Market research is considered to be a critical part of the innovation process. However, problems with market research can arise when companies fail to derive the outcomes of the research appropriately, thereby failing to implement the new ideas which could have otherwise taken the industry by storm. This article explores the pain points related to traditional market research and its impact on the overall innovation process. It also highlights the importance of implementing the right methodology in order to help companies innovate and develop new products and services based on the customer preferences…
Market Research is an integral part of the innovation process. The myriad forms of market research ranging from traditional surveys to prediction methodologies only reiterate its importance. A successful market research initiative can provide you with the right inputs for new product development. Even so, some companies find it difficult to make the most out of their research findings. This situation results in launches of new products and services that typically fail in the market. The very fact that more than 80% of the new product initiatives fail, reinforces that companies need to optimize the way they approach “innovation”. It is a complicated process to understand the interest areas of the target audiences and at the same time gauge the potential size of the market. In an environment where the success rate of new product ideas is low, it becomes all the more important for companies to follow the right methodology in order to achieve superior results, which ensure maximum ROI.
There has been an ongoing debate on the importance of the role the customer plays in innovation. Many marketers tend to believe that their customers don’t really help in innovation, believing that their customers look to companies to come up with new products and services. These marketers are missing a significant piece of the puzzle of innovation. Even though customers may be unaware of how a product should look or operate, they do know what benefits the product should bring, or how it should add value to their lives. Therefore, the most beneficial and the most effective market research focuses on key customer needs and benefits and leverages them to drive the innovation process. In a conventional market research, it is important to keep into consideration some of the factors, which inevitably acts as a barrier to innovation if not handled appropriately. So let´s have a closer look at the importance of Information Accuracy, Information Relevance and Data Interpretation.
The first step towards innovation requires a thorough understanding of the existing marketplace
– An incomplete understanding of the consumer only results in generating ideas that fail in almost all scenarios. Companies must be able to gauge the needs of their customers and ascertain the attributes that would instigate a change in their behavior. It is vital for companies to identify the factors that are most likely to improve customer experiences and simplify their customer’s lives. Companies need to abandon the notion of building a new product and then creating a need around it. Companies must cultivate a customer-centric approach within their environment in order to drive the innovation process. A simple way to do it is to develop an ongoing dialogue with their customers, learning from them directly. Companies should draw in their customers, make them friends and focus on a shared future for the customer and the company. Identify the untapped opportunities in the customer journey and develop new ways to reduce cost, time, and make using the company’s products emotionally satisfying. Success of innovation depends solely on how well companies can focus on the needs and benefits of the customers.
The continuous struggle of companies for competitive advantage, dominant market share and value differentiation has resulted in a ‘Red Ocean’ market place. One result of the “Red Ocean” is that companies often fail to tap real consumer needs, eventually commoditizing their product offerings. Companies need to take a step back and realize the importance of having an effective ‘Blue Ocean’ strategy that gives them distance from the competitive fray. They can move to the “Blue Ocean” by designing and delivering unique customer experiences and that create value and addressing the pragmatic and emotional elements that the customer needs. The right practice is to engage consumers to improve and evaluate ideas, and companies can do that by:
- Talking to the right customers: Most companies question their existing customers, generating information for product enhancement and innovation. However, they tend to overlook the importance of actually engaging with those who are not brand loyal or are the worst customers of the company. A chance of innovating is at its best when companies interact with the customers it doesn’t serve and understands their viewpoint and works towards making it a possibility
- Asking the right questions: In most cases, companies tend to ask the questions which drive the customer feedback towards a predetermined solution. This approach is erroneous because the outcome of this type of research often results in a new product or service offering, which becomes irrelevant to the market within a very short period of time. Ideally, companies should target their customer inquiries in a way that allows them to provide a solution to the existing concerns of their consumers. The focus of their research should be on the customer and the problems that they are trying to solve. This approach has the best chance of driving successful innovations.
Businesses today depend entirely on the data they gather from market research to make better decisions. However, it might just be a partial truth when it comes to innovation. Even though market research is a great tool, the very art of innovation is more human in nature. While research findings can make the process of decision-making easier and systematically approachable, it is the data scientists who ultimately create the right “stratifications,” “predictive models” and attempt to learn and build actionable heuristics that drive successful innovative outcomes.
In the conclusion, it can be said that market research is a very powerful and valuable tool in the process of innovation. Companies need to use it appropriately in order to avoid market research from killing “Innovation”.
Tools for innovation
OSG helps clients grow their business by becoming more customer-centric through insights, analytics, advisement and technology. OSG’s innovation technique is driven by OSG Dynamo™ our bespoke behavioral and cognitive analytics solution, which pinpoints the importance of current and future product benefits, allowing our clients to know exactly which innovations out of a universe of possibilities will ignite consumer interest and engagement. Illuminate not only answers what benefits are important to consumers but also determines how much more important benefits are to each other. OSG Dynamo™ can also capture any salient characteristics or behaviors of different audience groups, delivering great flexibility in analysis.
When applied to innovation efforts, the three crucial benefits compared to any other methodology:
- Accuracy: It captures the strength of commitment to a choice, which more accurately reports how various benefits motivate your target audience
- Relevancy: Results tend to be relevant for a long duration because it reports on desired product or brand experiences rather than attitudes or behaviors, giving our clients a long- term resource to support innovation
- Efficiency: More possible product benefits can be evaluated without increasing the sample size, and smaller sub-sets of the sample can be analyzed, giving more flexibility and depth of analysis
OSG Steps to Success
OSG is a “catalyst” that helps our clients be the best at decoding their customers’ decisions. Our clients have seen a minimum 20% improvement in customer engagement by implementing smart insights delivered using our behavioral analytics products.