Product Development Insights from Porsche and Fiat Chrysler

Key Lessons from Product Development

  • Successful Innovations:

    • Porsche: Launched the Cayenne SUV; focused on customer wants and willingness to pay.

    • Fiat Chrysler: Launched Dodge Dart; failed to align with customer needs, resulting in poor sales.

  • Understanding Customer Needs:

    • Porsche's approach: Extensive research to determine desired SUV features and pricing.

    • Key findings included a demand for sportiness and power, and not for the manual transmission.

  • Result of Customer Focus:

    • The Cayenne became a top-selling and profitable vehicle.

    • By 2015, it accounted for approximately 50% of Porsche’s total profits.

  • Pitfalls of Non-Customer-Centric Development:

    • Fiat Chrysler's Dart: Developed based on internal definitions of perfection; ignored market research leading to failure.

    • Major mistakes included offering manual transmissions only, which contradicted customer preferences.

  • The Broader Trend:

    • Companies often fail due to lack of understanding of customer wants; 72% of new products fail.

    • Emphasis on first understanding what customers will pay for before investing in product development can reverse failure rates.

  • Best Practices for Innovation:

    • Conduct early and ongoing discussions with potential customers about willingness to pay (WTP).

    • Successful companies, like Procter & Gamble and Swarovski, leverage early customer input to inform product design.