When the company has managed to 'understand' the purchasing behavior of the market that it wishes to 'serve' and has chosen to establish a competitive position that gives it an advantage over potential competitors, it must adapt to the needs of that market.
This response from the company is of strategic relevance, lays the foundation for its growth and development and presents two significant challenges as a starting point.
The first of them has to do with the definition of the business to which you want to dedicate yourself, on the dimensions of the benefits to be offered to the selected markets and the technology to deliver them to you.
The second is to convert that technological solution to Products and Services, which constitute the way in which the benefits are brought to the market.
Of the three dimensions on which the business is defined, technology is the one that changes in the most dynamic way, so the product development activity is permanent and doubly risky, since it can be as critical not to develop them as to fail in their introduction.
Recognizing that products and services evolve over time leads the company to act proactively to control the implicit stages in that evolution process and answer critical questions.
How should the product change over time against the interest of customers, the actions of competitors, or economic, technological and governmental conditions? Beyond a successful launch, how long does it take until the product is 'accepted' by the public? How to minimize the risk implicit in the development of new products and services?
We must understand that a product or service is considered new when the consumer or user considers it new, not when it is new for the company that offers it, so the process of developing new products and services can be continuous, dynamic or discontinuous.
According to studies by AC Nielsen, Booz, Allen and Hamilton, and Marketing Intelligence Service Ltd., 80% to 90% of consumer products fail in the United States. This percentage is lower in those products that are new to the company or new to the market. It is greater in those that are improvements or revisions of the existing ones, the extension of a line, a new line resulting from a decrease in costs, or the repositioning of the same product.
According to the Journal of Business Strategy, companies mention among the three most important failure factors:
- Wrong strategic direction 44% The product did not fulfill what it offered 35 Wrong positioning 33 It did not offer a differential advantage 32 Poor value-to-price ratio 30 Lack of commitment from managers 29 Packaging failed to communicate 20 Results of misinterpreted studies 19 Lack of support in the channel 18 Bad brand name 15 Lack of consumer information 14
You just have to read these factors in the opposite direction, from a right strategic direction, to enough consumer information.
In general, success is achieved to the extent that significant advantages are offered to the market compared to what already exists, for which it is essential to ask whether the product or service is compatible with the needs of the consumer or user, with the strategic objectives of the company, with its ability or competence and with its resources.
From the point of view of customers, it is important to them that there is compatibility with the existing way of doing things, low complexity of use, possibility of testing, adequate visibility and communication, and social approval from their reference group.
The reasons for failure include some related to Market Research: not enough was done, or not done; it was done, but the management did not take into account the results because they did not coincide with their previously existing points of view; or was done, but the techniques used did not help to predict buying behavior.
Since the market approach starts from, precisely, understanding the market, it is worth asking how to obtain information from consumers or users? Their role is not to provide information, but to make purchasing decisions, and they are neither trained nor compelled to verbalize unmet needs or desired benefits, much less technological solutions or areas of strategic opportunity.
Market Research techniques aimed at identifying opportunities for new products or services should be focused on customers, asking them about their problems and not about their ideas for new products or services; they must be descriptive of purchasing behavior, as opposed to exploratory; they must focus on unmet needs and must be proactive, in the sense of anticipating competition, the market and technology.
The process of development of new products that most companies follow is of the Stage - gate system type, with stages such as the following:
1- Generation of ideas
2- Sieving of ideas
3- Concept development
4- Proof of concepts
5- Development of marketing strategies
6- Business analysis (sales, costs, profits)
7- Product development
8- Market test
9- Marketing: when, where, to whom, how
This bureaucratic process carries implicit internal obstacles that hinder the development of products, such as unreasonable time pressures (time-to-market); vested interests (power games); departmental objectives that prevail over strategic objectives; a feeling of corporate / business superiority; be absorbed by the process (paralysis by analysis) and a lack of decision to stop non-viable projects.
As a process it is not bad, but it is necessary to simplify it with explicit objectives, few suppliers involved and focused on customer needs; eliminate delays for the interaction between Design and Production to delay launch dates, eliminate stages or at least expedite gate-keeper approval; speed up the process by doing small group work, reducing testing periods and establishing customer partnerships; as well as working in parallel with mutually exclusive design teams, contingency facilities and timely customer service planning.
Deep down, the real problem is that companies are struggling to cut down on the time it takes to design and produce new products at the factory gate, and assume that from there the 'marketers' will make them market successes.
However, the new product development process is an eminently entrepreneurial activity and companies need to worry about the time it takes for a sufficient customer base to accept the new product or service. The key expression is not time-to-market but time-to-acceptance.
And that period of time decreases as potential customers are taken into account as soon as possible and marketing, design and production activities are integrated as part of an eminently business process.
