Avoiding Pitfalls in Product Development The Importance of Market Research and Understanding the Innovation Adoption Cur

1. ARROWPOINT-MARKET RESEARCH AND INSIGHT SOLUTIONS Avoiding Pitfalls in Product Development: The Importance of Market Research and Understanding the Innovation Adoption Curve.

2. Antenatal Phase - Identifying Needs Many companies understand the importance of innovation and invest substantial resources in research and development (R&D). In industries like electronics, R&D budgets can reach up to 15% of sales due to rapid advancements. Even for companies like Boeing, Honda, or Siemens, with R&D spending typically ranging from 2% to 5% of sales, these allocations signify significant investments. Contrary to common belief, most successful innovations don't result from meticulously planned R&D efforts or extensive market research. Surprisingly, over 90% of successful innovations initially veer in the wrong direction and often arise from chance discoveries. Examples like the telephone, X-rays, bubble gum, Velcro, Viagra, and Post-it notes highlight accidental inventions. For instance, Post-it notes originated from a 3M researcher's attempt to create a super adhesive but instead produced a weak adhesive that became hugely successful. However, not all innovative products come about by chance. Market research can play a vital role in identifying potential needs. Drucker (1993) exemplifies this with the story of William Conner, a former medical salesman turned entrepreneur. Through interactions with surgeons, Conner identified a significant challenge in cataract surgery and subsequently developed an enzyme to address it. By conducting market research, Conner identified an unmet need in the medical field and successfully capitalized on it by introducing his innovative solution.

3. Concerning cataract surgery, market research provided vital insights into unmet needs and a thorough understanding of the market landscape. Nevertheless, it's essential to approach market research cautiously, as it may not always reveal significant opportunities or directly result in the development and launch of new products. Instead, researchers should utilize market insights to identify potential applications for new products that meet market needs. Market research cannot determine the precise nature of a new product, and respondents cannot serve as substitute R&D directors.

4. Furthermore, it's unrealistic to perceive market research as an exact science because expecting researchers to accurately predict the demand for a new concept disregards the numerous external factors that can influence demand beyond their control. Introducing a product to the market and establishing its presence requires significant time and effort, as well as achieving widespread acceptance. Market research should be viewed as an experiment that may fail if not conducted under optimal conditions. For instance, Xerox's decision to launch a new copier despite consultants' advice against it or conservative sales forecasts resulted in surpassing expectations, with 80,000 units installed in just three years. This highlights how market research can underestimate demand, especially when respondents lack firsthand experience with the product being researched. Innovations that necessitate users to embrace new concepts, often involving shifts in mindset, present distinct challenges for research. Asking potential buyers or users to assess their interest or willingness to purchase a product they have never encountered is inherently challenging. Without the opportunity to fully understand or experience the product, respondents may struggle to provide meaningful feedback. Consider the example of the Sony Walkman: before its launch, individuals might have found it difficult to envision a portable music player for on-the-go listening, potentially leading to skepticism or rejection.

5. Nonetheless, market research plays a critical role in comprehending the underlying needs of the market and evaluating how well a new product aligns with these needs. Therefore, it falls upon the researcher, rather than solely relying on potential buyers or users, to establish the connection between unmet needs and opportunities for new product development. In any concept screening research, several pivotal questions should be addressed: 1. Is the purpose of the concept clear, and can potential users be persuaded of the product's benefits? This evaluates the clarity and purpose of the offering. 2. Does the product fulfill a need? What specific requirements do potential users have? This assesses the demand for the product. 3. How do people currently utilize existing products? This includes duration of use, frequency, and specific usage patterns. 4. What challenges do users face with existing products, and what needs remain unmet? Are users content with current products and suppliers? This helps identify market gaps. 5. Is the price reasonable relative to the perceived benefits of the concept? This determines if potential buyers are willing to pay an appropriate price for the new product. 6. How inclined are potential users to purchase the product? This indicates purchase intent and the potential market size, although it can be influenced by promotional efforts.

6. Companies often fall into the trap of assuming they have all the answers, as exemplified by Sony's e-Villa Internet appliance. Sony failed to conduct sufficient market research before launching this product, which aimed to provide internet access from kitchen countertops. However, the appliance's weight of nearly 32 pounds and size of 16 inches made it impractical, leading to its withdrawal from the market after just three months. More thorough market research could have potentially saved Sony significant resources in product development and commercialization. In the pre-launch phase, it's crucial to consider not only the product itself but also all surrounding aspects, such as packaging, services (e.g., technical support), and marketing. Coordinating and commercializing these elements can be time-consuming, especially for industrial innovations, which often take years, if not decades, to gain traction. For example, although carbon fibers were discovered in 1965 and produced in the 1970s, it took around 20 years for them to have a significant impact. It takes time for consumers to become aware of a new product, understand its benefits, and ultimately adopt it. The innovation adoption curve, as described by Rogers (1995), illustrates the progression of new adopters of a product over time, across different stages of the product lifecycle. Innovators are the earliest users who embrace change, followed by early adopters, who are also receptive to new ideas but tend to be more cautious. The early majority then adopts the new product, followed by the more skeptical late majority, who only embrace it once it becomes mainstream. Finally, traditionalist laggards are resistant to change and only accept new products when they are widely adopted.