Market research is an integral step in a successful business development effort, whether you are part of a start-up, launching a new product or rebranding your business. When you skip out on market research, you miss valuable opportunities that will help your business in the long run. Successful business owners know their markets, understand their competitors’ and customers’ wants and needs, and gather all the information necessary for their businesses to be competitive. They know why people buy their products and services, not just when or where. Neglecting to do market research can result in indecision and inaction, fear of risk or the truth, and/or too many options which can lead to paralysis.
Not every product is for every person. When launching a new product, effective market research will help you narrow down your true market potential and your most-likely customers. The more specific your survey questions are, the better you will be able to position your new product or service for sales success. Timing of new product introductions is also critical. When a business waits too long to take advantage of a marketplace opportunity, it can lead to missing out on the opportunity altogether. Trends and consumer’s needs are ever-changing, and when a business is indecisive because of lack of knowledge about audience preferences, you may miss the boat!
Sometimes businesses skip the market research step because they simply do not know what to look for, or they don’t know what’s missing from their thought process. Having a list of burning questions that you want or need answers to is a good starting point instead of blindly researching your industry with the hope of stumbling across something useful.
Here are some classic cases of products that failed due to lack of market research:
1. Toothpaste producer Colgate released frozen dinners in 1982. It was difficult for the company to carry brand association over from oral hygiene to frozen food products. The brand extension simply didn’t translate and reminds us of this important lesson: do not ask customers to radically shift their understanding of your brand.
2. In 2006, Microsoft released the Zune, a portable media player that was supposed to be a director competitor to Apple’s iPod. Despite millions of dollars in investment, the Zune was discontinued in 2011 due to a lack of differentiation from the iPod and poor marketing segmentation. Former Microsoft executive Robbie Bach commented on the failed product, saying that the marketing tactics just gave no good reason for customers to buy the Zune over the iPod.
3. Pepsi released a new product called Crystal Pepsi in the mid-1990’s when clear beverages were trending. While Pepsi saw the rising trend in crystal clear products, it missed the mark on how its market would respond. People were confused. Is it water? Is it lemon-lime? People were accustomed to cola drinks being brown and clear drinks tasting light and crisp.
4. After the release of the widely successful movie Avatar, companies like LG and Sony released 3D televisions with the hopes of gaining the same type of traction and profit as
the famous 3D movie. What they didn’t take into consideration was that most people didn’t want to view all of their content in 3D format. Both companies have since discontinued the manufacturing of 3D TVs.
5. Kodak lost its competitive advantage beginning in 1975 when it failed to introduce digital cameras because it was so focused on its current products and the goal of selling film for its cameras. By not recognizing market needs, Kodak missed a prime opportunity, and ultimately lost $10 billion in revenue between 1996 and 2011.
These examples demonstrate that solid market research can make or break a new product release or a new initiative. Companies like Apple utilize their “Apple Customer Pulse” research to gather customer feedback via online surveys that allow it to adjust software features prior to new product introductions.
Another example of effectively gathering customer insight comes from Wayfair. They created an app that allows customers to take photos of furniture and home items they see and like in their daily lives. Wayfair then shows them similar products on their website that they manufacture and sell. This app not only allows customers to find products they like (and buy them!), but it also guides Wayfair in identifying and responding to trends.
Market research is not an optional add-on to your business. It is a necessity. Effective market research also needs to be ongoing, and the most successful businesses are always adjusting their strategies based on that research.