Work your plan         

Editor’s note: Laura Patterson is president and co-founder of VisionEdge Marketing, Inc., Austin, Texas.

Getting the corner office to buy into and approve market research can be tough going, especially when measuring ROI for market research is difficult. With today’s tight budgets, every expenditure request requires a good justification. The best way to secure buy-in is to tie the market research to an organizational priority and relevant business objective. This might include research to define new products, to identify ways to improve customer service, to determine buying requirements, and so on.

Research related to new products is especially important. For most business-to-business (b-t-b) companies, new products are essential to survival. According to a late-1990s study by Abbie Griffin, new products account for about 32 percent of a company’s sales. Profits from new products account for almost one third of the bottom line. The fast rate of technology enhancements can often make existing products quickly obsolete. And for many b-t-b companies, innovation is a critical ingredient for achieving and/or maintaining leadership. While thousands of new products are developed annually only a few succeed. In fact, a Booz Allen Hamilton study on new product management found that for every seven new product ideas, about four enter development, one-and-a-half are launched, and only one succeeds. Good research can help ensure that your new product is one that succeeds.

This article recommends five steps to help you get more out of your research investments and help secure easier and faster budget approval. A project for our client Motion Computing that used qualitative research to determine key product attributes illustrates how to put these ideas to work for you.

Formed in 2001, Motion Computing, Austin , Texas , focuses on ultra-mobile computing and wireless communications. The company integrates world-class technologies into the latest mobile-enabled technologies to adapt to the way people work - so people don’t have to compromise their work styles to accommodate a machine.

Motion Computing is dedicated to driving innovation based on the market and customers’ needs. As a result, current products were designed based on direct market input. Motion Computing’s product development efforts generally include exploring market reactions, perceptions and preferences for several key aspects associated with a next generation platform. While the company has product and marketing expertise internally, members of the product and marketing teams use a third party to provide some important benefits in terms of objectivity, process and analysis.

Key decisions

In general, the purpose of the research was to provide truly material information that enabled the organization to make key decisions in regard to the product platform and capabilities. As with any technology product, mistakes are costly, not only in terms of actual product costs, but in market acceptance and time-to-revenue. Our recommended approach for these efforts was to deploy qualitative research methodologies using both focus group and in-depth interviews conducted by phone and using Web technology. This approach provides good guidance regarding market requirements and yields key information about existing products, company reputation, market perception and customer satisfaction.

Key outcomes of this type of research include being able to discern the most important attributes for a new product, as well as the trade-offs between these attributes, plus insight into how and where the customers tend to use the product, and their other product needs. The process used in this case study can be employed by any firm wanting to validate its product development efforts.

Using a collaborative process, VisionEdge Marketing guided the research effort employing the following five steps to ensure Motion Computing’s product validation efforts paid off.

1. Clear objectives.

Any good research must have a clear set of objectives. In the case of Motion Computing, the objective was to secure key facts needed to make important business decisions about feature sets and functionality priorities. Before conducting any research, it helps to answer two primary questions. The first question is, “As a result of this research, what will we know?” The second question is, “As a result of this research, what business decisions will we be able to make?” The outcome of this step is to ensure the research will yield “need to know” information that is actionable.

This step is critical because it serves as the foundation for selecting research participants and the development of the discussion guide and survey instrument.

2. Well-defined scope.

Because it can be hard to secure buy-in for research, it is not atypical for marketers to try and pack everything they ever wanted to learn into what may be the only research study they will be able to deploy during the year. We advise against this.

Because companies have so few opportunities to conduct research, the urge to overload is common. For example, it’s typical when we start working with a company that they want to cover every question, from market plans to various revenue breakouts, key purchasing attributes, and so on. While it may seem more cost-effective to conduct one very large study that answers a host of questions, this approach can actually reduce the overall effectiveness of the research, raise the costs of completing the survey, and potentially make the instrument too long, thus reducing the number of completes.

You’ll have greater success if you craft smaller studies to target specific issues. Build on your successes. If the research pays off, the management team will be more receptive to additional research efforts.

A key factor of success in the Motion Computing example was having a very specific scope of the study to address several key design and technology decisions for a particular product. The discussion guide and the additional handout completed by each participant kept the research focused. This requires a lot of collaboration between the company and research firm so that everyone inside the company is clear about the research purpose and desired outcomes.

3. Use research to avoid costly mistakes.

Good research helps an organization avoid costly mistakes. Developing a new product or service and bringing it to market is generally one of the largest investments an organization makes. Research on new products suggests that solid upfront homework drives up new product success rates by 43.2 percent. Yet in a survey of companies by Cooper and Kleinschmidt, only 7 percent of the money and 16 percent of the work effort goes into this step. Other big investments include major changes to tech support or customer service processes. Mistakes in these areas are not only costly, they can also result in major setbacks. The window to bring a new product to market for most b-t-b companies is very narrow and few such firms can afford more than one product failure. Research is a good way to gather insight before making an extensive investment only to find out later the decisions weren’t the right ones. While the research may appear to cause delay, the exact opposite is actually true. Products that hit the mark are more likely to achieve faster time-to-revenue because they are better developed to fit the needs of the target market.

Identifying and recruiting the right participants and developing and asking the right questions are the two most important components to ensure the information learned will facilitate the decision-making process. For this type of work, we always recommend testing any instrument prior to using it and using the same discussion leader for the entire project.

In the Motion Computing project, the survey instrument was designed collaboratively and tested. We included an additional handout component to collect written responses to key questions, which let participants respond to questions and put their responses in writing. This approach provided a particularly useful way to gather and compare key input for several aspects of the product concept. For these types of projects, record the focus groups and individual interviews to help ensure accuracy and provide context.

Lastly, it is important to have the needed props for any discussion. If the purpose is to test feature and functionality of a new product, then models with options need to be created and be available for participants to experience. How someone reacts to something drawn on paper may not be the same way they react to a product they actually hold in their hands. For a company such as Motion Computing where size, shape and weight are being tested, we used models that accurately represented these options.

4. Make the research count.

Many marketers are finding themselves relegated to sales support rather than leading the charge to improve the company’s competitive advantage and market position. Research can provide valuable data points to demonstrate the impact of marketing efforts on business initiatives. The best way to assess your impact and spot changes is to conduct before-and-after studies, benchmarking studies and tracking studies.

5. Use the research results.

It is somewhat baffling to hear that companies invest their time and money to conduct research and then ignore the results. It is important to reconcile what you believe with what you learn from the research. Setting aside the results merely because they don’t sync up with your company’s assumptions and instincts isn’t the best course of action.

Uncovering issues and identifying unmet needs is a core component of marketing. The purpose of conducting research is to enable us to make recommendations with a degree of confidence rather than rubber-stamping what we think we already know. In an example from a Motion Computing project, the company held an opinion regarding the location of the batteries. In one model, the battery looked aesthetically more pleasing in one location than another and the research participants provided insight into why the alternative approach would be more suitable.

Worth it?

As you can see from the example used in this article, conducting research to define and refine new products is not effortless. To yield results from your product research undertakings, you will need management commitment, a well-defined set of objectives, a process to ensure that all efforts are linked to your business objectives, a culture that fosters innovation, and a high-quality systematic process for evaluating new products prior to commercialization.

Is the effort worth it? In 1995, R.G. Cooper and E.J. Kleinschmidt conducted research showing that 50 percent of successful products achieve a 33 percent or better return on investment, have a payback period of two years or less, and achieve a market share in excess of 35 percent. For most any b-t-b company, these would be considered great results.