The low success of new products in the marketplace has been attributed to many factors, yet key among them is the belief that companies do not adequately understand and address consumer wants and needs. Some have begun to blame this failure on outdated tools.
While we agree that many of the tools currently in place are outdated, the problem is more complex, involving not only tools, but the way we work and the way we think. In this article, we will explore three of the reasons that new product development is often unsuccessful:
- Business unit silos that prevent good business development
- Failure to understand that we are moving into a "relationship economy” and out of a "demand economy"
- Use of rote tools rather than critical thinking
Business unit silos prevent good business development
Consumer goods companies are generally divided into units that are responsible for different areas of a product’s development and therefore its success (the term product includes the primary package and the contents that are consumed).
Marketing, supported by Marketing Research, generally has the overall responsibility for conceiving (concept development) and marshaling a product from idea to market. As its research arm, Marketing Research has the responsibility of supporting Marketing in developing and testing concepts. In some organizations Marketing Research is also responsible for conducting consumer testing on products to determine whether they will meet project goals.
R&D is responsible for developing the product and may or may not have a consumer research group supporting it.
Most often, Marketing decides on a new concept and then turns the project over to R&D to develop the “right product.” Generally the concept, the messaging and the product are not developed cross-functionally, because different units are responsible for each. The assumption in this scenario is that Marketing, with the help of Marketing Research, adequately understands what consumers are looking for in products – from the specific product features through to the emotional valence (positive or negative emotions).
In fact, often they do not understand how consumers interact with product and the attributes that consumers want/don’t want. Thus, the most commonly practiced concept testing is not up to the task of defining winning product ideas.
The failure rate of products that make it to the market has been quoted to be as high as 80-plus percent to as low as 40 percent or less.
When consumers rate interest in a concept, they often do so based on the underlying benefit that the concept conveys, not the specific product attributes shown. Therefore, when products are developed to match concept attributes, those products often miss the mark, in that they do not deliver on the benefits promised.
Another fault of typical concept testing is that “close-in” concepts, which are familiar, typically score higher than those product ideas that are newer (less familiar, too unique). Therefore, concepts chosen for development are often less innovative and more typical of those already on the market.
After the concept has been chosen by Marketing it is often assumed that the R&D organization will know how to develop a product that will exactly match the concept and will be compelling to consumers. Because the product and concept are not developed together, and the organizations do not act as a fluid team (conducting work together), a frequent outcome is a product that either does not live up to the concept, or a concept that does not adequately describe the benefits/limitations of the product.
Packaging development is typically divorced from product development. While evaluation of the packaging “look” is often conducted by Marketing, the package form is often dictated by machinery capability or supply chain requirements (cost), and is rarely optimized for consumer satisfaction. Often, the “whole package” ends up disappointing the consumer because the packaging doesn’t support the product; e.g., packaging that doesn’t function properly (shreds when opened, juice boxes that squirt all over, blister packs that are impossible to open, etc.).
Most R&D or Marketing Research organizations do not have individuals who are competent in the discipline of consumer products research, a specialization in which practitioners are trained to help the organization understand the critical product attributes, link these to the overarching and compelling concept and then help in the development of the product or package to meet consumer expectations. Nor do Marketing Research and R&D work together to develop the right messaging about the product as it evolves through development. Instead they rely on the belief that if each individual organization does its job correctly, the end product will deliver.
Working together does not mean simply having an assigned team, where members of the team meet at intervals and communicate results. In that case, the work is still being conducted separately, and the members of the team are not conducting the work together – they are still working separately. Working in silos, instead of as a team, is not only inefficient, it leads to many of the market failures we see today.
Though the whole cross-functional “team” concept has been floated for more than 10 years, in practice, silos continue to be the norm. It is rare to find the company that implements a collaborative, iterative approach to get to “perfect.”
Failure to understand that we are moving out of a “demand economy” and into a "relationship economy"
All too often, companies rely on the mistaken idea that all they have to do is develop a product that appeals to a group of consumers, put that product on the market and success will be assured. While all companies mouth the importance of consumers, and the importance of customer service, few truly deliver.
There is a current belief that we are moving out of the era of a “demand economy” and into a “relationship economy.” In this new era, consumers are looking for more than lip service from a company. They want an “authentic” relationship with the company and its brands. Everything needs to deliver on this promise – the company itself, the brand message, and the product.
In order to develop products that will be “authentic,” there needs to be a close relationship established with its consumers. This does not just apply to marketing and customer service. The product and package have to be developed with the consumer to truly hit every note.
In a world with a lot of skeptical people, genuinely getting to trustworthiness is something that has to be embraced and earned, every day. Connectivity with the consumer cannot be achieved through a simple twitter channel, a YouTube promotion or a Surveymonkey study. Rather it is through an integrated approach between the product team across all facets of the product understanding model.
It is noteworthy to add that when we say “consumer,” we acknowledge that there is rarely one monolithic consumer. There are usually a number of different, distinct idiographs or clusters of people who make up the concept of consumer. That, of course, is one more reason for the complexity of understanding, THE consumer.
Use of rote tools rather than critical thinking
Many business practices drive to uniformity of practice, and therefore to the use of a standardized set of tools. The problem with this approach is that researchers do not think through whether the tools are adequate to answer the business questions at hand.
Standardized tools can create a culture of laziness, where critical thinking is discouraged because it is not required. The tools used should be adaptive, not static, and should be based on the business questions at hand, not a benchmarking study recommendation from three years ago.
The basic flaw in many of the standard marketing, consumer and sensory research tools is that they do not bring the consumer into the conversation early enough, often enough or deep enough. Inadequate are the traditional tools (old school paper versions or more updated web/digital versions) such as surveys -- whether conducted to determine the highest ranking concept, optimize the product, measure likelihood of success in the market or understand satisfaction with product performance after use. They are used more as a scorecard rather than as active methods to develop products that will appeal to people -- i.e., the consumers.
Even focus groups, which are meant to elicit more in-depth consumer feedback, are basically validation tools. Surveyors have certain assumptions going into the focus group research, which frame the questions used. The groups can only validate or disconfirm the surveyor’s thinking. They are not able to lead us to new ways of thinking. The process should start as one of discovery not validation.
The consumer should be an active participant in all stages of the product development process and the methods used must be able to elicit an in-depth understanding of the emotional needs that products should fill and product attributes that will, or will not, link to those emotional needs.
While the tools used are important, the way the researcher goes about understanding consumers and products is even more important. New thinking on the “product research” process has led to identification of some common traits that allow a researcher to be more successful at developing new products.
These are not about the tools being used, but about being good at critical thinking. The researcher must be interactive and agile, willing to use a variety of tools to understand the needs of the consumer. Therefore, while the tools are important, the characteristics of the researcher are essential.
Critical factors the researcher should bring to new product development:
- Be fascinated with the product
- Be fascinated by people who purchase and use the product
- Strive to question your assumptions
- Be adaptive.
These traits are not common today. Marketing Researchers rely on simplistic tools such as concept testing to drive new products. Product Development and Packaging Development groups typically do not think that they need to be part of concept development or have met negative responses from “Marketing.” The refrain of “just tell me what you want” is often heard from the PD group reflecting a service versus integrated research team member mentality.
How should products be developed?
Each new product effort should have a dedicated product team, which includes Marketing, Consumer Products Research, and Product and Package Research &Development. Members of this team need to be involved in all stages of the research. Research into concept, product, packaging, and communication must be done in concerted parallel paths that are essentially simultaneous.
Everyone on the team needs to be grounded in the product category being explored. This grounding must include an understanding of the consumers and the products in the category. Questions that must be asked are:
- How do consumers interact with this category? How does the market behave, really?
- What is the market landscape….who plays in it, why? Why not?
- What needs do products in this category fulfill?
- What are the emotional links?
- What are the important product attributes and how do they link to the consumer needs?
- What are the differences in market products – which products are meeting or failing consumer product expectations?
- How are the product benefits currently being communicated? Are they on target?
- Based on this understanding, where are the opportunities?
- Can we find a way to prove ourselves, or our assumptions wrong?
Identified opportunities need to be explored together and the weight of success needs to be shared. It is very efficient to explore product in the context of the general product idea and at the same time explore how communication and packaging ideas mesh with the product. Based on feedback, all can be modified and explored simultaneously. In this way, mismatches can be avoided and many more successful products can be developed.
Businesses are not the only area where change is needed. The educational system also needs to approach consumer and products research differently. Rarely is this comprehensive and integrated “products research” training taught in universities or companies. It is rarely taught to food scientists or marketing researchers. Similarly there is little cross training being conducted.
This situation is unlikely to change until professional organizations, universities and companies realize the need to include this into their required competencies. Until the situation changes and more realize the importance of this paradigm shift, products will continue to fail in the market at an alarming rate.