new product marketing: a new view on market research....learning to run real research!

Bryan Cassady Guest Professor, [email protected]

KU Leuven Master Class: New Product Marketing3/11 Rethinking Market Research

A new view on Market Research

Learning to run real research


About this courseIt is a sad fact that most new businesses, products and service fail. Some estimate the failure rate is as high as 90%. This course is about why products fail and what you can do to increase your odds of success.

This lecture is a part of series of 12 lectures. In my classes I use a lot of videos. If you’d like to see the presentations with videos, go to: http://www.fast-bridge.net/resources/new-product-marketing/

I hope in the pages that follow you will find new ideas and inspiration… If you’d like to download the whole class go to: http://www.slideshare.net/bryancassady2/2009-course-new-product-management-by-bryan-cassady

If you have ideas on ways to improve this course or would like help with your new products, I’d love to here from you…

Bryan Cassady [email protected] +32-475-860-757

http://www.fast-bridge.net/resources/new-product-marketing/

http://www.slideshare.net/bryancassady2/2009-course-new-product-management-by-bryan-cassady


A less-than-optimal "configuration" of product or service attributes and benefits is selected.

Lack of a strong sustainable position in the market

Marketers fall in love with a product no one else loves

The marketing plan for the new product or service is not well implemented in the real world.

Marketers assess the marketing climate inadequately.

The plan is too complicated

A failure to ask the right questions and a belief that everything is a big idea

No Support to get things done

A questionable pricing strategy is implemented. A weak positioning strategy is used.

Cannibalization underestimatedThe advertising campaign generates an insufficient level of new product/new service awareness.

Over-optimism about the marketing plan leads to a forecast that cannot be sustained in the real world.

Too focused on the internal game not enough on the market

The Lemming effect


1000

40

1000

30

1000

20

1000

10

5,000


Paradigms = models, patterns the basic way of perceiving, thinking valuing

A dominant paradigm is seldom if ever stated explicitly; it exists unquestioned… transferred through culture

and unspoken business practices

William Harmon-An incomplete guide to the future


Hot summersWarm winters

Evidence of global warming

Cold summersCold winters

Evidence of global warming


I will see it when I believe itvs.

I will believe it when I see it

Too much research is the first type


We often do research to check our brilliant ideas

SUGGING (Selling under the guise of market research)

Issues

Objective criteria in place beforethe research starts

Is 35% planned purchase good or bad

Clearly define your biases before you start

Focus on insight (vs. confirmation)

Do regular reality checks

Solutions


“The formulation of the problem is often more essential than its solution”

Albert Einstein


Research that Produces Customer Insights

Based on a lecture by M. Sawney(Northwestern University)


A good product manager

Builds, Shares, and uses insights

Chris Start P&G


Example

“The consumer isn’t a moron. She is your wife.”

David Ogilvy

“We don’t sell cosmetics, we sell hope”

Revlon


today’s business


Offering (WHAT)

Process (HOW)

Presence (WHERE)

Customers (WHO)

1

4 2

3

Networking

Brand

Supply Chain

Organization Value Capture

Customer Experience

Platform

Solution


Offering (WHAT)

Process (HOW)

Presence (WHERE)

Customers (WHO)

Networking

Brand

Supply Chain

Value Capture

Customer Experience

Platform

Solution

Organization


Offering (WHAT)

Process (HOW)

Presence (WHERE)

Customers (WHO)

Networking

Brand

Supply Chain

Value Capture

Customer Experience

Platform

Solution

Organization

One place all The info

Answers in 30 minutes


Using observation to formulate an idea or theory. “Qualitative” or “Interpretative” research draws on inductive reasoning.

Sheba cats are part of the family

Inductive Reasoning

Taking a known idea or theory and applying it to a situation (often with the intention of testing whether it is true). “Quantitative” or “positivist” research draws on deductive reasoning.

Sheba buyers are 240% more likely to buy pet magazines

Deductive Reasoning


Qualitative Research Quantitative Research

Also Known As interpretative / responsive positivist / deductive

Type of Reasoning (usually) inductive (usually) deductive

Objective Generate insights that lead to hypotheses

Validate insights by testing hypotheses

Outcomes Illuminate a situation to create deeper understanding and insights

Accept or reject a proposed theory, or get specific answers to well - defined questions

Methods Qualitative, eclectic Quantitative, rigorous

Approach to Validity truth seen as subjective and socially constructed

truth seen as objective and universal


New understanding that is actionable and competitively unique

Interpretation of the research findings

Consider carefully the research objectives.

Data Analysis and Data Reduction

Traditionally, marketing researchers and research

agencies stop here


Of most value because offers new ways of looking at markets that lead to

competitive advantage

Summarizes the implications of the research for the business

Selected information that is of interest, but lacking in implications

Informs the business about a market, but no indication of relative importance

of different pieces of information

Of little value because it is usually difficult to understand and interpret on

its own.


Inductive, Qualitative, Exploratory Research

that Produces Insights

Deductive, Quantitative, Confirmatory Research that Validates Insights


New Products focus…

Proactive, Episodic

Reactive, Routine

Validation Research

Exploratory Research


Customer insights

Ideas from Innovative

Customers and Partners

Patterns in Customer

Transaction Data

Observation of Customer Behavior

in Native Surrounding

Anomalies and Discrepancies

Metaphors and Analogies

Introspection, Intuition and Brainstorming


Top Management

Product Development

Legal and corporative

affairs

Corporate Marketing

Market Research Product

Marketing


Worst practices Best practices


Source : McKinsey

Finance &Accounting

Marketing

InformationService

HumanResources

MarketResearch

How useful is the information?Not very1 2 3 4 5

very


How do you think the insight was developed ?


His conclusion… the idiots errors cancelled each other out


“Bringing new members into the organization, even if they’re less experienced and less capable, actually makes the group smarter simply because what little the new members do know is not redundant with what everyone else knows.”

(p.31)


Alpha Group

138

132 135

139

135

137

Diverse Group

121 84 111

75 135 31


“Most of the time” the diverse group outperforms the group of the best by a substantial margin.

See Lu Hong and Scott Page Proceedings of the National Academy of Sciences (2002)


Alpha Group

ABD

ADE BCD

ABC

BCD

ACD

Diverse Group

AHK FD AEG

EZ BCD IL


collective intelligence increases as the “herd mentality” decreases and the people in the group express what they genuinely think rather than going along with whatever everyone else is saying.

“The more influence a group’s members exert on each other, and the more personal contact they have with each other, the less likely it is that the group’s decisions will be wise ones.”

(p.42)


Decentralization means everyone in the crowd will try their own approach to the problem rather than having their efforts

directed from the top down.


Mon Tue Wed


Brad: (8-8)2 +(10-12)2 +(10-9)2 = 5

Matt: (10-8)2 +(12-12)2 +(8-9)2 = 5

Crowd: (9-8)2 +(11-12)2 +(9-9)2 = 2


(Brad-Crowd)2 = 1 + 1 + 1 = 3

(Matt-Crowd)2 = 1 + 1 + 1 = 3


Implication: Diversity can trump skill


“If a group satisfies those conditions [diversity, independence, decentralization, aggregation] , its judgement is likely to be accurate. Why? At heart, the answer rests on a mathematical truism. If you ask a large enough group of diverse, independent people to make a prediction or estimate a probability, and then average those estimates, the errors each of them makes in coming up with an answer will cancel themselves out. Each person’s guess, you might say, has two components: information and error. Subtract the error, and you’re left with the information.”

– James Surowiecki


Armstrong’s seer-sucker theory…no matter how much evidence exists than seers do not

exist, suckers will pay for the existence of seers…


Why do we believe in seers…

because we get fooled by randomness…

because we are looking back not looking forwards..


Why not just hire an expert…

Because, groups usually do better than experts

ConclusionsCheap crowds ≈ Expensive researchGreater descrimination between ideas

New Product Concept

Monadic TestWith matched samples of 100

in the target market(Top 2 Box Purchase Intent)

Research Market 1*

With diverse group of 500 people- *betting

(Top 2 Box Purchase Intent)

SignificantDifferences

A 85 86

B 83 82

C 81 90 +

D 78 91 **

E 74 69

UK Norms (top 2 box) 67 67

F 64 24 ***

G 64 22 ***

H 54 53

I 49 39 ***

J 43 17

Respondent Base Sizes: Monadic = 100 per cell / Research Market *Betting =502

Fig. 1, Top Two Box Purchase Intention Result – Research Market 1*


“The best collective decisions are the product of disagreement and contest, not consensus or compromise.”

(p.xix)

“The best way for a group to be smart is for each person in it to think and act as independently as possible.”

(p.xix)

new product marketing: a new view on market research....learning to run real research!

Marketing

youbryan cassady

new ideas

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