Market Research Questions for NPD (Part Two)

Last week at the Idea Incubator, we began a short series of blog posts to investigate how market research techniques can help innovation teams become more successful with new product development (NPD).  Asking just three simple questions can improve commercialization and profitability for new product launches.

1. Who are the customers?
2. What do our customers need?
3. What is the best product for these customers?

This week, we’ll take an in-depth look at finding out what customers really want.

Listen to the podcast (approximately 4 minutes).

What do Customers Need?

An old wives’ tale circulates among innovation practitioners that consumers can only offer ideas for incremental improvements.  As we’ve discussed previously, consumers actually know their own needs better than a remote NPD team.  While it is unconventional, potential customers can be integrated into a firm’s needs analysis to help identify new product concepts (read more at Managing Customers, Stakeholders, and Bosses).  End-users are particularly useful in evaluating trade-offs among product features.

Needs Analysis

Once a firm establishes an innovation strategy, they will also identify a market, technology, and product category for future product development initiatives.  In Market Research Questions for New Product Development (Part One), we described the benefits of market segmentation to classify market needs.  Technical development should only follow customer identification in alignment with the strategy.

However, there are usually multiple ways for engineers to design products to meet customer needs.  NPD teams need to take early decisions on which customer needs to address with the new product in order to proceed with development of features and attributes.

Interviewing customers on an individual basis is a qualitative market research technique that can gather customer wants and needs.  Most experts agree that interviewing just 20 to 40 consumers will yield a complete set of customer needs.  Unfortunately, this list may number thousands of items, depending on how radical the innovation might be.  Certainly, the NPD team cannot efficiently design a new product to satisfy every potential customer!

Trade-Off Analysis

Needs are therefore prioritized and grouped so that the new product can incorporate the most important features.  First, needs are grouped into categories.  Next, customers are surveyed regarding the most important category.  Finally, needs within a category are prioritized.  This approach can quickly produce an effective list of features and benefits that eliminate uneducated or cost-only trade-offs.

For instance, a hotel chain may find customers desire luxurious bedding and bath linens, additional seating, and internet access.  When customers rank internet access as an important category, they are directed to a detailed survey inquiring about their behaviors regarding wired or wireless internet service, use of business centers, and range of cost of the desired service.

By conducting such a trade-off analysis, the hotel may find a large number of customers who demand free, wireless internet in their rooms.  Another segment may emerge from analyzing trade-off data that is willing to pay a premium for access to an on-site business center.  The hotel can then incorporate these features into at least two different products – one serving the occasional family vacationers needing free wireless internet and the other serving frequent business travelers who utilize the hotel business center.

Both needs analysis and trade-off evaluations require time, money, and dedication by the NPD team.  Market research does not always come quickly or cheaply, but the investment allows for a better overall product design that meets the true needs of real-life customers.  The innovation team should be trained in interviewing techniques and ethnographic research in order to get the most utility from customer needs analysis.  A healthy understanding of statistics will allow the innovation team to couple market segmentation data with trade-off assessments to hone in on specific product designs for each target market.

Next week, we’ll address the final market research question for NPD.  What is the desired product?  In the meantime, if you’d like more information on gathering customer needs for market research in new product development, please feel free to contact us at info@globalnpsolutions.com or by phone at 281-787-3979.  You might also be interested in a a facilitated New Product Development Professional (NPDP) certification workshop.

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