Role of Customer Research in New Product Development - Essay Example

Evaluating the role research in new product development BY YOU YOUR SCHOOL INFO HERE HERE Evaluating the role research in new product development It has been a point of contention whether customers are capable of providing insights which assist in providing relevant products as part of new product development (NPD). Some experts argue that exhaustive research provides the foundation for building close relationships with customers and, through the insight gleaned through market research, provides the firm with valuable knowledge to create profitable products. Others, on the other hand, believe that new product development should be internalised as customers will not maintain the ability to provide valuable input for goods and services that have not yet been conceived. Based on findings, it would appear that the argument supporting intensive market research as a means of innovating new products is the most viable as consumers are the most important constituents for a firm developing products. In the new product development process, generating new ideas serves as the foundation for creating a profitable product with value for consumers (Koen, Ajamian, Burkart, Clamen, et al. 2001). In order to innovate and create a product with market potential, considering the voice of the consumer is considered a vital success factor in the NPD process (Van Kleef, Van Trijp and Luning 2005). For many firms, new products are critical and serve as the foundation for achieving growth (Pitta and Pitta 2012). Henry Ford’s launch of the first automobiles represented a disruptive innovation, a new product concept that completely displaces an established market (Christensen and Raynor 2003). In the time where Henry Ford was creating his disruptive innovation, Ford insinuated that this new product could not possibly take into consideration the opinion and needs of consumers. Ford offered that customers would have, instead, stated that they would rather have faster horses than the automobile. Hence, Ford believed that his own firm’s internal competencies superseded the relevancy and logic of consumer attitude. However, today, there is much more emphasis and significance placed on consumer needs, opinion and attitude when a firm is conceptualising new products that will be distributed in a particular market (Hoffman, Kopalle and Novak 2010; Fuchs, Prandelli and Schreier 2010). Why is this? Consumers will either reject or accept a new product depending on whether the product maintains perceived value and benefits (Schiffman and Kanuk 2010). Marketing literature regularly asserts that if a product does not maintain a perceived value for the consumer, it is likely that a firm will not find market success with the launch of a new product (Chen and Quester 2006; Pura 2005). It is further asserted that companies which maintain a market orientation, firms with a strong emphasis on understanding and servicing the needs of consumers, is a critical factor for achieving profitability and organisational performance (Renko, Carsrud and Brannback 2009; Kohli, Jaworski and Kumar 1993). Hence, with consumers maintaining the ability to reject or approve of a new product, gaining marketing intelligence about the values, lifestyles, needs and emotions of customers is critical for achieving NPD that will ultimately launch a desirable and relevant product in the minds of consumers. When companies utilise the voice of the consumer, such as conducting focus groups or customer panels, it leads to successes double that of companies that do not conduct these and other customer research strategies (Cooper 2000). Marketing recognises the legitimacy of the Symbolic Interactionism Theory, which states that people will either have a positive or negative opinion of things based on the specific meaning that the object holds for them (Fernback 2007). For example, Microsoft’s Windows operating system introduced a start button in Windows 95 which was a revolution in providing consumers with a new type of innovative convenience within this software. However, when Microsoft launched Windows 8, a new operating system version designed to be more useful for the customer, this start button was removed and the company received considerable negative consumer sentiment with many customers removing Windows 8 from their computers and returning to an older version of the software. Microsoft did not take into consideration the voice of the consumer and, instead, determined that a new format (without the start button) would facilitate more end user advantages, relying on internal technological competencies and knowledge rather than considering the needs and expectations of its consumers. Therefore, the consumer-perceived functional benefits of Windows 8 did not provide considerable opinion about value related to this new product. Whether consumers are going to be satisfied is strongly dependent on their perceived value for a product (Tam 2004). Hence, whether the consumers are actually competent and capable of providing important ideas about a new product would seem to be irrelevant. So long as the product being developed, upon launch, manages to satisfy customer needs, expectations and perceived functional benefits, there is more likelihood that the product will be embraced by the consumer. Even if the developing firm believes that the new product concept is irrelevant, it would appear that if the company remains concerned about what customers actually want, the new product constructed on consumer opinion and customer ideas will achieve market success. However, it should be recognised that market research, in all situations, will not guarantee success and the achievement of customer satisfaction. In the 1980s, Coca-Cola conducted substantial market research to test consumer reactions to its New Coke product (USC 2010). Consumers, during this research, seemed to appreciate the New Coke formula which led to its ultimate launch. However, Coca-Cola was not prepared for potent negative consumer reactions when it was announced that New Coke would replace traditional Coca-Cola (USC). In this new product development example, even though Coca-Cola gained important marketing intelligence and had tested the product in focus groups and other qualitative situations, the firm did not recognise that consumers maintained considerable loyalty and favouritism for the traditional Coke product. Therefore, it should be acknowledged that in some instances, even consumer sentiment and opinion gleaned through market research will not assure a favourable market response and profitability for the new product launched in an established market. Hence, should a firm balance its own knowledge and competencies as the primary source of ideas generation without considering the need of consumers? It would appear not. Customers dictate the profit potential for a new product based on their social needs, pride factors, reward expectations, vision of self-entitlement, and general utility expectations (Groth 1994). If a new product can potentially satisfy these (and other) motivations, there is more probability that the newly-launched product will achieve market and profit success. One can consider a hypothetical situation to illustrate the aforementioned position. A foods producer does not consider external customer opinion and attitude and launches a new beef product with a relatively high price tag that has been enhanced with a revolutionary food preservation technology that gives refrigerated meat a shelf life of seven months. The firm’s internally-driven rationale: consumers will be satisfied as this new product no longer requires freezing to maintain its freshness life cycle. However, upon purchasing this product, consumers dislike the taste of the meat and do not see the relevancy of keeping refrigerated meat for this period of time. Hence, consumers find little utility for making recurrent purchases of this innovation. In such a situation, the firm itself believed it was providing a valuable and revolutionary product whilst consumers maintained a largely unfavourable impression and attitude about the product in relation to its perceived benefits. If this hypothetical foods producer had tested the beef product and consulted with consumers, they would have likely uncovered that consumers found this concept without convenience, relevancy, or even misgivings about having to pay more to gain a longer shelf life. Consumers could have, in a focus group environment, made value judgments about this impending new launch and determine whether the beef innovation would be pertinent to fulfilling their lifestyle-related needs. Whilst Ford ultimately was successful in the long-run by launching the innovative automobile, consumer segments could very easily have maintained their loyalty toward the reliability and power of the horse and completely rejected this innovative product. Not all companies, in contemporary society, can launch an innovative product without considering consumer sentiment, needs and attitudes, and expect that a more sophisticated and powerful consumer segment will be satisfied by it. Based on all literature provided in this essay pertaining to the influence of the consumer in predicting market success for a new product launch, it would appear that customer research is critical (in most instances) to achieve a product that will be adopted and appreciated by the product’s target customers. Consumers are more in-tune with what drives their value judgments and how a product can provide benefits that satisfy their needs in relation to the developing firm. Whilst a business might have conceived a concept that the company deems as being a unique and revolutionary product borne of internal ideas generation, the potential success of this product without consulting the end customer would likely be substantially limited. 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