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These consumers like a dud when they see it

Consumer product managers may want to rethink how they test new product ideas, thanks to study from MIT.

Testing products before rolling them out often involves finding that rarified group of elite consumers who set trends, influence friends and family and blaze a trail for the next megapopular, pure gold, mass-market product. Come up with a product they like, the theory goes, and they'll spread the word.

But what if you could find that ideal shopper's polar opposite? A consumer with such narrow, eclectic tastes that the new ideas they're drawn to consistently turn out to be products shunned by the mass market. Think diehard fans of Diet Crystal Pepsi. Or McDonald's Arch Deluxe.

Man shopping for groceries.
Katrina Wittkamp | Getty Images

Leave it to a pair of researchers at MIT to identify this gifted cohort. Some consumers, it turns out, have an uncanny ability to buy the least popular products. Over and over.

"There were some products you think to yourself: How could anyone have thought this was a good idea?" said MIT economist Catherine Tucker, one of the co-authors of "Harbingers of Failure," which recently appeared in the Journal of Marketing Research.

The researchers identified these hapless consumers by sifting through two large data sets tracking purchases of nearly 9,000 new products by nearly 78,000 consumers at a national convenience store chain between November 2003 to November 2005. They considered a product a failure if it was pulled from the shelves within three years of launch. Only about 40 percent of new products survived that long.

When they took a closer look at who was buying these failed products, a distinct pattern began to emerge. Some shoppers apparently have a natural gift for choosing new products that are doomed to fail, a group researchers dubbed "harbingers of failure."

When these consumers made up between a quarter to half of a product's sales, the product's survival rate fell by 31 percent. And when they bought the product at least three times, the data showed, these consumers' interest was more often than not, the kiss of death; the survival rare for those products dropped by 56 percent.

The researchers looked for alternative explanations, but the data confirmed that they had discovered a new breed of consumers who are drawn to doomed products.

"We tried to control for everything," said Tucker. "We couldn't kill the effect."

The finding could be a boon to consumer product companies. Identifying the losers early in a new product launch can save a company enormous expense — from marketing and advertising to distribution and precious retail shelf space.

The failure rate is brutal — an estimated 60 to 80 percent of new products introduced every year fail to find a following. One recent study found that some 75 percent of consumer packaged goods and retail products fail to generate even $7.5 million in sales during the first year, and less than 3 percent reach first-year sales of $50 million, according a recent article in the Harvard Business Review.

One reason is that consumers appear to be fiercely loyal to their favorite products. The HBR authors cited separate research showing that American families repeatedly buy the same 150 items — as much as 85 percent of their household needs.

That's why much of the emphasis of testing new products typically is geared toward a small group of consumers who help drive the lion's share of new product sales.

Less than 1 percent of consumers — or 1 in 143 — accounted for 80 percent of sales of new consumer packaged goods, according to a study from market researcher Calatina. Also, just 11 percent of those consumers who bought a product within the first six months of a launch were still buying after a year.

The hope is that these early purchasers will identify products that will turn into long-running hits. But the MIT study turns that strategy on its head.

The researchers speculate that consumers with a knack for finding failed products may be more willing to take risks with new products than the general population. And the products aren't necessarily bad — they just fail to attract the mass following product manufacturers are seeking.

But the gift for finding failed products, the researchers say, appears to be comprehensive.

"You might have thought this was a category-specific effect — someone who buys the wrong makeup," said Tucker. "But the strongest effects were going across category. If you bought the unpopular yogurt or the unpopular shade of lip gloss, you also bought the laundry detergent that no one wants to buy."