From the April 1998 issue of Entrepreneur

"Today is the first day of the rest of your life" is an excellent adage for addictive personalities or people who have been through an upsetting experience. It's a horrible way for businesses to operate, though, and that's what many companies are doing.

To produce tomorrow's successful products, you must be aware of what has already succeeded and failed. Sure, times change. Tastes come and go. Fashion is fleeting. Just because an idea failed yesterday doesn't mean it will flop tomorrow. But unless you understand why the concept failed, odds are you'll make the same mistakes again.

Benefits, Not Features

The benefits of a product are all-important--I should say the perceived benefits are all-important. Calvin Klein isn't selling perfume. He's selling sex. Year after year, Coca-Cola's advertising drummed variations of the word refresh--refreshes, refreshing, refreshed, refreshment--into the American psyche. Coke owned a benefit that almost all of us feel a need for from time to time.

One of the most common mistakes marketers make is that they communicate the features of a product rather than the benefits. Imagine the results if Coke's advertising slogan had been "the pause that's cold and wet" rather than "the pause that refreshes."

A feature is something that the folks in the research and development department get excited about. A benefit is something that excites the buyer. A feature is what a product does; a benefit is what a product does for me.

British comedian John Cleese made a training film for salespeople that illustrates the folly of trying to sell features rather than benefits. Cleese portrays a surgeon who is explaining an upcoming procedure to an anxious patient lying in a hospital bed.

"Have I got an operation for you," Cleese begins eagerly. "Only three incisions and an Anderson slash, a Ridgeway stubble-side fillip and a standard dormer slip! Only five minutes with the scalpel; only thirty stitches! We can take out up to five pounds of your insides, have you back in your hospital bed in 75 minutes flat, and we can do 10 of them in a day.

"Shall I put you down for three?"

Cleese's surgeon has a demonstrably superior product. He's talking to a customer who is interested in what it could do for him. But all the customer discovers is that after a gory surgical procedure, he'll be right back where he started. In the hospital bed. What he wants to know is when he'll be playing golf again.

Put your customers on the golf course.

Besmirching Your Good Name

Can you imagine the reaction of a congregation if its minister announced he embraced sex, drugs, and rock and roll? Can you imagine the reactions of Pearl Jam fans if lead singer Eddie Vedder renounced loud music?

The value of a brand is its good name, which it earns over time. People become loyal to it. Don't squander this trust by attaching your good name to something totally out of character.

Millions of Americans love Frito-Lay's salty snacks. But Frito-Lay products have never been known to quench thirst. In fact, they make people's tongues feel like swaths of felt. That's why PepsiCo, which was the parent company of the brand, made a terrible mistake in naming a new powdery refreshment Frito-Lay Lemonade.

When you hear Ben-Gay Aspirin, don't you immediately think of the way Ben-Gay cream sears your skin? Can you imagine swallowing it?

Cracker Jack Cereal, Smucker's Premium Ketchup, Fruit of the Loom Laundry Detergent and Noxzema Solid Anti-Perspirant Deodorant were other attempts to stretch a good name. A good brand name stands for something vibrant. You can suck the life out of it by attaching it to a new product that stands for something different.

A Sad State Of Innovation

I began to notice that products were becoming less innovative at an alarming rate in the mid-1980s. To prove my hunch, several associates and I developed an Innovation Index to measure whether each new product shown at trade shows or launched into the marketplace actually offered consumers a meaningful difference from existing brands.

To establish a base, we assigned an Innovation Rating to every product we were aware of that was new from 1980 forward. To qualify as innovative, a product had to offer consumers a significant new or added benefit in one of the following five areas: formulation, positioning, packaging, technology or previously unmet market need.

According to the Innovation Index we developed, only 18.9 percent of new products in 1986 could be considered innovative. That was a startling number, even lower than we anticipated. By 1989, however, the percentage had dropped to 13.4 percent. The following year, it plummeted to 8.4 percent as a national recession took hold. By 1993, the figure was down to about 5.1 percent, although it has been inching its way back up and reached 7.2 percent in 1995.

Here are the five criteria we used, with examples of products that qualified, and did not qualify, as innovative when measures were applied:

1. Is the product positioned to new users or usage? Rembrandt Low-Abrasion Whitening Toothpaste for Kids represented a new positioning for whitening toothpastes and was therefore considered innovative. Previously, teeth whiteners had been pitched to older consumers with yellowing teeth or to smokers.

On the other hand, Topol Smoker's Toothpaste had been out for five years when Zact Smoker's Toothpaste tried--and failed--to carve a presence in that market.

2. Does new packaging provide a consumer benefit? Smucker's Beverage Division introduced a six-ring carrier to its fruit-based beverages that was made of pressed biodegradable fibers instead of the plastic found on most multipacks. This innovation provided an environmental benefit that's important to many consumers.

In the early 1980s, Colgate-Palmolive introduced a powdered detergent called Fresh Start that was packaged inside a clear plastic bottle. Innovative, again. After a while, Stanson Detergents came out with a box of concentrate that featured a clear cutout on the front panel through which the consumer could see the detergent. There was a bottle outline printed on the panel that carried the slogan "No bottle inside, that's why you save!" The package looked different from other packages. But the clear cutout existed solely to position the product against Fresh Start. There was no perceptible benefit to the consumer.

3. Is value added through a new formulation? Soaps and shampoos have come in many scents and varieties over the years, but St. Ives Swiss Formula Vanilla Shampoo was, to my knowledge, the first toiletries product to use a vanilla scent. Because scent is so important to the health and beauty aids category, it was clearly an innovative product.

The cinnamon spice version of Accents Potpourri Glass Cleaner, however, was little more than a gimmick. The world did not need a glass cleaner that smelled like a mouthwash. Since no value was added to the glass cleaner, the product was not innovative.

4. Is there a technological introduction? Salem Preferred Menthol cigarettes were manufactured using a proprietary paper technology that purportedly made the odor of a burning cigarette less offensive to nonsmokers. Although it was a misguided idea because it addressed the wrong market, it was technologically innovative.

General Mills' Mrs. Bumby's Potato Chips, however, were nothing more than a copycat version of Procter & Gamble's Pringles Potato Chips. Mrs. Bumby's chips came stacked in a circle around the edge of a resealable "Flavor-Pack Bowl" instead of being stacked in a canister as Pringles were. The presentation was the only major difference between the two products; the production technology was basically the same. It was not innovative.

5. Does the product open up a new market for the category? Arizona Iced Tea Freez-A-Pops was probably the first beverage, and was certainly the first tea, to become a freeze-and-squeeze ice. It was a clever way to introduce the taste of tea to kids who, on a hot day, love to squeeze slushy ice crystals into their mouths. Three Musketeers ice cream bars were not innovative because other candy bars were in freezer cases before them.

You don't absolutely have to be innovative to succeed. A Three Musketeers ice cream bar tastes different than a Snickers does, after all. But the number-one killer of new products is, without a doubt, Me-Tooism.

Packaging Pointers

Packaging is as important to a brand as a cover is to a book, as a voice is to an actor, as a fit body is to an athlete. A fit body doesn't guarantee victory, but you don't see many potbellied Olympians.

Attractive packaging can turn even the most prosaic product into something special. Remember the store brands that became so popular during the 1970s and early 1980s? It was as if manufacturers were competing to make the chintziest packaging possible to prove that their products were true bargains. That has changed.

One of the primary reasons private-label products are doing so well in the 1990s is that retailers have stopped making cheaply packaged imitations of the big brands. In many cases, they've created such elegant packaging--from superior raw material to glitzy graphics--that some store brands have become serious competitors to the nationally advertised products. Stores now believe that a private label is one of the best ways to differentiate themselves from their competitors. If only Wegmans sells Wegmans-label products, consumers have to go there to get them.

Four trends should continue to drive package design well into the next century:

1. Special packaging, such as embossed labels, bottles embossed with logos, and special shapes and decorations, will continue to differentiate quality products from run-of-the-mill brands.

2. As me-too products proliferate, it will be particularly important to clearly communicate what your product is and what it does. And unless you're selling bubble gum or another product that only kids buy, MAKE SURE YOU USE TYPE THAT AN OLDER PERSON CAN READ.

3. Less is more. Use as little packaging as possible without making the product less easy to understand or use.

4. In a global economy, strive for the big idea. The shape of the Coke bottle, Pepsi's signature blue and the Nike Swoosh logo translate well into any language.

Shock Value

As a rule, I prefer substance over style. I have to admit, however, that a little showmanship or packaging pizzazz can go a long way. It seems that almost anything goes these days, in fact, as long as it jolts people out of their complacency.

For more than a dozen years, I've been drawn to an exhibitor at specialty food trade shows who calls himself Uncle Dave. He dresses in Farmer John denim overalls, flannel shirts and a bright red woodsman's cap. You wouldn't give Uncle Dave a second thought if you saw him gabbing away in a general store in Vermont, which is where he hails from. But at trade shows, where vendors are usually dressed conservatively, he stands out like a maple tree in all its blazing autumnal splendor. You can't miss him if you look down the aisle.

As unusual as his appearance is, though, Uncle Dave is down-to-earth, friendly, and usually engages in a couple of conversations at the same time. I'm always eager to chat with him myself. Just like his products, Uncle Dave is all-natural, with a touch of spice. It helps, of course, that his salsas, sauces, mustards and so on are top-notch products--don't miss the horseradish sauce with shredded carrots--and that he's always coming up with something new to exhibit.

The labels on Uncle Dave's condiments feature a caricature of him, replete in overalls and red cap, reflecting his homespun personality and appearance. The jars are as successful at catching a passerby's eyes as the heavyset, bespectacled entrepreneur is in the flesh. In the end, that's more important to supermarket buyers who attend the trade shows than the way Uncle Dave appeals to them personally.

I admire the distinctive packaging for Arizona Iced Tea Co., too. The unusual size and shape of the bottles and the Southwestern motifs of the labels not only stand out on the shelf, but they also exude a sense of quality. Newer versions continue to cut through the clutter. The Indian's head on its Piña Colada label looks as if it has been silk-screened; there's a pretty, delicate print on the label for Green Tea with ginseng. These packages almost demand that you pick them up for closer inspection.

The way things are going, I wouldn't be surprised to see a Burp brand of beer with a picture of an ample-bellied couch potato on the label. And why not? If you've got it, as the saying goes, flaunt it.

From What Were They Thinking? Lessons I've Learned From Over 80,000 New Product Innovations and Idiocies, copyright© 1998 by Robert McMath and Thom Forbes. Reprinted with permission by Times Books, a division of Random House Inc.