Market Research for Innovation

Market research for the purpose of innovation is a unique type of market research. Innovation, at its simplest level, is a two-step process in which companies must first conduct market research to identify opportunities in a market – that is to discover which jobs and outcomes are underserved in the eyes of the customer – and then devise solutions that address them. There are three reasons why traditional new product market research methods make it near impossible to surface these opportunities for value creation.

First, companies typically obtain the wrong customer inputs, an incomplete set of inputs, or a mix of inputs because they are unaware of what constitutes a good input. They typically gather a mix of solutions, specifications, high-level need statements, benefits statements, must haves, exciters, latent needs, and so on. Market research for innovation requires that companies understand the jobs customers are trying to get done and the outcomes they use to measure the successful execution of a job. To succeed here, market researchers must know what the structure, content and format of job and outcomes statements must be before they can be captured.

Second, because of the way questionnaires are typically structured and administered, market researchers often limit the number of attributes they test in a survey to about 30 when 50 to 150 statements often need to be evaluated. This means that up to 80 percent of the attributes, some of them undoubtedly important, are cut out of the survey prematurely. Who makes that decision, and how? Using a unique questionnaire structure, companies are able to test 150 to 250 statements in a way that is effective and convenient to the respondents. Hundreds of new product market research studies have been conducted using this format with great success.

Third, when conducting market research for innovation, companies often use scaling methods such as paired comparison and forced choice to get customers to make trade-offs between attributes, a practice that is totally inappropriate when trying to find opportunities for value creation. Making trade-offs at this stage of the process is premature and indicates that companies are unknowingly using a mix of input types in the survey to be tested (a very common occurrence), more than likely some of them being solution statements. Trade-offs should only be made when devising solutions to address the underserved jobs and outcomes, not when figuring out which are underserved. A simple change of scaling methods can alleviate this problem altogether.

Outcome-Driven Market Research

Outcome-driven market research methods have been created specifically for the purpose of innovation. They ensure the right inputs are used to begin with, enable the prioritization of up to 250 customer inputs, employ optimal scaling methods, and use the opportunity algorithm to determine where the greatest opportunities for value creation exist. These new product market research methods enable companies to uncover hidden market opportunities – a prerequisite for innovation.

Imagine if everyone in the company knew all the customer’s needs and knew with certainty which were unmet. Gaining agreement on this across a company would have a dramatic impact on the organization and its ability to innovate.