Idea Generation & Testing: Using Marketing Research For New Product Development Abstract: New product development is an expensive and high-risk undertaking for corporations and organizations. Reducing the risk and increasing the probabil- ity of successful new product introduction means better understanding what con- sumers want and, subsequently, ensuring that your new product offering delivers on that. This paper discusses the various customer inputs available to new prod- uct developers, their strengths and weaknesses, and how each is used. This paper also discusses the testing of new product ideas, in terms of understanding cus- tomer reactions to guide further evaluation and development. Conducting new product development research can help Marketers and Product Developers work together more effectively by communicating the Voice of the Customer. POLARIS MARKETING RESEARCH, INC. 1455 LINCOLN PARKWAY, SUITE 320 ATLANTA, GEORGIA 30346 404.816.0353 www.polarismr.com Idea Generation & Testing: Using Marketing Research in New Product Development © 2009-2010, Polaris Marketing Research, Inc. All rights Reserved. ii Contact: Polaris Marketing Research, Inc., 1455 Lincoln Parkway, Suite 320, Atlanta, GA 30346 404-816-0353, email: [email protected], web site: www.polarismr.com Idea Generation & Testing: Using Marketing Research in New Product Development Idea Generation & Testing: Using Marketing Research for New Product Development New Coke. Colgate Kitchen Entrées. Wheaties Dunk-a-Balls Cereal. Earring Magic Ken Doll. Crystal Pepsi. What do all of these products have in common? They all failed. The truth is that most new products end in failure. Estimates of new product failures range from 33% to 90% depending on the industry. So, what can companies do to improve the success rate of new products developed? One way is to conduct sound and thoughtful marketing research. Marketing research is defined as the function that links the consumer, customer, and public to the marketer through information - information that can identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. If executed correctly, marketing research can help steer companies to develop a product that consumers will buy and prevent them from wasting money on developing new ideas that will prove to be fruitless. But if not executed correctly, the results of marketing research can be useless and/or misleading. Idea Generation Idea generation, or the process of trying to come up with ideas for a new product, is the first step of new product development where marketing research should be implemented. Years ago, it was commonplace for companies to come up with an idea for a new product, develop it, and then try to figure out ways to convince people to buy it. Now most companies recognize that it makes more sense to first assess what consumers want and then (after taking into account whether it would be profitable for them, whether it fits their business and marketing strategy, etc.) produce it. One way that many companies currently develop opportunities for new product development is through Voice of the Customer research. In Voice of the Customer research used for new product idea generation, customers’ feedback is used as the key input for new product development. There are several different kinds of feedback that may be provided by the customer including needs, solutions, specifications, and benefits. ● Needs are typically expressed as adjectives communicating high-level descriptions of the overall quality of a product or service (for example, an air conditioning unit that is dependable, reliable, or effective; a dessert that is comforting). ● Solutions are customers’ interpretation of the answer to the question, “What can make the product better?” Solutions can also lead to a completely new product that consumers believe will make life easier. Solutions are often expressed in terms of features they think should be added to the physical product (for example, a blow dryer on a stand; a frying pan with bigger handle). ● Specifications are detailed instructions on what a product’s particular design characteristics should be: size, weight, color, look, feel, or weight (for example, a sink that is sleeker; a washing machine that is thinner or taller). © 2009-2010, Polaris Marketing Research, Inc. All rights Reserved. 1 Contact: Polaris Marketing Research, Inc., 1455 Lincoln Parkway, Suite 320, Atlanta, GA 30346 404-816-0353, email: [email protected], web site: www.polarismr.com Idea Generation & Testing: Using Marketing Research in New Product Development ● Benefits are expressed as the value customers would like a new product or service to deliver (for example, a cell phone that is easier to use or has fewer dropped calls). Problems using Voice of the Customer research to develop ideas for new products occur if the Marketer assumes that customers know and can communicate effectively by themselves, the input that is needed to develop a product. This is not usually the case. In the case of needs and benefits, customer feedback is expressed too abstractly for designers and engineers to be able to translate it into new product development. Marketers may become frustrated because they think they are providing developers with information they need and developers may become frustrated because they feel they have no better information than before the research started. Suppose we give product developers the information that consumers need or want a vacuum that is effective. Does that mean they want it to suck up more dirt or fit into smaller places or something else entirely? The same thing would apply to designing a cell phone that consumers want to be easier to use. Do you put bigger buttons on it, reduce the number of features, or include a more detailed users’ manual? Another problem with needs and benefits driving the research and design process is ensuring that the new product actually meets the customers’ needs or provides an additional benefit. If you don’t know what the customer actually meant in the first place, how can you measure that you have achieved meeting that need? Solutions and specifications provide the opposite problem: they are too detailed and specific. Here, customers are saying exactly what they want added. However, using the product doesn’t make them the product development experts. They don’t know what the company is capable of producing or how their ideas for changes will affect the design of the rest of the product. Their change may impact the design so that features or specifications the customer was satisfied with before may have changed. There may very well be a better or cheaper solution to the same problem that the customer hadn’t thought of, because they are only product-users and not product-designers. Another problem with using Voice of the Customer research in new product development is that individuals often give the answer that they believe the interviewer wants to hear, as opposed to their “real” opinion. This leads to biased results that frequently do not correlate well with the customer's actual purchases. In his book, What Customers Want (McGraw Hill, 2005), Anthony W. Ulwick presents another approach to gathering customer information to use in developing new products. He suggests that in order to generate a successful new product idea, companies must obtain 3 different kinds of customer information: jobs, outcomes, and constraints . Jobs are the activities or tasks that customers are trying to get done by using the product. In everyday life, individuals have many jobs that they need to accomplish and seek out products to help them complete these jobs. A student may purchase a bike in order to get themselves to school each day. Someone else may purchase a car, or a scooter, or utilize © 2009-2010, Polaris Marketing Research, Inc. All rights Reserved. 2 Contact: Polaris Marketing Research, Inc., 1455 Lincoln Parkway, Suite 320, Atlanta, GA 30346 404-816-0353, email: [email protected], web site: www.polarismr.com Idea Generation & Testing: Using Marketing Research in New Product Development public transportation in order to accomplish the same thing. All of them are trying to get the job of transport between home and work accomplished. There are three different types of jobs individuals may be trying to accomplish: functional, social, and personal jobs. ● Functional jobs define the tasks people seek to accomplish, ● Personal jobs explain the way people want to feel in a given circumstance, and ● Social jobs clarify how people want to be perceived by others. A man may purchase a new watch to tell the time (functional), make himself feel successful (personal), and be perceived by others as wealthy (social). Or any combination of the above. Ulwick proposes that you need to know the primary job your customers are trying to accomplish in order to have a successful product, but knowing what supportive jobs individuals are trying to accomplish at the same time can also lead to ideas and innovation for successful new product development. If there is a group of individuals who have a glass of wine after dinner for the purpose of winding down and at the same time are trying prevent themselves from indulging in sweets after dinner, a beverage manufacturer may innovate a new beverage that curbs hunger while still relaxing the consumer. Customers not only want to get more than one job done at once, they also want to get their jobs done better, faster, and cheaper. Ulwick advises that learning customers’ outcomes is the second way to obtain information to generate ideas for a successful new product. Desired outcomes are measures that define how customers get their jobs done and what it means to get the jobs done perfectly. Ulwick suggests that companies obtain from customers every desired outcome for their products. For example, several desired outcomes for laundry detergent could be: minimize the amount that is needed to get clothes clean, minimize the fading of the colors of the clothing, increase the number of stains that can be removed, etc.