Unlocking Innovation: The Role of Market Research in Identifying Unmet Needs and Driving Product Development

1
ARROWPOINT-MARKET RESEARCH AND INSIGHT SOLUTIONS

• Unlocking Innovation The Role of Market Research
  in Identifying Unmet Needs and Driving Product
  Development

2
Antenatal Stage Identifying Requirements Numero
us corporations acknowledge the significance of
novelty, hence dedicating substantial resources
to research and development (RD). While
electronics firms might allocate up to 15 of
their sales to RD to keep up with their rapidly
evolving sector, most companies typically spend
between 2 and 5 of their sales on RDa
considerable amount even for industry giants like
Boeing, Honda, or Siemens. Surprisingly, over
90 of successful innovations originate from
initial missteps and not from meticulous market
research. Examples abound, from the accidental
discoveries of the telephone and X-rays to the
serendipitous inventions of bubble gum, Velcro,
Viagra, and Post-it notes. The latter, for
instance, emerged when a 3M researcher sought to
create an exceptional glue but ended up with one
that hardly adhered, ultimately birthing one of
3M's most triumphant productsthe ubiquitous
Post-it notes. However, not all breakthroughs
occur by chance, as market research can identify
the necessity for many innovations. Drucker
(1993) recounts the tale of William Conner, a
medical salesman turned entrepreneur, who
embarked on a quest for new product
opportunities. Conner's approach involved
engaging with surgeons to understand their
challenges firsthand. Through these interactions,
Conner unearthed a significant hurdle in cataract
surgery the need to cut a ligament, a risky and
unpleasant task for physicians. Conner's
subsequent discovery of an enzyme capable of
dissolving this ligament, along with a method for
preserving it until needed during surgery, proved
transformative. His innovation not only met an
unaddressed need but also led to patenting his
compound, illustrating the vital role of market
research in identifying and capitalizing on
market opportunities.
3
In the scenario of cataract surgery, market
research offered invaluable insights into unmet
needs and a comprehensive understanding of the
sales environment for the new product.
Nonetheless, it's essential to approach market
research expectations with caution, as it's not
guaranteed that conducting market research will
unveil significant opportunities or lead directly
to the creation and launch of new products.
Instead, it falls upon the researcher to leverage
their understanding of market needs to identify
potential applications for new products that
address those needs effectively. The market
itself cannot dictate what the new product should
be, nor can market research respondents assume
the role of an RD Director.
4
Moreover, it's unrealistic to view market
research as an exact science, as expecting
researchers to accurately predict the demand for
a new concept would be impractical. There are
numerous variables beyond the scope of market
researchers that can influence demand, making
precise predictions challenging. The process of
bringing a product to market and establishing its
presence takes considerable time, let alone
gaining widespread acceptance. Market research
should be approached as an experimental process,
one that may yield unexpected results if not
conducted under appropriate conditions. For
instance, Xerox's experience with launching a
copier illustrates this point. Despite the advice
of two consultants against its launch and
conservative sales forecasts from the third,
Xerox proceeded and achieved remarkable success,
installing 80,000 machines within three years.
This discrepancy highlights how market research
can underestimate demand, particularly when
respondents lack experience with the new product
being evaluated. Innovations that require users
to embrace something novel, often involving a
shift in mindset, pose additional challenges for
research. In such cases, asking potential buyers
or users in interviews or focus groups to imagine
using the product and gauge their likelihood of
purchase or willingness to pay can be
ineffective. Without adequate time to fully
comprehend the product or possibly trial it in
its intended environment, respondents may
struggle to provide meaningful feedback. For
example, envisioning people's reactions to the
concept of a portable music player like the Sony
Walkman before its launch would have been
difficult, potentially leading to misconceptions
or negative perceptions.
5
However, market research can delve into the
underlying needs of the market and assess how
well a new product addresses these needs.
Therefore, it is the researcher, rather than
solely the potential buyer or user, who
establishes the link between unmet needs and
opportunities for new product development. Key
inquiries that should be included in any concept
screening research are as follows - Is the
purpose of the concept clear, and can potential
users be convinced of the product's benefits?
(This evaluates the clarity and purposefulness of
the offering.) - Does the product fulfill a need?
What are the specific requirements of potential
users? (This examines the demand for the
product.) - How do people currently utilize
existing products? (This sheds light on
purchasing behaviors regarding existing
products.) - What challenges do users encounter
with existing products, and what needs are not
being addressed? How satisfied are users with
these products and their providers? (This
identifies market gaps.) - Is the price
justifiable considering the perceived benefits of
the concept? (This assesses whether people are
willing to pay a reasonable price for the new
product.) - How likely are potential users to
purchase the product? (This gauges purchase
intent, providing insight into the number of
people likely to buy the new productinitially,
as this may be influenced by promotional efforts.)
6
Companies can sometimes fall into the trap of
believing they already possess all the necessary
answers. This was evident in the case of Sony,
which failed to conduct sufficient market
research before launching its e-Villa Internet
appliance. This product aimed to provide
consumers with internet access in their kitchens,
but its substantial weight of nearly 32 pounds
and size of 16 inches made it impractical.
Consequently, the product was withdrawn from the
market after just three months. With more
extensive market research, Sony could have
potentially saved significant resourcesboth
financial and humanduring the product
development and commercialization
process. Another crucial consideration during
the pre-launch phase is that it's not just the
product itself that needs to be perfected all
surrounding elements, such as packaging, services
(e.g., technical support), and marketing, must
also be meticulously planned. The design,
coordination, and commercialization of these
components can often span several years,
especially for industrial innovations, which are
known to take decades to fully establish. For
example, carbon fibers, discovered in 1965 and
produced in the 1970s, took approximately 20
years to make a significant impact. Indeed, it
requires time for consumers to become aware of a
new product, recognize its benefits, and adopt
its usage. The innovation adoption curve, as
illustrated by Rogers (1995) in Figure 2, depicts
the changing number of new adopters of a product
over time, across different stages of the product
lifecycle. The curve begins with innovators, the
earliest users who embrace change, followed by
early adopters who also welcome new ideas but are
typically more cautious. Subsequently, the early
majority adopts the product, accepting change
sooner than the average consumer, while the
skeptical late majority follows suit only when
the majority does. Finally, traditionalist
laggards, who are critical of new concepts, only
adopt new products once they become mainstream.