Paul Altaffer &rnGrant Washington-Smith12.01.10
The last segment in this continuing series on new product development (NPD) from around the world examines the importance of understanding consumer and market trends. In the introduction to this series, we suggested that a successful NPD process involves insight—the ability to predict the future demands of the consumer. While good products, timing, marketing and luck play important roles in product success, predicting a potential success is a great starting point. In essence, successful NPD begins with the identification of a consumer interest or need and ends with actual consumer acceptance.
If successful product development is dependent on one’s ability to predict future consumer demands, then it makes sense to begin this process by gaining inspiration and ideas from the market itself. Much NPD involves improving on something that already exists or introduces a concept unknown to the category. Market research can provide a view into consumers’ interests. Trends are driven by consumer motivations and expectations.
For this column we interviewed Lu Ann Williams, head of research at Innova Market Insights. She discussed the role of market intelligence and provided some insight on how one might leverage market research tools to assure successful product launches.
Why is market research an important tool for the NPD process?
Products are not created in a vacuum—someone will have tried it or something similar before. Getting inspiration and ideas from the market should be an important part of every company’s development process. Market research tools are readily available today and it is simple to get the facts to either validate what you already know or to learn something completely new. With our new product database, for example, in a few minutes you can find out trends in flavors, answer questions about a specific ingredient or get inspiration on new packaging. You can also easily see what your competitor has done over many years in the space. Resources spent on market research can drastically reduce the time you spend on the development process. It can also prevent mistakes.
Where and how should product developers use market research in the product development process?
Market research can be used at every stage in the process, but filling the funnel at the beginning of a stage gate process is crucial. Identifying a consumer need is usually the first step and then a review of the market for products that meet that need is a good way to get started. Good stimulus can really broaden your thinking and help companies identify new opportunities that can add more value to the final product. Market research can be used for gathering consumer insights, scanning the market for existing products, identifying current trends, gaps in the market, and even help you navigate the regulatory process. Looking at wording and claims on packaging can help you understand what you can say about your product.
Describe the differences between different database and market research tools. Please describe the major types of tools that companies use for market research.
The most commonly used market research tools are new product databases, consumer insight surveys and reports and quantitative databases. There are also databases for science and patents. Some are based on primary data that the market research company develops themselves and others are based on secondary sources (based on existing public information).
How expensive are databases and how much does a company need to budget to have access to them?
Companies shouldn’t be scared about the cost of market research; often it is possible to purchase small packages of information—and when used creatively, the benefit will always outweigh the cost. I am amazed sometimes at how cleverly some of our clients use our market research tools. It is difficult for me to quote a standard price range for databases but they can range from a few thousand dollars to hundreds of thousands for the largest users. The best way to explore this is to understand what you want to achieve and approach the supplier with a clear outline of what you need. Small start-ups sometimes just want to do some prospecting and market researchers can offer cost-effective ways to do this. All the information we supply is reliable and filtered by experts. Rather than taking the shotgun approach and using broad and poorly targeted or filtered information, it’s better to pay a little more for high quality information that returns superior results.
Is there a difference in the way small and medium-sized companies should approach data acquisition from larger companies?
The best way for any company to approach a market research provider is to prepare an overview of what the company’s needs are. Are you looking for inspiration, are you looking for prospects for your ingredients, are you looking at claims, do you want to use it as a marketing tool, an R&D tool—these are questions that the supplier will have. If you have a clear picture of what you need and how you are going to use the data, the supplier can usually find a solution that meets your needs. Small- and medium-sized companies should not assume they couldn’t afford market research; they should first talk to the supplier.
What kind of data is most important for product developers to understand in figuring out which products and opportunities are most important?
In my opinion, seeing what is out there on the market is crucial to identifying the best opportunities. I think a lot of companies try to size a market but the information there is not always accurate; often it is based on estimates. Look at Red Bull. If it had tried to size the market for energy drinks when they started in the 1980s, the number would have been $0. But there was a need and no products on the market to meet that need. I remember students at university eating spoonfuls of instant coffee and taking caffeine tablets. Jolt Cola had been launched and people talked about it but it was nearly impossible to find. In this case, identifying the consumer need and then scanning the market for products that met the need—and finding none—created one of the most exciting new categories for the beverage industry.
POM Wonderful is another good example. Senseo and Nespresso are two other great examples. Identifying a consumer need combined with a scan of existing products on the market was the best use of market research in these cases. There are many more great opportunities like this and companies need to be open to real innovation. Our product, The Innova Database, when used well, is a very powerful tool. It can help identify gaps in the market and also help companies find what they need to make it happen. We have a solution that helps from ingredients and packaging to products to the consumer—all on a single platform.
How important is presentation of the data when convincing your company how to move forward with new products?
We are so bombarded with information that it’s important to catch decision-makers’ attention. Presentations should be simple and convincing. It is not much different from the simplicity trend we see happening in the food industry right now. Visitors who came to the “TasteTheTrend” pavilion we put on at IFT Food Expo saw an example of how we like to present information so that it is easy to digest. It’s the same in a company. After conducting analysis and identifying an opportunity, you should present the findings in a simple and clear way—if the right person is able to get it quickly and easily, you have done your job. It could also carry over into the marketing of the product later. Presenting any benefit in a clear, simple and convincing way will sell the message or the product.
In a globalized world, how do databases help product developers identify new opportunities globally and develop products?
We really do live in a global world, and good or bad, food is becoming more global. Here’s a good example. I am from Augusta, Georgia, but have lived in The Netherlands for 20 years. My kids love to take cupcakes to school for their birthdays (we bring Betty Crocker mixes to Europe with us). But for years the Dutch kids have called them muffins, which really frustrates my kids. In the latest issue of the teenage girl magazine my daughter reads, there was a pull-out on cupcakes, a recipe and cut-out wrappers to decorate them (with the faces of Justin Bieber and other teenage celebrities). So, the cupcake craze that has gripped America has crossed the Atlantic and hit the continent. This just goes to show you that products aren’t created in a vacuum. The idea usually exists in some way in another market. There is a whole world full of inspiration. Databases like The Innova Database make that accessible to anyone from their computer at any time, with the benefit that there are tools and functionalities built in that allow you to search and analyze the data in minutes.
What advice can you offer to product developers and what practices should they develop to successfully connect with their consumers?
Pay attention and invest in market research. There are cues everywhere about what is driving and influencing consumers and it’s possible to validate and qualify these drivers with the use of market research. Look at cookbooks, magazines, billboards—there is information everywhere. Once you see something appear a few times, pay more attention and then use market research tools to investigate it further. We do the same and include this kind of information in reports and reviews on our database. It’s another way to use our database platform to help identify new opportunities. We also do webinars, brainstorming and projects for our clients to help them learn how to connect with their consumers.
