examples of products that delivered high or low levels of Acceptability- Here are some of the key lessons we can take away from these examples:

Table 3.1 Acceptobility Lessons

Product                                Lessons

Sony Betamax                     -    Try lo establish on industry standard-with new technologies/formats, don't try to go it alone

Boeing Dreamliner             -    Focus on Acceptability for immediate (airlines} as well as final customers (passengers)

                                               -    Break lrade-off mentality

Ford Edsel                            -    Get quality right the first time

                                               -    Don't be too radical with design for mainstream products

Apple Newton                      -    Don't overpromise ond underdeliver

                                               -    Don't try lo do too much with a single product

                                               -    Make sure the technology is ready for prime time

Palm Pilot                             -    Appreciote the power of simplicity

3 Com / Sony                       -    Beware of blind spots and socred caws

                                               -    Provide flexibility-don't lock customer into unattractive options

Gillette Sensor                     -    Create products specifically desiqned for each

For Women                               segment/market

Apple iMac                           -    Come up with on irresistible design that creates "product lust"

Microsoft Bob                       -    if it ain't broke ... Don't try to solve a problem that doesn't exist

                                               -    Simple-minded is not the same as simplicity: dont insult your customers’ intelligence with dumbed-down products

IMPROVING PSYCHOLOGICAL ACCEPTABILITY

As we discussed in Chapter 2, marketers have tended to focus heavily on psychological acceptability, especially since it goes a long way in improving customers willingness to pay. Ways to improve psychological acceptabiiity include:

-       Brand image. A brand's image is a critical component of psychological acceptability Customers use brands not only as a way to identify products and form expectations about product quality, but also as a way of branding themselves. Brand identity and self-identity are inextricably linked, especially for products with which customers have a high level of psychological involvement. For example, Tiffany & Co. and Goldrnan Sachs have historically benefited greatly from their sterling brand reputations, which attract customers in large numbers and allow them to charge a premium price for their offerings. Of course Goldman Sachs' reputation has taken a substantial hit in the wake of the bank bailouts, and the company needs to rebuild itself to regain client trust .

-       Packaging and design. Marketers can move beyond brand image and use the product's packaging as a means to communicate to customers and create psychological acceptability. For example, perfume is marketed in very attractive containers, which have come to mean as much to customers as the perfume itself. Marketers can a use design to greatly enhance a product’s psychological acceptability; consider the iPod's and iPad's look and feel, which has much to do with the device’s overall appeal. We will discuss design in greater depth later in this chapter.

-       Positioning. Positioning refers to how the customer perceives the product-what it stands for and how it relates to other products in its category. Based on the needs and characteristics of the target market, a product should be positioned to ensure that customers find it psychologically acceptable.To succeed, an offering must occupy a leadership position ia an area that its targeted customers care about. Possibilities include being the leader on value, prestige, social responsibility, responsiveness, ease-of-use, environmental issues, relationships, service, and flexibility.

-       Service guarantees. Companies should offer service guarantees that create greater psychological acceptability. For example, Caterpillar guarantees customers a 48-hour response time for repairs, which reassures farmers, heavy-equipment operators, and other construction business owners that they won't sustain long-term losses when a machine breaks down.

-       Risk reduction. Customers generally are risk averse atrd resist change. The more radical the offering, the more skeptical the customer is. Companies must reduce the social or professional risk that customers perceive. When it dominated the mainframe computing market, IBM was renowned for enncouraging the notion that customers could not go wrong with Big Blue. The company used this perception to club its competitors, by allegedly sowing fear, uncertainty, and doubt (FUD) in the minds of corporate customers if they thought of switching to another company's products.

IMPROVING FUNCTIONAL ACCEPTABILITY

Marketers have not paid adequate attention to the functional dimension of Acceptability, as we discussed in ehapter 2. Some ways in which companies can increase functional acceptability include:

-       Enchance the core benefit

Sofa beds have long been derided, as most of them fall to fulfill their primary purpose well: provide a good night's sleep. Most people sleep fitfully on sofa beds, largely because of the metal bars that spear them in the back. No wonder that sales of sofa beds peaked years ago (in 1993, when 2-7 million were sold in the US) and have since fallen steadily; only 1.7 million were sold in 2003. People are increasingly turning to futons, air mattresses and other options, all of which are growing in sales.

However many older customers are uncomfortable with futons and the like, as they are often associated with dorm rooms. One shopper who reluctantly opted for a futon said she would have willingly paid more for a sofa bed, if only she could have "found one that looked good, was smaller and had a pullout mattress that was comfortable-"To reverse the trend, furniture designers are returning to the basics of what defines a good sofa bed, starting with the notion that people must be able to actually sleep on it. For example, American Leather has come out with a sofa bed called the Comfort Sleeper that uses a sheet of wood instead of metal bars. The opportunity remains for furniture makers to create a sofa bed that offers true bed-like comfort but is still suitable for a family room.

-       Enchance perforrnance and safety

Most products carry some inherent degree of usage risk. One important way to improve functional acceptability is to enhance the product's ability to protect the user. For example, skiers face a very high risk of torn knee ligaments. Working with MlT's Center for Sports Innovation, ski boot maker Lange has designed a fast-release boot that reduces force on the knee by 30 percent to 60 percent, thus avoiding many devastating injuries.

The same lab has worked with many other companies to improve their products' safety performance. Case in point working with New Balance,  the center helped design a new shoe for triathletes to wear after hours of biking and swimming.

-       Enhance usability. Many products are simply too difficult to use.  How many times have you struggled with the alarm clock in a hotel room er the faucet in the shower? Improving the human-machine interface is a surefire way to improve functional acceptability. Technology-intensive products are an especially fruitful area for usability enhancements.

-       Simplify. As digital products go mainstream and older customers start adopting them (sometimes reluctantly), they are often intimidated by all the features and capabilities at their disposal. Many are unable to make use of more than a small fraction of the features they own. one company that has taken this to heart is Philips Electronics NV, which has formed a "simplicity Advisory Board” of outside experts to help it reexamine all of its products.

Accordingto Philips' top marketing executives, consumers are saying,"Many products complicate my life instead of making it easier-"vodafone, one of the world's lirgest cellular telephone operators, is also discovering a huge, latent demand for simplicity. It surveyed 5000 Europeans and found that many consumers in the 35-to-55 age group were deeply confirsed by their phones. Many did not know their own cell number, or how to use basic functions. They didn't know how to respond to text messages and felt intimidated in the company's retail stores-they simply could not understand all the acronyms and jargon used by the young staffers. The simplified Jitterbug by Samsung, has been a great success for the silver-hair generation.

-       Increased rehability

Customer expectations for product and service reliability have never been higher: spurred by continuous improvements in manufacturing processes quality levels have been rising and defect levels have been declining for decades. The "six Sigma" quality improvement movement has greatly contributed to this trend. Companies such as Roils-Royce have leveraged their extraordinary reliability to steal market share in their industries.

-       Greater capabilities

In addition to becoming simpler to use and more reliable, product also become more capable over time. Enhanced capabilities must not come at the expense of ease of use or overall robustness. Good examples of products that have increased their capabilities without making rade-offs include the Blackberry and Apple's iPhone.

People buy products to solve-problems Marketers should strive to solve those problems in the most compelling way without creating other difficulties for customers. This is the essence of creating a high degree of functional acceptability.

THE CRITICAL IMPORTANCE OF DESIGN

Acceptability is above all a design issue. No single factor contributes more to a product's Acceptability (or lack thereof) than its design. Design impacts both functional and psychological acceptability, as well as each of the other As. It represents an area of highly leveraged spending for marketing. In this section, we discuss the multifaceted strategic role that the design function has come to play.

Design addresses far more than a product's functionality and aesthetics; today, it is a highly complex function. When fully understood and applied, the principles of design can lead to exciting results:

-       Empirical studies have shown that an additional doliar spent at the design stage leads to an average of $47 dollars in incremental profits during the life of the product.

-       According to the Industrial Designers Society of America (IDSA), the average company realizes sales of $2500 for every dollar spent on design. For companies with revenues over $1 billion, the average rises to $4000

-       Over 80 percent of a product's production costs are locked in at the design stage, even though only a tiny fraction of that is actually spent on design

-       According to estimates by Dataquest Inc., a product change that costs just $1000 at the design stage can cost up to $10 million during the final production stage.

Despite these impressive numbers, most companies do a poor job harnessing the true power of design. For instance, some companies have proven adept at designing products that are easy to manufacture and assemble, but the products themselves are uninspiring. Dell is renowned for its manufacturing prowess, but has often suffered on the design front. Mobile-service providers rejected the PC maker's first attempt at launching a competitor to Apple's wildly successful iPhone, pronouncing the design of Dell's prototypes as relendessly "dull".

On the other hand, Hewlett-Packard's tremendous success in the laser and inkjet printer market was made possible by product designs that were simple to use, easy to manufacture and often immune from breakdown. The company sets a blistering pace for its competitors, consistendy improving its products, which are already market leaders. Its  laser-printer market share is nearly 60 percent, more than five times higher than that of its nearest competitor even though it uses the same Canon “engine" that many of its competitors use.

The basic requirements of good product design are timeless and well known function, aesthetics, and reliability. Functions does not imply designing products to serve the largest combination of needs, as many multifunction products reflect design overkill and can confuse the customer. (The Swiss Army Knife is an exception) Less can often be more in designing products. Many electronics companies are retreating from an everything-but-the-kitchen-sink design philosophy to one that emphasizes robust performance and easy function. Vodafone has launched a cell phone called "simply," which lacks a camera, browser, and other common bells and whisdes. Not surprisingly, it's extremely easy to use.

Another increasingly important consideration is "universal design"-the nation that as the population ages, products must be easy and safe to use, especially by the elderly and the disabled. Examples include walk-in bathtubs, easy-to-open detergent boxes, and OXO kitchen utensils with large rubber grips.

Products must conform to customers' sense of the aesthetic. Great design evokes in consumers something akin to "product lust." Even mundane products such as small appliances are often bought because of their style and appearance.

Companies develop distinct design identities that become as much a part of their overall identity as their brand names. Manufacturers must strive for a high degree of integrity and thematic consistency in their design elements within and even across product lines. Honda Motor Co- achieves such consistency across lines as diverse as cars, power equipment, lawnmowers, garden tools, and motorcycles.

Reliability is probably the single most irnportant factor for consumers, since it is directly related to a product's uptime. This translates to the need to design products to not only minimize breakdowns but also to permit speedy repair. One way to achieve this is through modular design, whereby the overall product consists of a number of modules that easily fit together. A modular design coupled with self-diagnosing modules can dramaticaliy reduce the costs of setting up and running a product service network; uptime can be maximized with minimal investments in inventory or in highly skilled repair technicians For example, most of Xerox’s high-end copiers and GE's sophisticated medical diagnostic equipment are designed with these characteristics.

The lack of early and dose coordination between design and engineering can lead to products that are difficult to manufacture. In fact, such neglect can doom potentially outstanding products. For example, the Danish company Bang & Olufsen has long been admired for outstanding product design. The company’s high quality electronic ertertainment equipment is good enough to be placed in museums. However, the company's products are assembled in a tedious process workers use pliers to insert individual transistors into circuit boards' As a result, the company's products are extremely expensive, and it has been steadily losing money and market share.

The use of approaches such as "Design for manufacture and Assembly" (DFMA) is fast becoming a strategic necessity; no company can hope to compete globally (or even loccally) for long without making full use of such metthodologies. Essentially, DFMA is a series of software "expert system” that can take an existing design and streamline it, making it easier to manufacture. This generally involves greatly reducing the total number of parts, and redisigning those parts so that they are exceedingly easy to assemble (through the use of snap-together assembly, for example)

Products that allow customers an accessibie entry point can give a company a competitive edge. The most important reason for IBM-compatible personal computing’s explosive growth was its open architecture and modular design. Customers are also increasihgly looking for products that are recyclable and environment friendly. To respond to this, companies must choose materials, components and supplies that are less hazardous, as they are doing now with air-conditioning coolants.

The notion of design for disassembly has been used by a number of companies, including BMW and U.K. Kettle- In the latter case, key issues involved in the kettle design included two-way snap-fit and break points, coding of all parts, using labels of similar material to facilitate separation when rerycling, and the total absence of fasteners. The product was very successful; it was so well designed that the Museum of modern Art was its first customer.

To Sum up, leveraging design is a key competency for companies. Of course no company can do all of the above. They must prioritize and figure out what approaches work best for them. When the design is right, Acceptability usually follows

DELIVERING ACCEPTABILITY BY LEVERAGING ALL RESOURCES

At most companies, the marketing function does not do a good job  of getting the people who design, engineer and manufacture products to do so in a way that maximizes customer satisfaction. Marketing groups often lack the clout and credibility to align the efforts of R&D with the needs of customers (IBM is a notable exceptions, its researchers work directly with customers). Marketing must bring the voice of the customer to bear on all the other internal functions of business, each of which directly or indirectly contributes to customer satisfaction.

Of course, other functional areas are not inherendy hostile to the idea of incorporating customer needs into their operations. Each area attempts to do so in its own idiosyncratic way, and some are better at it than others. But the key problem is that they may hear the voice of the customer in a different way. Just as marketing is (or should be) responsible for coordinating a company’s communications to its customers through IMC (integrated marketing communications), it must also take responsibilty for providing a holistic view of what customers want and need from the company and communicating those wants and needs to all the relevant entities within the company.

Here are some examples of how marketing can leverage a broad set of resources to enhance Acceptability:

Product: Greater ease of use leads to functional and psychological acceptability. This is one of the key elements that make the iPod highly acceptable. Its single, unobtrusive button is a gateway to what is now a seemingly limitless number of apps. Likewise, Google, unlike other search engines, has stuck with a plain, stripped down design for its search page. This makes the page load faster for those who just want to do a search. Though the company has added many new services, it has kept its homepage the very essence of simplicity.

Increased robustness and functionality makes a product more psychologically acceptable. For example, Hyundai used to be known for low prices, no-frills and poor reliability. Over time, the company has improved its cars, to the point where they can now compete with Honda and Toyota. One telling piece of evidence of Hyundai's improvements in the reliability arena: the company no longer needs to offer a ten-year 100,000 mile warranty to gain customers' trust.

User centered design increases functional acceptability. For example, Carhartt has become synonymous with durabie, no-nonsense outerwear for workers. Having originally designed work wear for railroad workers in the 1890s, Carhartt gained prominence after World War II, when it came to be seeh as the authentic creator of the "original equipment for American workers”.

Price; Hitting the pricing "sweet spot" leads to high functional and psychological acceptability. For example, Motel 6 launched the first, no-frills budget hotel for families and business travelers, priced at $6 per night. By providing a clean, comfort able room for that price, Motel 6 exceeded customer expectations for functional as well as psychological acceptability.

Offering higher quality at an affordable price increases the product's psychological acceptability. For example, when they were introduced, disposable diapers were high-priced items that were only meant for occasional use. P&G's research indicated that if they could bring the price down, many people would make disposables their everyday diapers. The company' aggressively reduced its costs and lowered its prices, which helped create the $25 billion disposable diaper industry

"Price fairness," real or perceived, makes the offering more psychologically acceptable.The same holds true for companies that use everyday low pricing rather than constant price promotions. For example, many retailers use localized pricing rather which means their prices vary from one store to another. This makes customers suspicious of the prices, and lowers the phychological acceptabilify of shopping there. But the German supermarket chain ALDI charges the same prices in all of its stores. This has helped make it Germany’s third most trusted brand, after Siemens and BMW. Another example Jordan’s Furniture, which sells its furniture at every day “under Prices." Customers can purchase good quality furniture when they want to, without having to wait until an item goes on sale. This poliry has helped make Jordan's one of the most successful Furniture retailers in the United States.

Place: Especially for services, place is an important element in functional acceptability. For example, Bay Bank used place as well as IT to become a dominant player in the Massachusetts consumer-banking market. It invested heavily in ATMs when they were a relatively new phenomenon.The bank quickly grabbed a majority of choice locations around the state and created a much larger presence than any other competitor.

Proximity to customers increases a service's psychological acceptability, since it is “there when you need it." Bay Bank's placement of ATMs in locations where people spend their money, such as malls, ensured that customers always had cash near at hand.

Edward Jones, by opening branch offices in local communities, helped its investment representatives build personal, face-to-face relationships with customers. By forging a sense of trust with customers, a firm increases the psychological acceptability of its products or services.

Then there’s Samsung, which leveraged retailers to redefine its brand and steal market share from companies such as Sony.To help overcome its image as producer of cheap, knock-off electronics, Samsung moved from discount retailers like Wal-Mart to retailers with stronger reputations such as Best Buy.

Well-trained dealers help enhance the overall customer experience and there fore the functional and psychological acceptability of producst. Toyota spends a lot of money improving the capabilities of its dealer network. The dealers now know within 15 minutes, instead of several days which cars are on the assembly line. They also have a system that enables them to do a "virtual swap" with other dealers in order to meet customer needs. Dealers are now able to offer more customization to customers, leading to a richer customer experience and higher overall Acceptability.

Communication. Open and honest communication-including a willingness to admit mistakes-enhances consumers' trust in a company's service or product. The 1982 Chicago Tylenol deaths, which occurred when seven people died after taking pain-relief capsules that had been laced with cyanide created so much fear among consumers that many predicted the brand would never recover from the crisis. But Tylenols’s parent company, Johnson & Johnson, responded immediately by pulling all Tylenols capsules off the market and exchanging all that had already been purchased with Tylenol tablets, which cost the company more than $100 million. Company executives communicated continuously and openly with customers and other stakeholders. The result: Johnson & -Johnson won so much positive media coverage for its handling of the disaster and it enerqed from the ordeal stronger than ever.

People: Employees play an important role lmproving and increasing the functional as well as psychological acceptability of services. For example, the Four Seasons hotel chain counts on its staff to improve the brand's Acceptabiiity. It has introduced what it calls a “familiarization stay" as part of its employee orientation, in which all workers, from housekeepers to front desk clerks, are given a free night’s stay for themselves and a guest, along with free dining. The employees are asked to grade the hotel on measures such as the number of times the phone rings when caliing room service to how long it takes to get items to a room. After six months of sen ice, Four Seasons employees may, stay up to three nights a year for free. Once they have been with the company for ten years, they get 20 free stays.

While Four Seasons' "familiarization stay" is a powerful perk, it also helps employees understand what it feels like to be a customer. And employee feedback helps the company improve the Acceptabillty of its service for customers.

Similaily, snowboard maker Burton actively encourages its employees to experience its boards and accessories. All employees are provided with free season passes to a ski resort; they also receive a 50 percent to 60 percent discount on most company producs. Burton even closes for what it calls "powder days"-if two feet of snow falls within 24 hours, employees can grab their boards and head for the slopes. When a blizzard blanketed Vermont with several feet of fresh snow and Burton deciared a powder day, founder and chairman Jake Burton told the First Tracks online ski magazine that "Nothing makes me happier than giving the people who work here the opportunity to experience the essence of a sport that they are making accessible and fun for so many others." Now that's how you create ambassadors for your business.

Aligning employee passions with the needs of customers results in greater functional and psychological acceptability. Timberland is known for its strong commitment to the environment and social responsibility. Employees get a $3000 credit for buying a hybrid car and can take up to 40 hours per year to do volunteer work in the community. In a similar vein, outdoor apparel and equipment company Patagonia offers its employees an environmental internship, whereby any employee can take up to two months offin a year with full pay and benefits to volunteer with an environmental organization of their choice. The adoption of such policies aligns a company's core values with employees' passion, increasing employee loyalty and brand acceptability.

Processes: Since the manufacturing and marketing process plays an integral role in creating and selling the product, it can contribute significantly to its Acceptability. For example, GE is a leading innovator in implementing "Six Sigma," a highly disciplined quality control process designed to eliminate defects. Six Sigma "black belts” have helped GE put world-class quality into its products, thereby attracting customers all over the world.

Then there's the 3M Corporation, which has had a sustainability program called "Pollution Prevention Pays" (3P) in place for more than 30 years. The processes implemented as a result of this program have creatted more functionally acceptaable products. For example, a new process for making abrasive backing improved product performance while reducing air emissions and costs. An additional benefit is that environmentally friendly products are easer and less costly to dispose of. The 3P program and resulting process improvements have won the company significant recognition, including numerous awards from the US Environmental Protection Agency and a spot on the Dow Jones sustainability Index. The upshot 3M has come to be known as a model global citizen, enhancing its psychological acceptability to customers and to employees.

Sales : A low-key, service-oriented approach to seliing can enhance Acceptability. For example, Barnes & Noble has a very different approach to selling books campared to traditional bookstores. Its stores provide comfortable surroundings, including ample public space reading chairs and a cafe that features Starbucks coffee. Customers can go to a Barnes & Noble and thumb through or read several books without any pressure to buy.

Another example: ING Direct's three storefronts in philadelphia, which are more like cafes than banks. The informal setting has increased Acceptability by making customers more comfortable with the potentially nerve-wracking process of managing their money.

R&D : When R&D focuses on solving customers' problems, it drives Acceptability. 3M places such great importance on R&D that it requires 30 percent of its sales to come from products that did not exist four years earlier. This intense focus on innovation forces a continuous round of improvements to products, which raises functional acceptability. A superior R&D team innovates better quality products, which are more acceptable to customers.

If a company has a reputation for investing heavily in R&D it increases its psychological acceptability in the minds of customers and employees. For example, Google is known to be a company that spends heavily on R&D (13 percent of revenue as of September 2009, far more than it spends on marketing), which contributes to its image as an innovator whose work benefits society as a whole.

Operations : Efficient operations result in speedy and reliable service and increased functional acceptability. FedEx is known for its operational efficiency. It has a fast and reliable package delivery system, covering over 220 countries with 672 aircraft serving 375 airports worldwide, 894 stations, ten air express hubs, 29 ground hubs and more than 70,000 motorized vehicles for express, ground, freight, and expedited delivery services. Fast and reliable operations also increase psychological acceptability. Customers using FedEx can feel confident that their packages will arrive on time. The FedEx package has also attained some status value, signifying importance of its content.

Dunkin’ Donuts promises its customers a consistent and speedy experience in its stores. It carefuliy studies employee efficiency behind the counter. It seeks to create the most efficient store layout and reduce the number of employee steps and functions. When it launched a new espresso drink. Dunkin' Donuts did not want to risk slowing down its morning coffee business with the new product. So it worked closely with a supplier to create an entirely automated machine, allowing stores to continue offering fast and efficient service to customers.

IT : The strategic use of information technology can greatly enhance the functional as well as psychological acceptability of a company's offerings. FedEx was the first transportation company to offer web-based package tracking. Customers could see the status of their packages in almost real-time. UPS drivers used maps, 3 x 5 note cards, and their memory to figure out the best way to run their routes. All that changed in 2005, when UPS began to implement a $600 million route optimization system that each evening maps out the next day's schedule for drivers. The sophisticated software designs each route to minimize the number of left turns, thus reducing the time and gas that drivers waste waiting at stoplights. The system has reduced drivers' daily mileage, eased-the burden on substitute drivers, and shortened training time for new ones, while improving customer service.

Customers: Customers can help improve the Acceptability of product by providing unadulterated feedback to companies. Ernie's Seafood utilizes a variety of methods to seek customer feedback, such as personal interaction, point of purchase receipts, a customer feedback phone number and e-mail- Dell has listened to customers' complaints about tech support, and instituted a new type of support whereby a Dell associate logs on to the customer's PC remotely and fixes the problem. The Harley Owners Group (HOG) has more than I million members and over 1100 chapters. All members share the passion of riding a Harley Davidson bike. HOG members play amajor role in promoting the Harley image-some even participate in a think tank that seeks to brainstorm new features for Harleys.

Government: Covernment certiffication and endorsements enhances a products’s Acceptability.The Food and DrugAdministration plays a big role in enhancing the Acceptability of pharmaceutical products. The EPAs Energy Star program has created enormous psychological acceptability for branded products due to the recent spike in energ'y costs and concerns about global warming.

lndustry: Educating customers about the benefits of a product category increases its psychological acceptability. Back in the 1980s, milk was perceived as an uncool drink for children, and the consumption of miik declined.Then in the early 1990s, the nation's milk processors came togetler and funded a program called the “milk Processor Education Program". which improved the image and Acceptability of milk with the "Got Milk?" campaign Pork producers and other industries have pursued similar initiatives.

Industry certifications can also increase functional and psychological acceptability. The International Standard organization (ISO) ensures that products meet high quality standards, and guarantees the functionally and interoperability certified products.

Partners: Partners aid in educating customers about a product or service's benefits fits and thereby enhance its Acceptability. Unilever partners with parents, health educators, teachers, community leaders, and government agencies in India to promote health education through a program called Lifebuoy "swasthya Chetna” or “health awakening." The program is aimed at educating people in rural India about good hygiene practices. As a result, sales of Unilever hygiene products rose 10 percent, The program has also improved the overall image of unilever in the Indian market.

Parterships can help enhance the psychological acceptability for both parties. The partnership between L.I. Bean and Subaru enhances the psichological acceptability of Subaru's cars, positioning them as the ideal vehicles for people who thrill to the outdoors as well as providing additional exposure for L.L. Bean.

Treating suppliers as customers increases Acceptability for a company's own customers. Toyota treats its suppliers as customers, establishing close relationships with them. Toyota's managers learn about their suppliers visit them, respect-them, and care about their future, working with them to improve their processes and make them more efficient and innovative. By doing so, Toyota is able to attract high quality and reliable supplierg giving them the ability to decrease time-to-market and achieve significantly lower costs than their competitors.

Public opinion/media: Public opinion impacts the zeitgeist of the moment and thus helps determine what is acceptable and what is not- The public's opinion of fatty foods and the ever-increasing waistline of the American consumer have caused the fast food industry to revamp its food offerings adding healthler fruit and vegetable choices. Popular restaurant chains such as Applebee's are embracing the more health-conscious consumer by offering a whole menu section endorsed by Weight Watchers,

With environmental activism and awareness increasing globally, locally and organically grown produce has become more mainstream, greatly increasing the Acceptability for a company like Whole Foods. fusing environmental consciousness has led GE to launch its "Ecomagination" initiative, designed to meet customer needs in a more sustainable way, Projects include a 200 ton, "Prius-on-rails" hybrid locomotive, a new jet engine that delivers a 15 percent improvement in fuel efficiency with half the emissions; better wastewater recycling technologies; and a hydrogen infrastructure that could lead to a carbon free transportation network. This initiative has increased the Acceptability of the GE brand.

While no company can do all of the above the examples illustrate the richness of the  possibilities that exist for companies to enhance the Acceptabiiity of their offering in creative ways. companies should look at the range of possibilities and prioritize the most likely high impact areas where they can positively impact Acceptability without spending too much.

THE INTERNET AND ACCEPTABILITY

Companies can use the Internet as a cost-effective tool to work more closely with their customers and improve Acceptability. Working online with customers can greatly improve communications and the efficiency with which new product design or modifications to existing products are implemented. Having a more interactive relationship is now possibie due to the power of the information age and the integration of technology. Customers can now be a part of the product design process, allowing companies to use real-time feedback to make changes that make the offering more acceptable.

Information technology has also allowed designers to infuse products with intelligence and responsiveness-As society moves toward more distributed intelligence more and more inanimate objects will become "thinking machines'" Designers of even the most mundane products can contemplate adding intelligence and connectivity to their produce. For example appliance makers such as LG are exploring the customer appeal of smart, connected refrigerators.

Companies can leverage the lnternet to make their products more responsive. Responsiveness includes the dimensions of product intelligence, connectivity, and integration. Product intelligence has several aspects. High-vaiue product should be made self-diagnosing through the extensive use of sensors. When feasible, these sensors should be linked to an automatic data interpretation and reporting system. For instance, Fuji-Xerox in Japan has developed a copying machine that runs a detailed set of diagnostic tests every 50 copies; it analyzes the results using a built-in rule-based software system. If it anticipates a problem, the machine automatically coatacts a service certer and schedules a preventive maintenance visit; it also alerts the service department as to what parts need to be replaced.

Such a design and service philosophy is becoming widespread: General Electric has a similar system for some of its medical diagnostic systems. Many cars now use satellite or cellular communication systems to send performance data to service facilities and trigger reminders to make service visits.

Design for intelligence also means intelligent product performance. Consider the extensive use of “fuzzy logic" systems by some Japanese manufacturers' Fuzzy logic is based on fuzzy set theory and incorporates reasoning that is approximate rather than precise. By using this technique, they have designed a variety of “smart" products, including smooth-shifting automatic transmissions, fast and always-available elevators, energy-efficient air conditioners, and one-button washing machiness that choose the optimal wash cycle from 600 possibilities.

CONCLUSION

The Holy Grail for marketing success starts ruith a great offering that meets customers needs as well as possible. When customers are new to a product category, psychological barrier is the more important one. Once consumers become experienced in a product category functional factors become more important. Marketers must pay balanced attention to both dimensions of Acceptability and continually innovate to stay ahead of rising costomer expectations. They must accomplish all this in a cost-effective manner, which can best be done by leveraging all possible resource pools to maximize allfacets of Acceptability.

In the next chapter, we examine the second half of the value proposition equation: the Affordability of the offering.