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Keywords
Market research, Innovation, New product development
Abstract
Market research results frequently produce negative reactions to discontinuous new products (innovative products) that later become profitable for the innovating company. Famous examples such as the fax machine, the VCR and James Dyson's bagless vacuum cleaner are often cited to support this view. Despite this, companies continue to seek the views of consumers on their new product ideas. The debate about the use of market research in the development of new products is longstanding and controversial. This paper reviews the literature in this area and examines the extent to which market research is justified and whether companies should sometimes ignore their customers. The paper offers a conceptual framework that may help companies to decide when market research findings may be helpful and when they may hinder the development of discontinuous new products.
1. Introduction
In his award winning "business book of the year" [1] Clayton Christensen (1997) investigated why well run companies that were admired by many failed to stay on top of their industry. His research showed that in the cases of well managed firms such as Digital, IBM, Apple and Xerox, "good management" was the most powerful reason why they failed to remain market leaders (sic). It was precisely because these firms listened to their customers and provided more and better products of the sort they wanted that they lost their position of leadership. He argues that there are times when it is right not to listen to customers. Recent research by Ovans (1998) supports this claim. He suggests that purchase-intention surveys are not effective predicators of sales of new products. The research revealed that people are not generally reliable predictors of their own long-term purchasing behaviour. The type of question used and whether or not the question is placed in context greatly affects the reliability of such market research. James Dyson has good reason to be suspicious of the role of market research in new product development. Not only did he struggle for many years to get anyone in the UK to believe it was worth manufacturing his bagless vacuum cleaner, he faced the same scepticism when he launched in the USA (Thrift, 1997).
Many industry analysts and business consultants...