Companies that don’t come out with new products have only two scenarios to face. They either retain their position on the market or lose it all. Often, it’s the second scenario that overcomes the first one. Every company has competitors and competitors are always going to be busy figuring out ways to trump your offerings with a product that’s attractive and far better than yours.
This is exactly why product development plays a key role in business. Even the “not so ambitious” companies need to offer something new if they intend to stay in business for long. However, product development is a tricky subject. More often than not, a new product heads down failure road.
The good news is that a new product doesn’t necessarily mean introducing something completely fresh. Many brands out there have reclaimed or expanded their market share by simply modifying or upgrading existing products.
The best part about this approach is that it saves money and works faster. Plus, the risks are fewer too.
But, what determines all this? How do businesses know when to introduce something fresh and when to just upgrade? Well, it all boils down to something called market research. Market research lays the foundation for the success of a new product. It helps manufacturers understand what the average customer wants and allows them to minimize the risk of failure.
Let us look at how market research impacts 2 key stages of the product lifecycle.
Pre-Birth: Understanding Needs
New or updated products don’t just show up by chance. Market research plays an important role here. To be more specific, it helps companies realize the need for a new product. By identifying the disadvantages or the pain points of customers with regard to an existing product, companies can work on developing innovative solutions that eliminate present issues.
On the whole, it is about meeting a need that hasn’t been met. Of course, customer feedback is very important in this phase. It is only by interacting with those who use the product that a manufacturer can identify current needs.
However, it must also be understood that market research may not provide the answers a manufacturer is expecting. It is the manufacturer’s duty to perceive and understand what the needs really are. The customer isn’t going to offer solutions.
Also, market research isn’t straightforward. There are many variables involved and manufacturers must be patient in bringing the new or updated product to the commercialization phase. Research is a painstaking process and viable results are achieved only when it is carried out under the right conditions.
Some of the questions that need to be asked in this stage are:
- Is the concept understandable and can consumers be convinced of the product’s benefits?
- Does the product address a need and what is the nature of the customer’s need?
- How is the current product used?
- What challenges are customers facing with the current product?
- Do the benefits and advantages justify the pricing?
- Will potential customers buy the product?
There are 3 factors that determine a product’s adoption – the current status of the product, its direction, and ability to achieve goals. Market research can address the concerns associated with these factors.
Market research gives us an idea of how big the market is and what the growth prospects for the product are. It offers insights on which distribution channel is ideal and what segments are likely to respond well. Market research provides data on what kind of purchasing decisions customers make.
All this information can be used to determine the product design, pricing, method of promotion, packaging, and after-sales service.
One of the best ways to conduct market research at this stage is to outsource it to an external service provider. This eliminates the possibility of internal conflict. Also, the delivery of the product can be hastened, which is advantageous.
Some of the market research areas to focus on at this phase of the product lifecycle include advertisement testing, pricing strategy, needs assessment, and communications testing.
On the whole, market research allows companies to manage product development with higher efficiency. This brings down the risk of failure significantly. Products can be examined right from the idea phase to the post-launch phase, which makes it easier to make decisions using empirical evidence and date before costs go out of control.