Market research has a purpose for every stage in a product lifecycle, as can be seen in the diagram above. From recognizing and establishing needs, to testing products and improving their performance, to identifying its place in the near and distant future, market research is the most crucial component in solidifying an approach to product development.
Companies apply significant portions of their budget to research:
- Electronics companies average an R&D budget that matches about 15% of their sales because of the quickly changing nature of the market.
- A majority of companies spend between 2% and 5% of sales on R&D, such as Honda, Siemens, or Boeing.
- More than 90% of all product innovations that are truly successful actually start as a failure and are considered happy accidents, such as Velcro, Post It Notes, the telephone, and x-rays.
Examples of Successful Product Development Due to Market Research
Implementing a standard process when planning product development is something a lot of companies do. Of course, there are a lot of variations, but most of them rely on an 8-step process:
The 8-Step Product Testing Process
- IDEA CONCEPTS
Offers insights about consumers and what product features they need. Includes secondary research to pinpoint consumer trends. One of the main objectives of the research from a primary research standpoint is to provide insights into any gaps in existing product offerings or to identify unfulfilled customer needs. - IDEA TESTING AND DEVELOPMENT
Offers insights about consumers and what product features they need. Includes secondary research to pinpoint consumer trends. One of the main objectives of the research from a primary research standpoint is to provide insights into any gaps in existing product offerings or to identify unfulfilled customer needs.
- BUSINESS ANALYSIS
The potential business implications of releasing a new product is determined via the analyzation of competitive market space, branding, production expenses, marketing, and pricing.
- PRODUCT DEVELOPMENT
Market Researching teams need to remain very involved in this stage to keep products aligned with the consumer insights that created a foundation for the idea. - TEST MARKETING
Includes marketing, effectiveness research, tracking research, and product satisfaction research using any number of methods like basic surveys or QR codes on mobile devices. - COMMERCIALIZATION, MONITORING, EVALUATION
Tracking marketing effectiveness and customer satisfaction are very much needed. Analysis of the result is dependent on the questionnaire layout, sample quality, and reporting.
