New Product Marketing: A new view on Market Research....Learning to run real research!

Bryan Cassady Guest Professor, Bryan@fast-bridge.com
KU Leuven Master Class: New Product Marketing
3/11 Rethinking Market Research
A new view on Market Research
Learning to run real research

About this course
It is a sad fact that most new businesses, products and service fail. Some
estimate the failure rate is as high as 90%. This course is about why products
fail and what you can do to increase your odds of success.
This lecture is a part of series of 12 lectures. In my classes I use a lot of
videos. If you’d like to see the presentations with videos, go to:
http://www.fast-bridge.net/resources/new-product-marketing/
I hope in the pages that follow you will find new ideas and inspiration… If
you’d like to download the whole class go to:
http://www.slideshare.net/bryancassady2/2009-course-new-product-
management-by-bryan-cassady
If you have ideas on ways to improve this course or would like help with your
new products, I’d love to here from you…
Bryan Cassady
bryan@fast-bridge.com
+32-475-860-757

A less-than-optimal "configuration" of product or
service attributes and benefits is selected.
Lack of a strong sustainable position in the
market
Marketers fall in love with a product no one else
loves
The marketing plan for the new product or
service is not well implemented in the real
world.
Marketers assess the marketing climate
inadequately.
The plan is too complicated
A failure to ask the right questions and a belief
that everything is a big idea
No Support to get things done
A questionable pricing strategy is implemented. A weak positioning strategy is used.
Cannibalization underestimated
The advertising campaign generates an
insufficient level of new product/new service
awareness.
Over-optimism about the marketing plan leads
to a forecast that cannot be sustained in the real
world.
Too focused on the internal game not enough
on the market
The Lemming effect

1000
40
1000
30
1000
20
1000
10
5,000

Paradigms = models, patterns the basic way of
perceiving, thinking valuing
A dominant paradigm is seldom if ever stated explicitly;
it exists unquestioned… transferred through culture
and unspoken business practices
William Harmon-
An incomplete guide to the future

Hot summers
Warm winters
Evidence of
global warming
Cold summers
Cold winters
Evidence of
global warming

I will see it when I believe it
vs.
I will believe it when I see it
Too much research is the first type

 We often do research to check our
brilliant ideas
 SUGGING (Selling under the guise
of market research)
Issues
 Objective criteria in place before
the research starts
 Is 35% planned purchase good or
bad
 Clearly define your biases before
you start
 Focus on insight (vs. confirmation)
 Do regular reality checks
Solutions

“The formulation of the problem is often more essential
than its solution”
Albert Einstein

Research that Produces Customer Insights
Based on a lecture by M. Sawney
(Northwestern University)

A good product manager
 Builds, Shares, and uses insights
Chris Start
P&G

Example
“The consumer isn’t a moron. She is your wife.”
David Ogilvy
“We don’t sell cosmetics, we sell hope”
Revlon

today’s
business

Offering
(WHAT)
Process
(HOW)
Presence
(WHERE)
Customers
(WHO)
1
4 2
3
Networking
Brand
Supply Chain
Organization Value Capture
Customer Experience
Platform
Solution

Offering
(WHAT)
Process
(HOW)
Presence
(WHERE)
Customers
(WHO)
Networking
Brand
Supply Chain
Value Capture
Customer Experience
Platform
Solution
Organization

Offering
(WHAT)
Process
(HOW)
Presence
(WHERE)
Customers
(WHO)
Networking
Brand
Supply Chain
Value Capture
Customer Experience
Platform
Solution
Organization
One place all
The info
Answers in
30 minutes

Using observation to formulate an
idea or theory. “Qualitative” or
“Interpretative” research draws on
inductive reasoning.
Sheba cats are part of the family
Inductive Reasoning
Taking a known idea or theory and
applying it to a situation (often with
the intention of testing whether it is
true). “Quantitative” or “positivist”
research draws on deductive
reasoning.
Sheba buyers are 240% more
likely to buy pet magazines
Deductive Reasoning

Qualitative Research Quantitative Research
Also Known As interpretative / responsive positivist / deductive
Type of Reasoning (usually) inductive (usually) deductive
Objective Generate insights that
lead to hypotheses
Validate insights by testing
hypotheses
Outcomes Illuminate a situation to create
deeper understanding and
insights
Accept or reject a proposed
theory, or get specific answers
to well - defined questions
Methods Qualitative, eclectic Quantitative, rigorous
Approach to Validity truth seen as subjective and
socially constructed
truth seen as objective and
universal

New understanding that is actionable
and competitively unique
Interpretation of the research
findings
Consider carefully the
research objectives.
Data Analysis and Data
Reduction
Traditionally, marketing
researchers and research
agencies stop here

Of most value because offers new
ways of looking at markets that lead to
competitive advantage
Summarizes the implications of the
research for the business
Selected information that is of interest,
but lacking in implications
Informs the business about a market,
but no indication of relative importance
of different pieces of information
Of little value because it is usually
difficult to understand and interpret on
its own.

Inductive, Qualitative,
Exploratory Research
that Produces Insights
Deductive, Quantitative,
Confirmatory Research
that Validates Insights

New Products
focus…
Proactive,
Episodic
Reactive,
Routine
Validation
Research
Exploratory
Research

Customer
insights
Ideas from
Innovative
Customers and
Partners
Patterns in
Customer
Transaction Data
Observation of
Customer Behavior
in Native
Surrounding
Anomalies and
Discrepancies
Metaphors and
Analogies
Introspection,
Intuition and
Brainstorming

Top Management
Product
Development
Legal and
corporative
affairs
Corporate
Marketing
Market
Research
Product
Marketing

Worst practices Best practices

Source : McKinsey
Finance &
Accounting
Marketing
Information
Service
Human
Resources
Market
Research
How useful is the information?Not very
1 2 3 4 5
very

How do you think the insight was developed ?

His conclusion… the idiots errors
cancelled each other out

“Bringing new members into the organization, even if they’re
less experienced and less capable, actually makes the group
smarter simply because what little the new members do know
is not redundant with what everyone else knows.”
(p.31)

Alpha Group
138
132 135
139
135
137
Diverse Group
121 84 111
75 135 31

“Most of the time” the diverse group outperforms the
group of the best by a substantial margin.
See Lu Hong and Scott Page Proceedings of the
National Academy of Sciences (2002)

Alpha Group
ABD
ADE BCD
ABC
BCD
ACD
Diverse Group
AHK FD AEG
EZ BCD IL

collective intelligence increases as the “herd mentality”
decreases and the people in the group express what they
genuinely think rather than going along with whatever
everyone else is saying.
“The more influence a group’s members exert on each other,
and the more personal contact they have with each other, the
less likely it is that the group’s decisions will be wise ones.”
(p.42)

Decentralization means everyone in the crowd will try their own
approach to the problem rather than having their efforts
directed from the top down.

Mon Tue Wed

Brad: (8-8)2
+(10-12)2
+(10-9)2
= 5
Matt: (10-8)2
+(12-12)2
+(8-9)2
= 5
Crowd: (9-8)2
+(11-12)2
+(9-9)2
= 2

(Brad-Crowd)2
= 1 + 1 + 1 = 3
(Matt-Crowd)2
= 1 + 1 + 1 = 3

Implication: Diversity can trump skill

“If a group satisfies those conditions [diversity, independence,
decentralization, aggregation] , its judgement is likely to be
accurate. Why? At heart, the answer rests on a mathematical
truism. If you ask a large enough group of diverse, independent
people to make a prediction or estimate a probability, and then
average those estimates, the errors each of them makes in
coming up with an answer will cancel themselves out. Each
person’s guess, you might say, has two components:
information and error. Subtract the error, and you’re left with
the information.”
– James Surowiecki

Armstrong’s seer-sucker theory…
no matter how much evidence exists than seers do not
exist, suckers will pay for the existence of seers…

Why do we believe in seers…
because we get fooled by randomness…
because we are looking back not looking forwards..

Why not just hire an expert…
Because, groups usually do better than experts

Conclusions
Cheap crowds ≈ Expensive research
Greater descrimination between ideas
New Product
Concept
Monadic Test
With matched samples of 100
in the target market
(Top 2 Box Purchase Intent)
Research Market 1*
With diverse group of 500
people- *betting
(Top 2 Box Purchase Intent)
Significant
Differences
A 85 86
B 83 82
C 81 90 +
D 78 91 **
E 74 69
UK Norms (top 2 box) 67 67
F 64 24 ***
G 64 22 ***
H 54 53
I 49 39 ***
J 43 17
Respondent Base Sizes: Monadic = 100 per cell / Research Market *Betting =502
Fig. 1, Top Two Box Purchase Intention Result – Research Market 1*

“The best collective decisions are the product of
disagreement and contest, not consensus or
compromise.”
(p.xix)
“The best way for a group to be smart is for each
person in it to think and act as independently as
possible.”
(p.xix)

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