Linda Stegeman
Artafact LLC
http://www.artafact.com

Over time, brand leader companies have developed and refined research practices that tap the voice of their customer for answers. Every company can benefit from understanding the new product development processes that are used by these businesses that manage to thrive during tough and uncertain times. Brands that have become household names like Coca Cola, Eastman Kodak, and Motorola have stood the test of time through flat and declining industry growth by precisely targeting the market opportunity, relentless cost cutting, and successful new product introductions.

Brand leaders invest in global market research with their customers and get a return on that investment through products and brands that gain market share in flat industries. In fact, you will find entire departments dedicated to marketing research, an expense virtually unheard of and largely ignored in software and enterprise hardware companies.

There are many statistics on the validity of sharply defined market requirement documents, including the following quote from Robert G. Cooper in Winning at New Products,

Successful products have much sharper definition prior to development. Projects that have these sharp definitions are:

• 3.3 times as likely to be successful
• Have higher market share
• Are rated 7.6 out of 10.0 in terms of profitability (vs. 3.1 out of 10.0 for poorly defined projects)

The role of sharp product definition prior to commencement of a development program cannot be overstated.

Few technology companies know their markets. It is not that software and hardware companies ignore their customers; in many cases they have reams of customer input from sales, customer service and user groups that product managers sift through to develop lengthy lists of product and feature requirements. But there are some key differences in the methodology used to determine product and release drivers

How does it Work?

There is actually a term for the tough task of identifying customer drivers for complex products called appropriately, 'the fuzzy front end." Defining the "fuzzy front end" is also known as "concept engineering" by the Center for Quality Management (CQM).

The principles of defining customer requirements that lead to strong product requirements is a disciplined and targeted approach that leverages routine sources of customer information with targeted sources of information. This approach has been documented by the consulting firm, Pittiglio Rabin Todd & McGrath (PRTM)

Routine sources of customer information include customer service and sales input, data from your customer and partner website, field engineers and call centers. While this is valuable input, it is insufficient for defining winning new products because it is not targeted. In other words, it is important to actively solicit input from your target market in addition to the ?unsolicited? routine customer feedback.

PRTM summarizes the differences in data from routine and targeted sources as follows:

Getting input from your targeted customer begins by segmenting your market based on demand for your product or services. You can determine if there are meaningful groups of customers/users that have different needs, attitudes and opinions.

These differences are important in that you may have an opportunity for additional product or service offerings to meet the needs of different groups or you may want to narrow your focus to a specific group of users for maximum impact.

Secondary research (such as analyzing sales and customer service data) and primary research (qualitative interviews or focus groups) are both effective tools for understanding how to segment your market and determining how well your solution meets their needs.

Once you've zeroed in on your 'target,' the research process parallels and supports the product development process of Define, Develop, Validate and Launch.

Each step of the research process is designed to answer a series of open-ended questions that help product management move from debating alternatives to deliberate choices aimed at solving real customer problems. For example:

By answering these questions, you will have a depth of understanding around what the ?customer drivers? are for your product category. With that understanding, you can then choose how to compete to win net new business.

What You Should Expect

The range of research methodologies and costs vary considerably. Your choice of methodology should be in line with your development expenses and timeframe such that you can justify a reasonable return on your 'research? investment. But, don't confuse cost with methodology. Choose the correct methodology first and then seek out the low cost and timely alternatives.

In general, quantitative research offers a high degree of predictability and should be used to validate ideas, concepts and products when you are marketing to a mass audience with a low price point (typically consumer products). Examples of quantitative research are surveys, polling, and on-line intercepts.

Qualitative research is directional in nature and typically used for depth of understanding around high price point products with a much narrower target (typically enterprise products). Examples of qualitative research are one-to-one interviews, focus groups, and ethnographic studies.

Qualitative is often used in conjunction with quantitative research, with qualitative research providing definition around the 'fuzzy front end' of product or advertising development and quantitative providing the metrics to validate and predict with a high degree of statistical accuracy.

Evaluate on-line alternatives as a way of broadening your sample, cutting costs and providing timely input. Web based quantitative surveys, such as WebSurveyor, are very effective. You can buy software or simply go on-line for hosted web survey software. Qualitative research can now be performed online for 1-on-1 interviews and online focus groups, such as Artafact's web-based research methods.

Choose whether to host the research yourself or to commission a third party marketing research vendor. The decision to use a third party should be driven in part by your comfort level. If you are new to using research for product development, you may want to use a third party vendor to get an understanding of the techniques involved. You may also want to use a third party due to scarce resources, for the ability to hear 'unvarnished' comments from your existing customers or to tap prospects.

Once you have chosen and worked with a methodology that has demonstrated results in terms of defining direction, stick with it and continue to refine the methodology through repeated use.

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Linda Stegeman has over 20 years experience in strategy, development and marketing for products, services, and major divisions of Fortune 50 firms. Her experience evolved from brand management in packaged goods to senior officer positions for Fortune 50 technology firms to a successful B2B e-commerce startup.