A company that does not introduce new product offerings will, at best, maintain its market position. In reality, though, it will probably lose ground, while its competitors invest in new, improved and attractive products to increase their market share.
Product development therefore forms an important element of any business with even the most modest of ambitions, but it is a minefield, since more new products fail than succeed. Of course, product development doesn’t have to be about new, revolutionary concepts. Ninety per cent of all product development is additions to existing lines or modifications to existing products, which is unsurprising given that they are quicker and more cost effective to develop and launch, not to mention inherently less risky.
It’s worth pointing out that product development research does not simply examine the product in isolation. Factors such as packaging, service, delivery, brand and company reputation, among other things, are often of real significance, with improvements to any one of a number of ‘peripherals’ potentially having as much impact as enhancements to the product itself. But regardless of the scale of the project, market research should underpin the product development process in order to both uncover the need for new products and to reduce the subsequent risk of their failure.
Research can aid each stage of the process
To better manage the product development process and to drive down the risk of failure, many organisations adopt a systematic process, as illustrated by the typical stage-gate model. Doing this enables the viability of a new product to be assessed, from the initial idea stages through to post-launch, and is particularly important in allowing go/no-go decisions to be made using strong, empirical data at each stage of the process before costs snowball.
Pre-process idea screening – letting customers lead the way
While customers alone should not be relied upon to generate new product ideas, it is vital to listen to their feedback and opinions. Voice of the customer (VOC) research is the ideal starting point for identifying their unmet needs and pain points. Studies have shown that four in every five industrial innovations come from customers.
However, the technical, sales, marketing and, of course, R&D teams can all play their part in suggesting new product ideas. The more initial ideas, the greater the likelihood of securing a winning outcome. All ideas, though, must undergo an initial screening, which is best done internally where experts understand what will and will not be technically feasible.
Stage 1: concept creation
Only a small number of ideas are likely to pass through the first gate but it is strongly recommended that concept-testing market research is carried out to understand whether they have a reasonable chance of success. Market research at this stage should seek to understand issues such as:
- customers’ first impressions of the idea
- their likes/dislikes
- their awareness of similar products
- their probable intent to purchase
- their price perceptions.
Stage 2: business case
Assuming the concept-testing research is passed, the next stage is to build a business case for the idea, which usually comprises extensive detail on
- product description – purpose, technical spec, competitive environment
- project justification – a breakdown of the market size/potential
- project plan – steps for successful launch, costings, annual sales targets.
While the findings from the concept-testing market research are frequently incorporated into the business case to provide evidence of the opportunity, additional research is often commissioned at this stage in order to assess the opportunity, for example sizing the market and the potential for the product.
Stage 3: product development
This crucial stage involves the development of a product prototype for review. While product assessment research is vital in order to identify potential major flaws, any ‘official’ market research that is commissioned at this stage would be limited to a quick and small-scale customer review.
Stage 4: testing and validation
If the prototype passes through the next gate, sufficient prototypes need to be made to test the concept in the field using product trials. Customer feedback will give a real feel for the product’s prospects for success, particularly if potential customers are asked about their likelihood of buying the product were it available on the market.
Stage 5: launch and monitor
Should a new product idea make it to the final stage of the process, the product’s commercialisation here kicks off in earnest with full-scale production. It’s worth a reminder at this point that the success of product development does not lie solely with the product. Its ultimate success can be as much down to getting the positioning, promotion and pricing spot on, and it is the market research conducted at the earlier stages that frequently enables companies to define and design the optimum marketing mix.
Some companies choose to conduct further research upon, and following, launch of the new product so as to assess its initial uptake and to keep track of its position in the market over time.
While there is little doubt that new product launches are vital in ensuring the continued growth and development of a company, there is also no getting around the fact that it is an expensive process. Yet market research, while ostensibly adding to the overall cost, is an excellent form of insurance. Consider the potential costs of not conducting market research, of going through the entire process only to find that there is no appetite for the new concept or some crucial aspect has been overlooked.
Using a stage-gate process model – and employing experienced, independent researchers who do not misinterpret the data and abort a great idea – will streamline the process, making it more cost-effective and, crucially, increasing the likelihood of its eventual success.
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