We all want our ideas to succeed! For our clients, the launch of a new product or service represents ideas and hard work finally coming to fruition.
When businesses get it right, the benefits of service or product innovation can be numerous: increased sales, growth in market share, more positive brand perceptions, new customers and employee motivation, to name but a few. Research shows that organisations who focus on creating new products and services grow faster than those whose priorities lie elsewhere.
But when businesses get it wrong, there’s the potential to damage the brand’s reputation, increase the number of customer complaints, and lose customers to competitors. And the odds are stacked against success. Not every fantastic product innovation is going to translate into a successful business idea. Some products will fall by the wayside, victims of poor marketing and bad timing. In the race to get to market, it’s all too easy to presume that what’s worked in the past will work again in the present. Estimates suggest that over 80% of new product launches fail. There’s even a museum in Sweden, crammed full of examples of just how wrong it can go!
Market research can play an important part in reducing the risk of failure when businesses develop new products and services. Below, we talk through some key benefits of using research as part of the product innovation or service development process.
Testing a new product or service concept before building it can save valuable time and resources. Get it right first time, and you won’t have to redesign or refine your product later down the line. A critical part of NPD success, is minimising the risk of failure.
It’s a mistake that’s seen most commonly when businesses are developing digital services. All too often, a developer-led approach means the client team only asks for customer feedback after the product’s been built, or the service is being piloted. Finding out how customers use your products (and those of key competitors) at the prototype stage, as we demonstrated in some recent app testing research, can dramatically reduce development costs. Not only that; it minimises the potential for negative PR.
It’s an easily-overlooked opportunity, but really scrutinising and understanding the way customers use a potential new product or service can lead to further innovation. Sometimes, talking to customers about a product, or observing how they use it, identifies gaps in the customer journey that further new products could address. Or, this fresh understanding leads the client to identify and market additional applications for the product that’s already being tested.
We saw this in our recent work for a global safety equipment manufacturer. This B2B research was built around video ethnography, carried out in industrial settings across Europe. It allowed the client’s product engineers to truly understand how products were used from a customer perspective. Subsequently, they developed new customer-centric products, as well as identifying new opportunities. It was a similar story when we worked with Tesco and Samworth Brothers to help them to leverage an emerging opportunity in the meal solutions market through ethnographic research that observed cooking behaviours in-home.
The brands and providers that we think of as offering the ‘best’ solutions to meet customer needs, are the same ones who work hard to understand those customers. By really exploring what the customer wants, and identifying their underlying – even unconscious – needs, they develop products and services that deliver true innovation, and that customers actually use and advocate.
The only way to achieve this kind of understanding is through customer-centric product development, and market research is essential to that process. It’s precisely why one of our global tech clients chose to work with us on B2B research when they needed a better understanding of customer needs, to inform the design of a new service package.
The application of tech innovation to healthcare problems is genuinely transforming both the health sector and the tech sector, faster than ever before. The coming together of health and tech has created a hotbed of NPD opportunities. Insights that will help businesses to market new products and services effectively are in great demand. Both established players and disruptor brands are investing significantly in NPD research studies – both with consumer and B2B audiences.
To fully understand how much product innovation is out there and the potential role that market research can play, let’s looking at the main types of new product development:
New to the world. These new products are the first of their kind. They result in an entirely new market: a well-known example in this category is 3M’s Post-it® Notes. It’s thought that this category represents in the region of one in ten new products.
New to the company. About one in five product innovations are products that are new to a company, but not to the marketplace. These new products enable a business to enter an established market for the first time. The market entrant might design and develop their own new product lines, by following others into the market. Or, it might obtain the skills and knowledge it needs to enter the market via acquisitions or partnerships.
Additions to existing product lines. These product innovations fit with an existing product line and represent one of the most common types of product development: in fact, around one in four of all new launches fall into this category. They may also represent a fairly new product to the market. For example, continuous ink systems like HP’s ‘Instant Ink’ are an extension of the print cartridge category and an alternative to traditional ink cartridges.
Improvements and revisions to existing products. Another frequent type of product launch (again, around one in four new launches), these are essentially ‘updates’ that replace existing products. They aim to offer improved performance or better value, compared with the previous product. An everyday example is the launch of updates to smartphone apps (e.g. to add functionality, remove bugs, make the app more customer friendly).
Repositioning. Repositioning essentially means finding new applications for existing products. It involves retargeting an existing product, to a new part of the market, for a different application. For example, denim jeans were originally designed as functional work-wear. Today, of course, they’re an everyday fashion item!
Cost reductions. About one in ten new product launches are designed as lower-cost replacements for existing products, giving the same benefits as the original. Generic pharmaceutical products are a great example. Unbranded alternatives offer the same benefits as the original drug, sometimes at a fraction of the cost.
Numerous models outline the stages in product development that a company might go through before deciding whether to launch a product. Some of these models look at stages of decision-making; some are organised by the processes and activities at each stage; others focus on the purpose of the information gathered. However we define the stages, though, most of these NPD models include elements along the lines of those we’ve set out below.
Before we talk about the stages, though, we should also say that the NPD process is rarely linear. It’s usual to refine and retune product concepts iteratively. This might be in light of new information that emerges about the market, or because external factors (like legislation or technology) drive the product development strategy in unexpected ways.
Doing research to test an idea is all well and good, but how do you generate ideas in the first place? Without ideas, there’s nothing to develop. Research to generate ideas tends to be (but isn’t necessarily) qualitative in nature.
Once the general areas of opportunity have been established, we work with clients to develop more specific hypotheses, as we start to home in on possible product concepts. Who is the target market? What are the key insights we’re hinging brand stretch on? What competitive advantage can be offered?
A lot of the insight we gather for clients informs these early stages of product development. One example is a study we designed for a manufacturer of specialist healthcare materials, who were building a product innovation strategy for a specific market. To do so, they needed to understand customers’ and end users’ influences and value drivers, when purchasing those materials.
We provided the client with a clear understanding of the factors that customers take into consideration, and particularly of the ways that changes in the end-user market are influencing these decisions. We also helped them understand challenges that customers and users were experiencing in the market at the time, and anticipated future pressure-points.
We typically work with a brand to develop a series of hypothetical options, modelled around customer insights. Co-creation workshops can be a useful way to test these hypotheses. We might use some initial product ideas as stimulus with customers at a first stage, brainstorming ideas that fit with the core brand, as well as fulfilling unmet needs.
It’s also common for our clients to seek further insight into their customers’ attitudes and behaviours at this stage. This is exactly what one of our financial services clients did before launching a new digital services concept in Germany.
You can find out a more about our thinking on the topic of idea generation in this blog.
Screening and R&D activity
Now it’s time to testing the viability of an idea and make the case for its development. Based on available information, we work with the client to analyse and evaluate the perceived need. This phase typically involves some desk research, as well as internal discussions across different parts of the client organisation.
It’s important to consider how and where a product would sit in the broader category, and what competitive advantage it would offer over what’s already out there. Ideas that don’t fit with the client’s ethos or strategy should be rejected, too.
So, screening’s a critical part of the NPD process. To avoid either accepting a poor product idea, or rejecting a viable idea, independent feedback through market research is a must.
Product concept testing
Once it’s agreed that an idea is a viable, it’s essential to test it among the target audience. New products and services need to be appropriate and relevant to the customers who are going to pay for them, as well as offering something unique and differentiated from the competition.
It’s at this stage that clients most often come to us as they seek to understand customer needs better. For example, our work for a well-known consumer health brand optimised the launch of a new snacking product, by ensuring that the product communicated the right message to the target audience.
At this point, a new product idea needs more sophisticated, detailed analysis from a commercial perspective. This helps to determine the costs and other resources involved in bringing it to market. It also helps in creating a more detailed risk assessment, and forecasting future profits.
At Breaking Blue we give plenty of careful consideration to how breakthrough ideas can be measured and evaluated. We regularly conduct quantitative research to scope market opportunities, or identify the appropriate marketing position for them. For example, we carried out B2B research for a global tech client to understand the market opportunity for a new category of imaging device, informing their design and launch strategy. We’ve also recently carried out a pricing study for an adhesives manufacturer, who planned to launch a new premium product across Europe.
Regardless of how ground-breaking a product innovation idea appears to be, if it’s going to have any chance of success there are some key criteria it needs to meet. For us, the successful NPD and service innovation checklist includes:
We’ve already said that failure happens more often than success when it comes to product and service development. But there are some points of best practice that can reduce the chance of failure: