What Marketers Should Know About Design Research

What Marketers Should Know About Design Research. Dr Ekaterina Khramkova, Founder & CEO Russian Design Research Consultancy Lumiknows :: 17 April 2009, Design & Advertising Industry in Russia, Central House of Artist, Moscow ::

Its day-to-day experiences and environment. 6

Every year brings 30,000 of new products. About 90% of them fail despite thorough and expensive market research. Harvard Business Review, 2005 Marketing Malpractice ©2009 Russian Design Research Consultancy Lumiknows 9

Traditional • When brands had no «BRAND - CUSTOMER» difficulties with reaching relationships model target audiences and BRAND • Launched products which had always found its customer CUSTOMER ©2009 Russian Design Research Consultancy Lumiknows 12

Brands experience real difficulties with 1. «delivering» its messages to the customer, «delivering» 2. «synthesizing» obtained information into a successful product or service. ©2009 Russian Design Research Consultancy Lumiknows 14

Let’s talk about the first part. Brands experience real difficulties with 1. «delivering» «delivering» its messages to the customer, 2. synthesizing obtained information into a successful product or service. ©2009 Russian Design Research Consultancy Lumiknows 15

3000 – Number of advertising messages people are exposed to per day. 90% – Proportion of people who can skip TV Justin Kurby & Paul Marsden, Oxford, 2006 ads and who do skip. Justin Kurby & Paul Marsden, Oxford, 2006 ©2009 Russian Design Research Consultancy Lumiknows 19

3000 – Number of advertising messages people are exposed to per day. 90% – Proportion of people who can skip TV Justin Kurby & Paul Marsden, Oxford, 2006 ads and who do skip. Justin Kurby & Paul Marsden, Oxford, 2006 80% – Market share of video recorders with ad skipping technology in 2008. Justin Kurby & Paul Marsden, Oxford, 2006 ©2009 Russian Design Research Consultancy Lumiknows 20

…Being able to capture A wealth of information someone’s attention at the creates a poverty of right time is a very valuable attention. asset. Hal Varian, 2009 Herb Simon, 1971 Google’s Chief Economist, The McKinsey Quarterly, “Hal Varian on how the Web challenges managers” ©2009 Russian Design Research Consultancy Lumiknows 25

…Being able to capture A wealth of information someone’s attention at the creates a poverty of right time is a very valuable attention. asset. Hal Varian, 2009 Herb Simon, 1971 Google’s Chief Economist, The McKinsey Quarterly, “Hal Varian on how the Web …Real competition no longer revolves challenges managers” around market share. We are competing for attention – mind share and heart share. K. Nordstrom, J. Ridderstrale, 2002 Funky Business ©2009 Russian Design Research Consultancy Lumiknows 26

If you are in need of an honest attention of your customer …you should be honestly attentive to him. ©2009 Russian Design Research Consultancy Lumiknows 29 http://www.flickr.com/photos/aknacer/2914095066/

Management will increasingly have to be based on the assumption that neither technology nor end use is a foundation for management policy. They are limitations. The foundations have to be customer values and customer decisions on the distribution of their disposable income. Peter Drucker, Management Challenges for the 21st Century, 1999 ©2009 Russian Design Research Consultancy Lumiknows 32

Until recentrly: What technical/organization/f inancial/manufacturing possibilities for designing new product do we have? (Technology- Driven Strategy); Now: How can we empathize with our customer?/What should we design to make our new brand/product experience meaningful and exciting? (Consumer-Driven Strategy). ©2009 Russian Design Research Consultancy Lumiknows 33

You have folks marketing tomato sauce, for example, who don’t make their own spaghetti but dine at fine Italian restaurants and have not opened a jar of spaghetti sauce in their own house in years. Interview with Dev Patnaik, Author of Wired to Care: How Companies Prosper When They Create Widespread Empathy, 2009 ©2009 Russian Design Research Consultancy Lumiknows 34

Let’s talk about the second part. Brands experience real difficulties with 1. «delivering» its messages to the customer, 2. «synthesizing» obtained information into a successful product or service. ©2009 Russian Design Research Consultancy Lumiknows 35

We investigated into fourteen large companies with an annual sales volume from $500 million to $10 billion. Only four of them had managed to meet plan in terms of timing, functionality of new products and market share. Harvard Business Review, 2007 ©2009 Russian Design Research Consultancy Lumiknows In search for new generation's product. 36

We investigated into fourteen large WHAT companies with an annual sales volume from $500 million to $10 billion. CAUSED Only four of them had managed to meet plan in terms of timing, THIS? functionality of new products and market share. Harvard Business Review, 2007 ©2009 Russian Design Research Consultancy Lumiknows In search for new generation's product. 37

It turned out, every time when in an NPD process difficulties occurred, the roots of the problems could easily be found at the stage of early planning, when the company had to decide what design the new product will have. Harvard Business Review, 2007 ©2009 Russian Design Research Consultancy Lumiknows 38

“The Fuzzy Front End of Innovation” – Identifying customer needs; – Synthesizing the needs in the form of design brief. http://www.flickr.com/photos/jurvetson/2542450115/ ©2009 Russian Design Research Consultancy Lumiknows 39

“The Fuzzy Front End of Innovation” – Identifying customer needs; – Synthesizing the needs in the form of design brief. – Establishing target specifications; – Concept generation; – Concept selection and testing; – Final specifications; – Project planning; – Economic analysis; – Etc. Adapted from: Karl Ulrich, Steven Eppinger, Product Design & Development http://www.flickr.com/photos/jurvetson/2542450115/ ©2009 Russian Design Research Consultancy Lumiknows 40

The main reason behind new products failure: 24% Inadequate market analysis (i.e. analysis of customer needs); 16% Product problems of defects; 14% Lack of effective marketing effort; 10% Higher costs than anticipated; 9% Competitive strength and reaction; 8% Poor timing of introduction; 6% Technical or production problems; 13% All other causes. Robert Cooper, Winning At New Products ©2009 Russian Design Research Consultancy Lumiknows 43

If I’d ask people what they wanted, they would have said a faster horse. If you’d asked people what they wanted in a VCR, they might have eventually suggested something like “super-fast rewind”. … You Henry Ford, might set out to create the fastest- Beginning of the 20th c. rewinding VCR in the world. But just as you released your fancy new model, you would have been blown away by the arrival of the first DVD players – which, along with sporting superior image quality, sound, capacity and improved reliability, require no rewinding at all! Tom Kelley, The Ten Faces of Innovation, Beginning of the 21st c. ©2009 Russian Design Research Consultancy Lumiknows 46

Companies have really big difficulties with identifying and synthesizing customers needs to create a product customer will prefer despite an abundance of choice. ©2009 Russian Design Research Consultancy Lumiknows 47

Transformation of consumption culture 1. To control customer’s attention is getting harder – she/he manages “the marketing space” on her own; 2. Marketing has problems with The Fuzzy Front End of Innovation at which customer needs are identified and new product ideas are generated. ©2009 Russian Design Research Consultancy Lumiknows 54

Market Research Design Research Techniques Techniques Artificial setting In-context Self-reporting of behaviours Observe behaviours first hand Identifies “preferences” Identifies “user experience” Sanitized data (aspiration) Raw data (reality) Focuses on the “known” Focuses on new possibilities Closed ended questions Open ended dialogue Detached research team Integrated to design development team Bar charts & text Visual images Design in Technology program, University of Cambridge, Judge Institute of Management, 2004 ©2009 Russian Design Research Consultancy Lumiknows 58

flickr.com/photos/myklmabalay/30178916 In the special way of seeing the situation flickr.com/photos/bacillus/2743928941/ ©2009 Russian Design Research Consultancy Lumiknows 60 http://www.flickr.com/photos/mllemathilde/1428593831/

flickr.com/photos/myklmabalay/30178916 http://www.flickr.com/photos/kiolero/745968385/ flickr.com/photos/bacillus/2743928941/ through people’s eyes. ©2009 Russian Design Research Consultancy Lumiknows 61 http://www.flickr.com/photos/theloser091/2186539998/in/set-72157606514104932/ http://www.flickr.com/photos/firenzesca/2494845630/

Despite an abundance of data, most companies do a poor job of predicting the behavior of their customers. Even companies that take the greatest trouble over their predictions are correct only 55% - a result that hardly justifies the costs of having a customer relationship management system in the first place… Harvard Business Review, March 2006 ©2009 Russian Design Research Consultancy Lumiknows 64

Design research methods Laura S. Richardson «Deconstructing Design», ITT, 2008. ©2009 Russian Design Research Consultancy Lumiknows Sources: M3 Design, frog design, IDEO, Continuum, IIT, TU Delft, SmartDesign, 65 Nokia and others.

«Wow! «Panoramic View» I see this for the first time in my life!» http://www.flickr.com/photos/7539598@N04/3085177911/ http://www.flickr.com/photos/_miss_lucky_/2579436279/ But you would be better of using something like these. ©2009 Russian Design Research Consultancy Lumiknows 68

http://www.flickr.com/photos/60538638@N00/2629847447/ No, these are opportunities of creating thousands of innovative brands, products, services, based on real life customer needs. ©2009 Russian Design Research Consultancy Lumiknows 75

http://www.flickr.com/photos/60538638@N00/2629847447/ Discovery consists of seeing what everybody has seen and thinking what nobody has thought. Albert Szent-Gyorgyi ©2009 Russian Design Research Consultancy Lumiknows 76

Сharles H. Duell, The commissioner of the United States Patent and Trademark Office : «Everything that can be invented has been invented». It was said in 1899... ©2009 Russian Design Research Consultancy Lumiknows 79

If we base ourselves in technologies, - the end of innovations is really close. But if we originate in humans, – opportunities of creating new are endless… ©2009 Russian Design Research Consultancy Lumiknows 80

Laura S. Richardson, «Deconstructing Design», ITT, 2008. 81

Launching new products and services is the No.1 driver of revenue growth; By 2010, products representing more than 70 per cent of today's sales will be obsolete due to changing customer demands and competitive offerings. Deloitte Research, ©2009 Russian Design Research Consultancy Lumiknows Global Manufacturing Study 82

http://www.flickr.com/photos/aknacer/2914095066/ to Are you ready empathize with your customer? Do you have enough expertise to understand his/her total human experience?? ©2009 Russian Design Research Consultancy Lumiknows 84

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What Marketers Should Know About Design Research

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