Speech by CEO of Russian design research consultancy Lumiknows Ekaterina Khramkova at the 15th Russian largest design and advertising exhibition "Design & Advertising Industry in Russia" held at the Central House of Artist in Moscow from 15th to 18th of April, 2009.

1. 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 ::

2. 1. Why design research?
2. What is the essence of design research approach?
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3. Why
Design
Research?
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4. To understand
your customer
as deep as
possible.
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5. drivers
needs
values
Its values,
drivers,
anticipations
and needs.
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6. Its day-to-day experiences and environment.
6

7. Its Weltanschauung…
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8. So far so good…
But how about
market research?!
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9. 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
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10. Why
does it happen?!
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11. Transformation of
consumption
culture
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12. 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
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13. Traditional
«BRAND - CUSTOMER»
relationships model
is over.
BRAND
CUSTOMER
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14. Brands experience real difficulties with
1. «delivering» its messages to the customer,
«delivering»
2. «synthesizing» obtained information
into a successful product or service.
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15. 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.
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16. ABUNDANCE OF PRODUCTS
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17. ABUNDANCE OF BRANDS
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18. 3000 – Number of
advertising messages
people are exposed to per
day.
Justin Kurby & Paul Marsden,
Oxford, 2006
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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
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20. 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
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21. Now, how do you think, what is
becoming
the most
valuable
for Brand in its
relationships with
Customer?
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22. Attention.
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23. Attention
of customer
to your brand.
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24. A wealth of information
creates a poverty of
attention.
Herb Simon, 1971
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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
challenges managers”
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26. …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
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27. Very nice…
But
how to
attract an attention of
customer???
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28. Magic #1.
Осторожно. МАГИЯ…
http://www.flickr.com/photos/aknacer/2914095066/
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http://www.flickr.com/photos/aknacer/2914095066/

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

30. Brand
Loyalty
Empathy
©2009 Russian Design Research Consultancy Lumiknows
http://www.flickr.com/photos/keesssss/109284197/
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31. Advertising is about selling
stuff, but
Branding is about
creating values.
©2009 Russian Design Research Consultancy Lumiknows
http://www.flickr.com/photos/keesssss/109284197/
31

32. 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
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33. 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).
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34. 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
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35. 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.
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36. 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

37. 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

38. 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
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39. “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/
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40. “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/
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41. «Phase Zero»,
at which
customer needs are identified
and interpreted is
the most dangerous
in new product development.
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42. It is here
where the main reason behind
new products
failure
lie.
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43. 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
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44. Traditional marketing
is good at analyzing
existing market ideas,
but has problems with
generating
an innovative
product idea.
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45. If I’d ask people
what they wanted,
they would have
said a faster horse.
Henry Ford,
Beginning of the 20th c.
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46. 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.
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47. Companies have really big
difficulties
with identifying
and synthesizing
customers needs
to create a product customer
will prefer despite
an abundance
of choice.
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48. So what?..
How to
more effectively
synthesize
needs??
http://www.flickr.com/photos/jurvetson/2542450115/
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49. Magic #2.
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50. Shift from narrow
defined customer
to total human
experience.
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http://www.flickr.com/photos/aknacer/2914095066/

51. ©2009 Russian Design Research Consultancy Lumiknows 51

52. ©2009 Russian Design Research Consultancy Lumiknows 52
http://www.flickr.com/photos/dogfaceboy/1095640322/

53. Transformation of
consumption
culture
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54. 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.
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55. Transformation of
consumption
culture
and, as a result,
Fundamental changes in
designer’s competencies.
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56. http://www.flickr.com/photos/redgum/238095322/
New
expertise of
designer:
CUSTOMER understanding
DESIGN BRIEF Synthesizing
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57. http://www.flickr.com/photos/redgum/238095322/
Purpose of
design
research:
CUSTOMER understanding
DESIGN BRIEF Synthesizing
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58. 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
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59. The essence of
design
research
approach.
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60. flickr.com/photos/myklmabalay/30178916
In the special way of seeing the situation
flickr.com/photos/bacillus/2743928941/
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http://www.flickr.com/photos/mllemathilde/1428593831/

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

62. In the unique ability to work with
ill-defined information
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63. synthesizing new from chaos.
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64. 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
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65. 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.

66. The real art of discovery
consists not in finding new
lands, but in seeing with new
eyes.
Marcel Proust
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67. http://www.flickr.com/photos/kenilio/172744389/sizes/o/
You may use these ones…
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68. «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.
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69. http://www.flickr.com/photos/jo92/1659953189/
Design research
is about seeing
things seen
many times
before in a
completely
new light.
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70. In other words, to see
behind day-to-day
«usual life situations»
«of an average customer»
opportunities of creating new.
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71. What do you think this is?
©2009 Russian Design Research Consultancy Lumiknows Thoughtless Acts? Jane F. Suri, IDEO 71

72. And this?
©2009 Russian Design Research Consultancy Lumiknows Thoughtless Acts? Jane F. Suri, IDEO 72

73. Or these?
©2009 Russian Design Research Consultancy Lumiknows Thoughtless Acts? JaneJane F. Suri, IDEO
Thoughtless Acts? F. Suri, IDEO 73

74. Images from day-to-day “usual” life?
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75. 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.
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76. 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
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77. Good news..
Abundance of
opportunities.
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78. Сharles H. Duell,
The commissioner of the United States Patent
and Trademark Office :
«Everything that can be
invented has been invented».
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79. 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...
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80. 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…
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81. Laura S. Richardson, «Deconstructing Design», ITT, 2008.
81

82. 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

83. Customer
is ready to these
figures…
Is your brand
prepared to
them??
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84. 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??
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85. ©2009 Russian Design Research Consultancy Lumiknows 85

86. Is your brand ready
to not just sell
people your
product,
but create
meaningful
values for them?
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87. Thank you for your time.
©2009 Russian Design Research Consultancy Lumiknows

88. www.designresearch.ru
Dr Ekaterina Khramkova
e.khramkova@lumiknows.com
flickr.com/photos/mllemathilde/1428593831/
©2009 Russian Design Research Consultancy Lumiknows