Why Crowdfunding Could Be The Future Of Consumer Product R&D

In Featured on App, Marketing and Sales, Social media by Vaughn HighfieldLeave a Comment

Why Crowdfunding Could Be The Future Of Consumer Product R&D

Customers want new products all the time. Of course they want their comfortable and familiar products, but they're always looking for something new to come along and grab their attention, but how do you do it? How can you wade in and offer up something totally new to the market?

It used to be about focus groups, tests, and market research. Previously a company would just decide that there's a lucrative opportunity and then fill it with a product. It wasn't an uninformed decision, but it certainly wasn't a guaranteed success.

Now though, thanks to places such as Kickstarter and Indiegogo, crowdfunding is a viable option to help develop something brand new for the market – especially for start ups looking to get their product out there and into market.

The idea behind a crowdfunded item is simple: offer up a product and let potential customers pay towards its development costs – handing out rewards to those who pay more.

Customers become invested in the products success

This means they'll start sharing its existence with others. It also means that they'll get instant gratification through a reward tier, not to mention a discounted – or free – version of the finished product. How could they resist the temptation?

Clear feedback

Not everything can be propositioned easily through these crowdfunding channels – after all, some will actively resent the idea of funding a project that's being pitched by a multi-million dollar corporation.

But what it does give you is a pure view of what people think about the product, how they envision it enriching their lives – that is if they think it would at all. It's better than taking a customer survey or having a focus group as you haven't got people feeling that they should answer with just ‘yes', ‘no', or sliding scales of satisfaction. It also means they aren't shoehorned into a situation where they feel they need to conform with others.

It's risky, that's for sure, but the anonymity of the internet means you'll get exactly what people are thinking.

Great exposure

A crowdfunded product – successful or not – will always garner one thing: exposure.

It'll be shared across the web, through social media outlets like Twitter and Facebook and talked on various blogs and industry websites. You'll quite possibly get all the free advertising you could want.

This means that if your product is a success you won't have to worry too much about advertising it at first as everyone will already know.

Lowers production costs and risk

You can use it to save money in the development process. By using crowdfunding to subsidise the cost of a product development cycle you'll only be asking for a small amount of money from the public to essentially pre-order it while you supply the rest once the crowdfund has been successful.

Guaranteed sales

By the time your product comes to market, either because you successfully crowdfunded it or decided to produce it yourself, the campaign beforehand means you'll just mop up sales.

It's also important as a retailer to pay attention to the crowdfunding success stories even if you aren't involved in producing propriety products. Stocking these in your stores could generate a lot of business from eager consumers clambering to get their hands on one soon – especially if your business has an online arm.

As the cost of product manufacture rises, partly out of general rising costs and the ethical problems faced by some companies who chose to do so abroad, pooling consumers together to create investment is certainly not the most unlikely of outcomes.

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