Tag Archives: Crate and Barrel

Will be canned wine successful?

I drink wine often. It goes well with dinner, helps me read papers, and soothes me at night. In the past, I enjoyed numerous marriages of soil, weather, and grape variety. Now, my tongue is developed although I neither remember one nor am able to elaborate why I like one.

Recently, I went to Urban Break 2021 and saw a pop-up store of Babe Wine, a brand name of a canned wine. It attracted a crowd of visitors. Out of curiosity, I sampled a sip of Grigio, Rose, and Red. They differed from the wine I experienced before. They came out from icy-cold cans and had bubbles. I ended up failing to like this wine.

Despite of my disappointment, this canned wine attracts attention internationally. “From 2016-2020, BABE’s CAGR was nearly 2,000% according to IRI. These numbers quickly caught the eye of beverage giant Anheuser-Busch, who acquired Babe in 2019.” According to the article in Forbes, “Babe specifically focused on targeting the wine lover who cracked open bottles on the regular, but “couldn’t name a single brand,” says Ostrovsky.”” 

Why do people like a canned wine I do not? Indeed, I have a long history of prediction errors. On one hand, I once thought that BTS, Tiktok, and Instagram would fail to make a presence. On the other hand, I expected that Clubhouse, a social audio app, and Gathertown, a meta-verse service, would succeed in Korea. Not surprisingly, my predictions were proven to be incorrect.

Then, how could experts like me (e.g., wine lovers) predict whether a product is successful in the market when it is designed for novices (e.g., canned wine)? About 10 years ago, researchers at University of Oxford and New York University suggested that an accurate prediction of an extreme event is an indication of poor forecasting ability. This suggests that even experts who have forecasting abilities predict only non-radical events. Predicting the next hit is beyond our control.

Denrell, J., & Fang, C. (2010). Predicting the Next Big Thing: Success as a Signal of Poor Judgment. Management Science, 56(10), 1653–1667.

Successfully predicting that something will become a big hit seems impressive. Managers and entrepreneurs who have made successful predictions and have invested money on this basis are promoted, become rich, and may end up on the cover of business magazines. In this paper, we show that an accurate prediction about such an extreme event, e.g., a big hit, may in fact be an indication of poor rather than good forecasting ability. We first demonstrate how this conclusion can be derived from a formal model of forecasting. We then illustrate that the basic result is consistent with data from two lab experiments as well as field data on professional forecasts from the Wall Street Journal Survey of Economic Forecasts.

Design Thinking vs. Behavioral Economics

Crate and Barrel sells various cookware. Most products in this store are grouped into product categories. However, some are grouped into why we need them. The two “ad hoc categories” are [7 Essentials for Every Kitchen] and [Everything You Never Knew You Needed].

 

 

Ad hoc categories, coined by Barsalou, motivate impulse buying. I bought some tools I did not plan ahead and saw some customers standing in front of the two sections for a while.

Barsalou, Lawrence W. (1983), “Ad hoc categories,” Memory & Cognition, 11 (3), 211-227.

People construct ad hoc categories to achieve goals. For example, constructing the category of “things to sell at a garage sale” can be instrumental to achieving the goal of selling unwanted possessions. These categories differ from common categories (e.g., “fruit,” “furniture”) in that ad hoc categories violate the correlational structure of the environment and are not well established in memory. Regarding the latter property, the category concepts, concept-to-instance associations, and instance-to-concept associations structuring ad hoc categories are shown to be much less established in memory than those of common categories. Regardless of these differences, however, ad hoc categories possess graded structures (i.e., typicality gradients) as salient as those structuring common categories. This appears to be the result of a similarity comparison process that imposes graded structure on any category regardless of type.

Interestingly, the two ad hoc categories in the Crate and Barrel tap into different psychological processes. [7 Essentials for Every Kitchen] are the products used by others. They nudge you to follow others, which is often recommended by behavioral economists. In contrast, [Everything You Never Knew You Needed] are the products useful for you. They help you discover your own unmet needs, which is always suggested by design thinkers.

Then, which framing is more effective between “competing against others” and “following your heart”?

 

 

We can answer this question by comparing the sales numbers between spatula and dual citrus squeezer. The two products belonged to the [Everything You Never Knew You Needed] four years ago. Now, only spatula belongs to the [7 Essentials for Every Kitchen]. If spatula sales have increased and squeezer sales did not, behavioral economics beats design thinking. In contrast, if spatula sales dropped and squeezer sales did not, design thinking beats behavioral economics.

 

 

Expert Products, Novice Consumers

DesignMarketingLab

Crate and Barrel, one of my favorite stores following Pottery Barn and Williams and Sonoma, has a section called “Everything You Never Knew You Needed.” It introduces highly specialized kitchen utensils including jar spatula, melon baller, strawberry huller, avocado slicer, dual citrus squeezer, egg timer, and herb scissors.

At first, they look useless for many who do not cook often. Even if they do so, they can slice avocados and trim herbs using existing kitchen utensils. However, it is true that people often fell in love with a product only after they experience it. For example, I love the salad spinner by OXO, Panini grill by Breville, and wine decanter by Spiegelau. Although I am able to dry vegetables, grill sandwiches, and oxygenate wines without using these products, they make my cooking experience enjoyable. Indeed, I believe most smart kitchen products are the nice marriage of careful observation of people’s behavior in the kitchen with just a bit of technological flavor. If I should slice many avocados and trim a lot of herbs all the time, I may need a slicer and a pair of scissors designed exclusively for them to enjoy my cooking experience.

This leads us to a series of critical questions about new product development. Should designers and marketers ignore the novices’ voices (e.g., I am fine with an existing slicer) but listen to the experts’ voices more carefully (e.g., I need a better slicer for avocados)? If so, how do designers and marketers confirm that there will be a market for highly specialized expert products (e.g., avocado slicer)? Alternatively, how should designers and marketers “educate” novices when launching highly specialized products so that the newly developed products are appealing to novices ?

DesignMarketingLab