The Role of Lead Users in New Product Development - Essay Example

THE ROLE OF LEAD USERS IN NEW PRODUCT DEVELOPMENT This essay on new products development dwells on one major issue which is the role of lead users in the rolling out process of new products into the market. This is because of the fact that when a particular existing product begins to near the end of its life cycle, if is very important that IT should either be revitalized or new products manufactured to take its place. This is so that the company does not loose its customers to competitors and thereby maintain its relevance in the market place. An attempt will be made to critically analyze the role of lead users in the development of new products. This essay shall seek to answer questions like: are lead users effective in the production and marketing of a new product? Are there disadvantages in this approach to marketing? Are there alternatives to this approach? Etc. Without doubt, given the dynamic environment within which the marketing activity is carried out, there is no gain saying the fact that product innovation occupy a very prime position in the quest to maintain relevance in the market of a modern economy. Lead users maybe defined as a sample population of a manufacturers intended market, who get to use a new product before it is actually launched in the market and name generally available to every would be user. A very important indicator of the health of a company is its customer satisfaction index. This all important indicator can be known only after a thorough market analysis, which can be achieved when the lead users approach is adopted. The ultimate aim in the mind of manufacturers is to make sales and by extensions make profit considering that more sales is a strong indicator of a company’s performance at any given time. Lead users aid market research because it results in systematic gathering, recording and analysis of every data concerning the response of the consumers to the new product. These are the potential customer base of the company and how they react is an indicator of market tendencies and effective business plans can then be created by the manufacturers. The most likely portion of the population to patronize the products are exposed via this approach to market analysis. Further revelations likely to be discovered are probable fine tuning of the product, location of where would-be customers are found, gender, age of people favourably disposed to product and income level factors etc. market research via this method is quite accurate to a large extent in the sense that the consumer here, practically has a voice with which he can influence the decisions of the manufacturing company simply by reacting naturally to the test products. It helps show the characteristics of the target market and also answer such questions related to competitors, market trends, customers need and product rating etc. lead user approach is employed in verifying if indeed there is a market for an idea developed by manufacturer and because the outcome could either mean that growth and success await actual product launch or signal a back-to-drawing-board time. This obviously reduces the risks because of the availability of data and feedback from the customers as represented by the lead users. Vehicle manufacturers are among those who employ this method in their market research. At a very early stage product downsides are discovered and improved upon. A simple example of what market research via lead users can have on a business can be seen in the following: MTN communications, Ltd a south African-Based GSM company won a Bid to roll-out GSM services in a particular country and to effectively achieve this aim the initial approach by the company was to get lead users who tested the quality and coverage of their services for a given period of time. The result of this was that they improved in areas were lapses were discovered and rolled out general services only when a satisfactory level of success had been attained IDEAS, PRODUCT OPPORTUNITIES DEVELOPMENT DROP PRODUCT TESTING PRODUCT BY LEAD USERS LAUNCH PRODUCT PRODUCT MODIFICATION IF NECESSARY STAGES INVOLVED IN THE DEVELOPMENT OF A NEW PRODUCT In the Diagram above a simplified scenario of the processes involved in the development of a new product is depicted. It starts first with an idea of the product and the problems it is meant to solve, from there samples of the intended products are developed and passed on to the lead users for test running. There are two possibilities at this junction either the product is discarded for its non-viability or it is modified where necessary and launched into the market. Inferences can therefore be made about why this method of marketing was developed, going by the analysis made so far it gives the product developers a first–hand information about what reaction they should expect from the generality of their customers if and when the product is released into the market. This gives them the opportunity to make adjustments where necessary or simply abandon the project where there seem to be no bright prospect. Does all of this mean that there are so no alternatives to the lead users approach? The answer to this question is a certain no as there exits other methods by means of which the market can be analysed. Some of the methods include: 1. personal interview 2. the telephone interview 3. the postal survey 4. the focus group 5. the panel 1. Personal interview: in this form of interview a direct contact and communication exists between the researcher and the respondent because it is done in a face to face situation usually following a format guideline in the form of a questionnaire. Response from the respondent are collated at the end of the whole exercise and analysed .the drawback in this kind of method is that the number of interview per day is restricted since time could be lost in the process of identifying the right respondents. 2) The telephone interview: This is one more method of market analysis done over the telephone questions are asked and the respondents give their responses about the products in question. The respondents and the researcher can carry out this activity in a more relaxed mood however not everyone may have access to a telephone line certain important class of customers may not be able to make contributions in this regard thereby narrowing the results of the form of interview. 3) The Postal Survey: like the name implies is an interview done via the post Box. Letters in the form of questionnaires are sent out to the participant to complete and return also via post to the agency or manufacturer of the product being tested, its own drawback is however lies in the reluctance with which the questionnaires may be treated. Not everyone will be favourably disposed to answering them, talk less of returning them. 4) The Focus Group: This kind of interview type is of great importance in the process of gathering information regarding the market. It is actually more of a qualitative research in which a group of people are asked questions in an interactive session about their attitudes towards a product. The drawback here is the fact that individual opinion may pale into insignificance under group influence thereby making it unsuitable for some kind of market research. 5) The Panel: This appears to be a little different from the others in the sense that a group of people are selected for a part of an on-going interview panel and are contacted from time to time to give their opinions about products. Different kinds of panels exist such as the consumer purchase panel with the assignment to report regularly about buying patterns, purchase intentions and the attitude of consumers towards products. It is not the aim of this essay to exonerate the lead user approach from its own deficiencies but to shed light on them and suggestions made. Limitations that might be encountered in this method includes: 1. Available budget for the product testing campaign. 2. Allocated time for a standard lead user test and the time available for the test. 3. Accuracy of obtained results, there is no guarantees of a 100% result. 4. The geographical spread of the lead users campaign. Different situations might obtain in different geographical location etc It is therefore obvious from these facts that the lead user approach, though advantageous still has its own short comings. In conclusion this Essay has critically analysied the roles of lead users in the development of new products as a very important tool in market analysis given that it helps the product developers to get first hand information about their intended customers. Nevertheless it is suggested that this method be carried our along sides the other afore-mentioned methods to ensure that no part of the important market population is overlooked. REFERENCES 1. Arinze, B “Market planning with computer models: a case study in the software industry”. Industrial marketing management volume 19, issue 2 (May 1990). 2. Cornish, S.L. “Product innovation and the spatial dynamic of market intelligence: Does proximity to markets matter? Economic Geography volume 73, issue 2 (Apart 1997). 3. Davis R.E. (1993) Experience: The role of market research in the development of new consumer products. Journal of product innovation management volume: 10. 4. Mullins, J.W. (1998) New Product development in rapidly changing market: an exploratory study-journal of product innovation management volume: 15. 5. Berry T (2004): Hurdle: The book on business planning millennium Edition, Eugene, OR: Palo Alto software. 6. Burns, A.C. Bush, RF(2001) Marketing research, London: Prentice-Hall. Read More