The Indispensable Role of Market Research in Product Development

1. ARROWPOINT-Market Research and Insight Solutions The Indispensable Role of Market Research in Product Development

2. At this specific stage within the intricate trajectory of the product life cycle, the manifold applications of market research reverberate with a resonance akin to those judiciously employed in antecedent phases. Conspicuously, the utility of market research manifests in its capacity to meticulously explore optimal price points, ascertain both market share and size, and gauge the nuanced attitudes of consumers towards the consumption of the product in question. Moreover, the discerning lens of market research facilitates a meticulous comparative analysis, juxtaposing the inherent strengths and vulnerabilities of competitors' offerings with the intricacies of the subject product. This expansive scrutiny extends beyond the surface, delving into uncharted territories of unmet needs, thereby unveiling latent prospects for potential product development initiatives. It is worth noting that this insightful exploration of opportunities persists unabated, even within the confines of this stage in the overarching product life cycle, contributing significantly to strategic decision-making processes.

3. Neglecting products during this pivotal stage in their life cycle is detrimental, as ongoing product enhancement is imperative for sustaining customer satisfaction. Statistics reveal that a substantial portion of customers, approximately 45% to 50%, may disengage from a company within a five-year span. Acquiring new customers can incur costs up to 20 times higher compared to retaining existing ones. Therefore, prioritizing continuous improvement becomes paramount. Engaging in market research focused on product development serves as a powerful signal to customers. It communicates not only that a company is attuned to the evolving needs of the market but is actively striving to address and improve its offerings in response. This proactive approach reinforces customer confidence and contributes to the long-term loyalty of existing clientele. For example, a supplier of office furniture, "Supplier X", could be regarded as just an average supplier in an industry in which all manufacturers' products are viewed as similar. In this case, Supplier X's furniture – the product – comprises 95% of the value, as illustrated in the left diagram in Figure 3 overleaf. If market research were conducted and revealed that companies purchasing office furniture actually had specific unmet needs around the product, such as the ability to customize furniture, assistance with interior design and delivery of furniture after 5pm, then Supplier X would need to build value around other parts of its offering, as illustrated in the right diagram in Figure 3. Thus by researching the product in its widest context, market research can be instrumental in rejuvenating a product, even at this late stage of its life cycle. In summary, typical market research studies conducted at this mature stage of the product life cycle include customer satisfaction research (in order to retain existing customers and hopefully attract potential customers), b2b market segmentation research (to determine how to tailor an offering to meet the needs of different segments) and pricing strategy research (to determine optimal price points so as to achieve maximum profits).