Companies are constantly under pressure to put out the next, best product or service. Along with that pressure comes the temptations to skip certain essential steps in the product development process. But one thing that you should never lose sight of: your customers.
Consumers are essential and can make or break the success of a product. Why be reactive, scrambling to figure out where it all went wrong, when you can proactively include consumers from the beginning of the process? This is the key to successful product development, but first, you need to understand the audience. The best way to begin product development is by starting with target market research.
Three Target Market Research Fails
Throughout history, particularly within the vertical of consumer packaged goods (CPG), there have been dozens of product failures. That in of itself is not surprising. What is a bit unsettling is that some of these failures were reported at illustrious Fortune 100 companies who had invested considerable resources into market research. Yet, their products still failed. Why? In the examples below, the lack of success can largely be attributed to generalizing an insight, which was translated into a broad goal aimed to satisfy everyone. Ultimately, nobody was happy and one can argue that the developers of these products were not specific enough in their analysis and failed to adequately target their market research.
New Coke®. The much-hyped darling-to-be of 1985. But it was not meant to be. During a campaign first launched by Pepsi in 1975, “The Pepsi Challenge”, Pepsi continued to out-perform Coke year after year in annual, national taste tests. In a market research effort fueled by competition and strong revenue growth from Pepsi®, the Coca-Cola™ Company sought to develop a cola that tasted more like Pepsi. Of course, their marketers asked their customers which flavor profile they liked better, and it wasn’t Coke. However, the question they failed to ask, because they presumably failed on the psychographic component of their target market research, was “Why do you like Coke?”. They were so myopically fixated on the notion that customers liked the taste of Pepsi better than Coke that they missed the enormous brand value, loyalty, tradition and associations that their customers had placed on the Coke brand. The backlash was swift and fierce. Customers changed teams and Pepsi sales soared. The Coca-Cola Company had to fall on the sword and return to the market with a costly launch of Classic Coke.
Amazon™ Fire Phone™. The biggest swing and a miss of 2014. Yes, customers loved their tablet and app that enabled users to readily recognize products and songs, but they didn’t love this clunky, limited feature phone which was described as “an app with a poorly designed phone built around it”. Here again, an example of market research insights revealing that customers wanted a tool to identify songs, but the lack of target market research analysis missed how customers wanted to use the phones that they already had (and liked) in order to do it. They didn’t want a new device designed around the one single feature they wanted.
Gerber® Singles. What was great for babies was not at all suitable for adults in 1974. Market research revealed an insight, new at the time, regarding consumers’ need for convenience. Mealtime prep was tedious and time-consuming, and consumers were searching for products that could reduce the time spent in the kitchen in exchange for allowing more time with family. (At that time, this concept wasn’t yet trending whereas now, it is firmly ensconced in our culture as necessity and a de facto standard requirement for new food product development efforts.) The issue? Target market research would have revealed that when it comes to food, prepping convenience was not going to be fairly traded off with poor taste. The product was a total flop – adult consumers did not want over-boiled, bland, mashed vegetable pureed food served out of baby food jar.
These examples highlight one critical aspect of market research: the trade-off between breadth and depth. Without deep target market research, which reveals how consumers think about the products they buy, how and why they buy, companies that are developing new products are at risk of missing key nuances. Specifically, what their target market is willing to trade in order to have the new product and, even more clearly, what they are not willing to trade. In a nutshell, there is an emotional driver behind nearly every product purchase – target market research taps into those psychographic and behavioral aspects to illustrate why they buy.
Target Market Research Process
Target market research needs to be thorough, well-planned and well-executed, however, it does not need to be exhaustive or expensive. Determining who your buyers or potential buyers are is the ideal starting point when executing this research. Your target market can be determined by taking an internal look at your company’s products and services and researching your company’s metrics to determine who is actually buying from you. These extensive analytics also help you understand where your buyers live and how and why they shop. After you’ve ascertained all this information, it is simply a matter of developing the product and messaging to attract the customer you have targeted based on what you have learned about them. This is the essence of target market research.
- Conduct online demographic analysis. What is the age, gender and ethnicity of your target market?
- Conduct online geographic analysis. Where does your target market live, shop and work?
- Employ surveys, research panels, focus groups and discussion boards to conduct psychographic analysis. What are the opinions of your target market, what do they value and what matters most?
- Deep dive with journaling, ethnography and other focused approaches to conducting a behavioral analysis. How do they shop, where do they shop and what activities do they do?
- Develop a persona. This is the profile of your target customer (there may be more than one persona represented in your buyers) that addresses all the questions related to what, how and why they buy. Segment is a company that offers an innovative Personas software profiling tool to help you assimilate all your target market research.
- Share your target market research analysis with others, both internally and externally. What is the reaction? Did anyone identify inconsistencies or potential causes for concern? If yes, re-examine your market insights, generate a few additional thought-provoking questions and ask people that fit within the persona that you have defined.
- Repeat. Repeat. Repeat. Perhaps not daily, weekly, monthly or even quarterly – but certainly annually as we live in an era of unprecedented social change. Ideals that people held true to last year may have already exceeded their sell-by date.
Why is target market research important? It is a required component of every business plan, sales and marketing strategy and product development effort for good reason. If you don’t know who you are selling to, how are you going to know who to advertise to and what you would do to attract them? Start by considering your target market and learn as much as you can about them. You cannot market to everyone, and it would not make sense to try. Learn what they want, what they do not want, what frustrates them and what excites them by asking them to ideate with you throughout the process. Your customers have great ideas and might even add a new perspective that you’ve never thought about before, adding an even deeper layer of understanding to the target market research you’ve done.
