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Archive for November, 2010

In product categories crowded with brands and models, entering a new alternative for consumer choice is a serious challenge. Whether one thinks of shampoos, TV screens, or cars, the competition on consumers’ minds, hearts, and pockets is tough. Consumers also have become more experienced and more critical about products and services made available to them. While the knowledge of the majority of consumers in any particular category is likely to be partial and lacking in detail about brands, models and product attributes, they can rather easily gather additional information as needed by reading articles online and offline, visiting stores or company websites, and by consulting with savvier (‘expert’) consumers. Trying to launch a product without having the consumer point-of-view would be under these contemporary market conditions an irresponsible if not reckless move.

Large corporations are already persistent in using research to learn about consumers’ preferences and expectations when developing many of their new products (i.e., at least when those are new concepts, lines or generations of products). Medium- and small-sized companies are much less committed.  Nevertheless, it seems that companies of every size recognise the potential of social media and other forms of direct interaction between a company and its customers as a source of feedback from consumers. In many cases using these channels would be more convenient, readily accessible and less expensive than application of research methodology. So, it can be quite tempting to shift from research to these new modes of interaction.

But research is not like social media and other channels of interaction with a company where consumers can voice their preferences and expectations. The latter lack the rigour of research methods in collecting input from consumers. In addition, the pool of consumers who contribute their feedbacks via these channels may not represent closely enough the target segment for the new product. Thus information received can be grossly biased and misleading. Consumers should be allowed to participate in the process of developing new products for their utility and enjoyment. Yet, great care should be taken as to how such participation takes place.

Modes to be considered include:

  • Social media in a public domain (e.g., Facebook) or as a private community hosted by the company;
  • Interaction or dialogue with customers via e-mail or a message web-interface built originally for service and support;
  • Focus group discussions and in-depth interviews;
  • Customer and market/consumer surveys employing methods and techniques designated for New Product Development (NPD) research.

Companies should aspire to use more of these modes by advancing down the list: Any approach lower on the list may be used in addition or at the expense of a solution upper on the list, depending on budget.

For small-size businesses social media may be the only feasible and efficient option for hearing from consumers, and it is better than relying only on their own conceptions.  Still, managers who rely on this approach should be aware of its limitations and disadvantages.

Primarily it is the lack of structure and consistency that characterises information derived from contribution of participants in social media as well as messages in other forms of interaction. The consumers participating in the process may be good-willing but their contributions should be carefully scrutinized to derive real value. But even if we did try to get some order in contributions by prompting participants with guiding questions, there could be problems with the validity of our inferences.

The ability to control and correct for biases in characteristics of the participants in social media and other forms of interaction  is very limited when the participants volunteer to contribute their viewpoints. This means that the validity of the marketing conclusions drawn from these inputs is in jeopardy. The suggestions and expectations traced in social media can be used in a manner similar to focus groups, that is, to screen possibilities, set priorities and guide further investigation with quantitative research methods. However, generalization to a target population for the product will not be valid no matter how many hundreds or thousands of consumers contributed feedback to the company.

Furthermore, convenience, availability and cost should be balanced against confidentiality and protection from competition. Management can use contributions from social media to guide internal product ideation. However, the inputs would be quite unfocused, spread in different directions, sometimes at the whim of the community members. As feedback is desired on a more mature and specific product concept, the more restrictive and secured forums are preferrable (e.g., a social media website sponsored by the company and dedicated to its areas of activity). As we go down the proposed list of modes for consumer participation, fewer consumers or customers will actually be exposed to the particular product, and actually without decreasing the value and validity of the information gathered.

Conducting research among customers chosen from a customer database of the company has its advantages. These can be members of a loyalty club or a customer community on the web. Importantly, they should be consumers identified as customers prior to the research. It can be a good start to turn to existing customers compared with consumers in general, as the customers already have some level of commitment to the company, and are therefore more likely to be willing to participate and contribute. They also are likely to be more familiar with the company, its brands and products to make their expectations, suggestions and other forms of feedback more valuable and meaningful to the company. In a survey, the sample should be randomly drawn from the customer database.

On the other hand, there are limitations to customer research for which reliance on customers is insufficient. First, the so-called “inside” perspective of customers can be a drawback because they see things too much like the company, or they may be willing to please and compliment the management for their ideas. A partial solution to this pitfall could be to ensure a mixture of customers having different levels of satisfaction with and loyalty to the company and brands. Second, the preferences and expectations of existing customers may not be similar or representative of those of the target segment of consumers as a whole for the new product. If the company wishes, as is normally expected, to attract new customers with its new product, then research should be conducted among existing customers and consumers from the general public. A research program for a company developing a new product may involve an initial customer survey followed by a consumer survey. Respondents who reported they were users of a brand by the company should be compared on some key characteristics to the customer sample and the researchers should decide how to evaluate and incorporate their responses.

Various methods and techniques have been developed over the past few decades for generation ideas (e.g., brainstorming, creative workshops), measuring and modelling preferences, evaluating model designs, and not less important, setting appropriate prices for candidate products. In the next post I will refer more extensively to a particular set of methods and techniques developed and organized as a comprehensive programme by a team of researchers at MIT, namely the “Virtual Customer Initiative”.

Letting consumers participate in a process of new product development should be encouraged because it can contribute refreshing viewpoints to the product developers and it can allow the company to create a product that better fits the needs and preferences of consumers. Engaging consumers in the process can increase considerably the chances that the product developed will be useful,  beneficial, and its design will be visually appealing  to the target consumers. For that purpose it is desirable that a number of modes for participation and gathering information will be employed and the appropriate combination of them will be carefully selected.

Ron Ventura, Ph.D. (Marketing)       

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Welcome to ConsumerGateway!

The blog is still in a set-up stage.

Meanwhile you can read a little about me in the About page.

Thank you for your patience.

Ron V.

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