Case Study: Incorporating Focus Group Research Into the Product Development Process

Getting the corner office to buy into and approve market research can be tough, especially when measuring ROI for market research is difficult. With today's tight budgets, every expenditure request requires a good justification. The best way to secure buy-in is to tie the market research to an organizational priority and relevant business objective.

This might include research to define new products, to identify ways to improve customer service, to determine buying requirements and so on.

Research related to new products is especially important. For most business-to-business companies, new products are essential to survival. According to a late 1990s study by Abbie Griffin, new products account for 32 percent of a company's sales. Profits from new products account for almost one-third of the bottom line. The fast rate of technology enhancements often makes existing products quickly obsolete.

And for many BTB companies, innovation is a critical ingredient to achieve and/or maintain leadership. While thousands of new products are developed annually, only a few succeed. A Booz-Allen Hamilton study on new product management found that for every seven new product ideas, about four enter the development, 1 1/2 are launched and only one succeeds. Good research can help ensure that your new product is one that succeeds.

This article recommends five steps to help you get more out of your research investments and help secure easier and faster budget approval. A project for Motion Computing that used qualitative research to determine key product attributes illustrates how to put these ideas to work for you. For background, here is a quick review of the project.

Formed in 2001, Motion Computing focuses on ultra-mobile computing and wireless communications. The company integrates world-class technologies into the latest mobile-enabled technologies to adapt to the way people work, so people don't have to compromise their work styles to accommodate a machine. Motion Computing is dedicated to driving innovation based on the market and customer needs. As a result, current products were designed based on direct market input.

Motion Computing's product development efforts generally include exploring market reactions, perceptions and preferences for several key aspects associated with a next generation platform. Though the company has product and marketing expertise internally, members of the product and marketing teams use a third party to provide some important benefits in terms of objectivity, process and analysis.

The purpose of the research is to provide truly material information that lets the organization make key product decisions in regard to the product platform and capabilities. As with any technology product, mistakes are costly, not only in terms of actual product costs, but also in terms of market acceptance and time-to-revenue.

Our recommended approach for these efforts is to deploy qualitative research methodologies using both focus group and in-depth interviews conducted by telephone and using Web technology. In general, this approach provides good guidance regarding market requirements and yields key information about existing products, company reputation, market perception and customer satisfaction.

Key outcomes of this type of research must be being able to discern the most important attributes for a new product, as well as the tradeoffs between these attributes, plus insight into how and where the user tends to use the product and their needs. The process used in this case study can be employed by any firm wanting to validate its product development efforts.

Using a collaborative process, VisionEdge Marketing guided the research effort employing the following five steps to ensure Motion Computing's product validation efforts paid off.

1. Clear objectives. Any good research must have a clear set of objectives. In the case of Motion Computing, the objective of the research was to secure key facts needed to make important business decisions about feature sets and functionality priorities. Before conducting any research, it helps to answer two primary questions.

The first question was, “As a result of this research, what will we know?” The second question was, “As a result of this research, what business decisions will we be able to make?” The outcome of this step is to ensure the research will yield “need to know” information that is actionable.

This step is critical because it serves as the foundation for selecting research participants and the development of the discussion guide and survey instrument. The participant profile and the questions incorporated into the discussion guide were determined by clarifying the key objectives:

· What key business decisions were going to be made from our learning?

· What did a specific type of user need from the next generation platform?

2. Well-defined scope. Because it can be hard to secure buy-in for research, it is not atypical for marketers to try to pack everything they ever wanted to learn into what may be the only research study they will be able to deploy during the year. We advise to avoid loading too many objectives into a single research project.

Because companies have so few opportunities to conduct research, it's common that when the opportunity presents itself, they want to ask every question they've ever wanted an answer to. For example, it's typical when we start working with a company that it wants to cover every question from market plans to various revenue breakouts, key purchasing attributes and so on.

Though it may seem more cost-effective to conduct one very large study that answers a host of questions, this approach actually can reduce the overall effectiveness of the research, raise the costs of completing the survey and potentially make the instrument too long, thus reducing the number of completes.

You'll have greater success if you craft smaller studies to target specific issues. Build on your successes. If the research pays off, the management team will be more receptive to additional research efforts.

A key factor of success in the Motion Computing example was having a very specific scope of the study to address several key design and technology decisions for a particular product. The discussion guide and the additional handout completed by each participant kept the research focused. This will require collaboration between the company and research firm so everyone inside the company is clear about the research purpose and desired outcomes.

3. Use research to avoid costly mistakes. Good research helps an organization avoid costly mistakes. Developing a new product or service and bringing it to market is generally one of the largest investments an organization makes. Research on new products suggests that solid, upfront homework boosts new product success rates by 43.2 percent. Yet in a survey of companies by Cooper and Kleinschmidt, only 7 percent of the money and 16 percent of the work effort goes into this step. Other big investments include major changes to tech support or customer service processes. Mistakes in these areas not only are costly, they can result in major setbacks.

The window to bring a new product to market for most BTB companies is very narrow, and few BTB companies can afford more than one product failure. Research is a good way to gather insight before making an extensive investment only to find out later the decisions weren't the right ones. Though the research may appear to cause delay, the exact opposite is true. Products that hit the mark are more likely to achieve faster time to revenue because they are better developed to fit the needs of the target market.

Identifying and recruiting the right participants and developing and asking the right questions are the two most important components to ensure the information learned will facilitate the decision-making process. For this type of work, we always recommend testing any instrument before using it and using the same discussion leader for the entire project. The survey instrument was designed collaboratively and tested.

For the project we did with Motion Computing, we included an additional handout component to collect written responses to key questions, which gave participants both an opportunity to respond to questions and put their responses in writing. This approach provided a particularly useful way to gather and compare key input for several aspects of the product concept. For these types of projects, record the focus groups and individual interviews to help ensure accuracy and also to provide context.

Lastly, it is important to have the needed props for any discussion. If the purpose is to test features and functionality of a new product, then models with options need to be created and available for participants to experience. How someone reacts to something drawn on paper may not be the same way they react to a product they hold in their hands. For a company such as Motion Computing where size, shape and weight are being tested, we used models that accurately represented these options.

4. Make the research count. Many marketers find themselves relegated to sales support rather than leading the charge to improve the company's competitive advantage and market position. Research can provide valuable data points to demonstrate the effect of marketing efforts on business initiatives. The best way to assess your impact and spot changes is to conduct before-and-after studies, benchmarking studies and tracking studies.

5. Use the research results. It is somewhat baffling to hear companies invest their time and money to conduct research and then ignore the results. It is important to reconcile what you believe and what you learn from the research. Setting aside the results merely because they don't sync up with the company's assumptions and instincts probably isn't the best course of action.

Uncovering issues and identifying unmet needs is a core component of marketing. The purpose of conducting research is to let us make recommendations with a degree of confidence rather than “rubber-stamping” what we think we already know.

In the case of one Motion Computing project, the company held an opinion regarding the location of the batteries. In one model, the battery location looked aesthetically more pleasing over another. The research participants provided insight into why the alternative approach would be more suitable.

Is the effort worth it? In 1995, R.G. Cooper and E.J. Kleinschmidt conducted research that showed 50 percent of successful products achieve a 33 percent or better return on investment, have a payback period of two years or less and achieve a market share exceeding 35 percent. Most any BTB company would consider these great results.

Conducting research to define and refine new products is not effortless. To yield results from product research, you need management commitment, a well-defined set of objectives, a process to ensure that all efforts are linked to your business objectives, a culture that fosters innovation and a high-quality systematic process for evaluating new products prior to commercialization.

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