I’ve read opinions about why you shouldn’t do market research to help you predict which of your products will succeed. My interest started with a book called Blink, by Malcolm Gladwell. He tells compelling stories of utter failures by market research firms to predict what would become successful new endeavors. Then of course, who could ignore Apple’s opinion on this matter. The very symbol of modern American innovation, Apple claims â “We do not do market research.”
But are these stories the norm? Are they rational for your business? I’ve worked in new product research on both the brand and research firm sides, with companies across many industries. I’ve observed:
- Most people do not have Steve Job’s undeniable knack for picking winners and creating the next big thing. It’s a truly remarkable and uncommon skill. At best, most of us are inconsistent at it.
- The more involved we get in our industries, the more we tend to lose that gut feel, and become blinded by internal jargon and miniscule details that consumers fail to pick up on.
- Most companies have little tolerance for financial loss. They tend to view innovation as an investment, where they often subscribe to Warren Buffet’s top two rules of investing:
- Rule 1: Don’t lose money
- Rule 2: See Rule 1
So why do some people and companies mistrust research?
There are a few logical reasons. Let’s start with Apple.
Apple has a right to be frustrated, because most new product research would systematically predict their ideas to be failures. But the problem isn’t that the research cannot predict Apple’s successes. The problem is that an entire industry is trained to look for only one type of winner â Mass Appeal offerings, characterized by 40-50% of consumers claiming they would buy. Most mass appeal ideas are in familiar categories, or are very low risk purchase decisions.
Every Apple offering we’ve tested, even the iPhone and iPad, failed to clear the mass appeal hurdle. The reality is that Apple â and this is true for many other brands too â doesn’t need to appeal to 50% of the target market. Most of our clients would be overjoyed with just 2% penetration for a new product, and some business plans would be met with 0.2%. There are different ways to succeed in the market and the research industry must broaden its search to find these hidden winners. Apple’s offerings almost always have Targeted Appeal, defined by a smaller group of consumers who are intensely interested â who definitely would buy.
Another common profile that is missed is the “Breakthrough” offering, and this takes us back to Gladwell. In Blink, Gladwell tells a story about the Aeron chair â a chair designed to be ergonomically superior, that went on to become the best selling office chair ever for Herman Miller. We’ve long since become accustom to Aeron’s ergonomic look, smaller in stature and less cushy than the former leather status symbols in every corner office. But at the time of Aeron’s introduction, it was oddly different from the norm. Gladwell details the failure of Herman Miller’s research to predict the true potential of Aeron, concluding that consumer research cannot predict the potential of unfamiliar things. If that were true for the Aeron chair, then it should also be true for DVRs, Lasik, tablets, and many of the 1,500 other new-to-the-world products and services we’ve studied over the past 25 years.
New-to-the-world ideas can be studied just like any others, but two areas are of critical importance to properly assess their potential:
- The education must mimic the real buying process. For Aeron, the research should have anticipated the salesperson’s pitch and the consumers’ initial reaction to the perceived “skeleton chair.” Even at the early research stage, marketers would have been crafting a persuasive story regarding every aspect of the chair’s appearance, materials, design, ergonomics, back support, etc. When designing research, the marketing approach needs to be discussed, and then integrated into the respondent education. If the marketing approach hasn’t been thought about by the time you’re conducting the research that should be a warning sign to the researchers. Good research must involve, at a minimum, early efforts at simulating the initial marketing messages.
- Breakthrough products have different indicators for success. Like Apple’s offerings, they are not characterized by high purchase intent. The telltale signs of a breakthrough offering are very high uniqueness and liking scores. Believability is usually low. Purchase intent is irrelevant.
If you are using research to assess new ideas, products, or services, what can you do to make sure you don’t miss an opportunity? First, start by expanding your search criteria. There is nothing wrong with searching for mass appeal ideas, but limiting your search to the obvious winners in the research turns your innovation process into the “pursuit of the ordinary.” Extraordinary ideas rarely have mass appeal. Secondly, present your ideas the way you think potential customers would learn about them in the real world. Many brands have a formula for writing concepts for research, but the formula doesn’t always work. Follow the 80/20 rule. For the 20% of your ideas that don’t qualify as “business as usual,” be willing to adjust them. Innovation is not only creative but it is also nimble. Research must be too.
SVP and GM- Technology Research