The idea of using market research to inform better decisions when designing, or launching new products is not new. Indeed, there are many successful companies who, over the years, have embedded research within the product development process. Successful brands like Xerox, Toyota, and Honda have been so successful in pushing the ethos of excellence to support various stages of product development and marketing, that their approaches to product development have become synonymous with the company e.g. the Honda Way.
But at the other end of the scale, there are far too many companies, who should possess sufficient resources and expertise, who are failing to leverage the opportunities that good research can bring to the product development process. The worst cases are where practically no product research is undertaken at all. Product designers, engineers and marketers simply work together, drawing on internal knowledge and perspectives to launch new products. The collective experience can be significant, so it is quite possible that variations of previously successful products can be built upon. Equally, other products can fail spectacularly.
There is another tier of company which sometimes uses research but not consistently, or they use research but it is so far down the development process that it is simply too late to adapt the offering to meet consumer needs. All too often, taking a last minute reading of consumer perceptions of the finished offering will simply confirm whether the market will ignore the offering, or be partly responsive to it. Well executed research has the ability to add real insight which can make the difference between rescuing a mediocre idea through to near perfect development and execution.
Leaving Research too Late in the Day
The failure to use market research in product development is not confined to resource strapped or fledgling companies. A few years ago I worked on a product development piece of research to support a business outsourcing product aimed at the HR function. Our client was a global business consulting firm, and the stakeholders of this particular initiative had already committed hundreds of thousands of pounds to develop the product before considering any research. The subsequent research programme was not disastrous in the sense that there was evidence of some interest, although the potential take up was not stunning. Some changes required of the offering would have made a difference, but the constraints of the system design already undertaken were too rigid to take account of market needs not expected earlier in the development phase. But most concerning of all, the price offering necessary to meet development costs and make future profits was only affordable to relatively few enterprise organisations. Having looked at the size of the business universe, and overlayed this against price sensitivity information it was clear that the product would never sell in sufficient numbers to match the development costs. Of course, research should have been undertaken in the early stages firstly to establish whether there were sufficient numbers of enterprises who would be able to afford enterprise wide propositions. The cost of development should have been set in the context of what potential customers can afford. Lastly, the specific offering should have matched particular needs – or addressed specific challenges which could have been met by the new offering. None of these steps were taken, and when the research revealed that there was simply no market, the not insignificant development costs simply went to waste. In our view this is not an uncommon experience.
Getting the fundamentals of product development research right
Market research is in itself, not a panacea. Poorly designed research which leads to inaccurate or misleading conclusions can be as dangerous as not using any research. There are many examples of new product ideas, which in product trials and new concept research appeared to meet consumer approval, but in reality failed to meet expectations, or in some cases, completely failed. Running a few focus groups to test reactions to specific ideas already developed internally and in isolation is not, in our view, the same as establishing market needs. The most successful research exercises in support of product development are those precisely which understand how customers use products and the challenges they face. The research seeks to develop outcomes in response to their unmet needs. If this stage has been skipped, there is always a chance that an opportunity has been lost, or the solution only partially addresses consumer need.
So understanding buyer behaviour and needs, the way they interact with existing products and services, and the challenges they face is the foundation of product research which can lead to genuinely demanded new products.
Testing the viability of the new product or service should be rooted in this first stage. But at some point, research is needed to test the reaction and potential take up of the product concept. There are various techniques which can be utilised including gap analysis of competitor products, pricing sensitivity research and conjoint analysis to help understand the optimum product features likely to seal the deal.
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