Huge failure rate of products shows it is vital to have right kind of research
People vary so widely it can be difficult to identify who exactly a business owner wants to talk to
Perfect pick: pursuing or applying innovation without the right information or in the wrong direction is next to useless
Getting marketing right is crucial for any company. Pursuing or applying innovation without the right information or, worse, in the wrong direction is next to useless both to business owners and their customers.
Although the vast majority of Irish businesses conduct research into their market or product, the difference between the right kind of research and any figures at all can be momentous.
In 2011, 95 per cent of newly-launched US products failed; last year upward of 80 per cent of Irish products were thrown by the wayside in their first year.
This huge rate of failed products is not only evidence of how difficult it is to succeed in any market, but is also a reminder of how vital the right kind of research is.
The advantage of running a small business is that owners, once they realise that a change needs to be implemented – be it to their marketing strategy or product innovation – can do so quickly without much disruption or confusion.
Conversely, obtaining new data can be a challenge as business owners tend to be experts in their particular product or field, without as much knowledge of how to ask questions which will yield results that reflect their product’s market accurately.
Hire a milkshakeHenry Ford
The theory is based on an exercise carried out by Christiansen’s team. It relates to the real-life example of a fast-food chain that was struggling to improve sales of its milkshakes despite conducting intensive research with would-be customers.
When Christensen and his team got involved they left to one side the standard assessment of market demographics on which previous marketing advisers had relied. Instead, one of the team sat in the restaurant for 18 hours, monitoring and noting in detail customer behaviour.
They noticed that 50 per cent of the milkshakes sales occurred before 8am, were bought by individual business people and were the only product bought by those customers.
Working off the theory that every product is bought or “hired” to do a specific task, the surveyor returned the next day to ask customers exiting the restaurant about their purchase – what they “hired” a milkshake to do. They discovered that the milkshake was the perfect commuting companion: its compact packaging keeps suits clean and required only one hand, leaving the other free for driving. And the shakes’ thick texture entertained drivers during their long, monotonous commute, as well as satisfying appetites until lunch.
To this end the fast-food chain was able to market the milkshake as a breakfast item: identifying other breakfast bits as competitors, as opposed to ice cream or fizzy drinks. It also allowed innovation in the right direction; instead of introducing new flavours, they made the drink thicker and introduced fruit chunks to make the drink last longer and the work-commute more interesting.
Implementation of theory
Although acknowledging that your market is made up of individuals can offer a fresh approach, people vary in so many ways that it can get confusing to identify who exactly you’re talking to.
“The customer isn’t always who you think they are,” says David Fanning, director of Business & Analytics, who has experience in conducting SME-focused research.
“Often business owners tend to think in terms of ‘we’ve got this product, how do we sell it’, rather than thinking of it from the consumer’s side and the consumers need. And there’s a huge amount of businesses that are suffering because of it.”
With two-thirds of Irish consumers looking for products that make their lives simpler, and 72 per cent likely to research a product before making a purchasing decision, consumers are demanding more of companies and expect more from their products.
“Acknowledging the human nature of the market is how invaluable insight is realised for companies that may think they have exhausted all options.
Convert the right questions into the right figuresSmurfit Business SchoolJohn Fanning
“Research can cost a huge amount, but there are affordable ways of getting the information you need. Bord Bia’s Brand Forum for food producers, and Enterprise Ireland for everyone else, have very good names for helping businesses, and also offer subsidies in the area of research, as well as having a bank of knowledge that can be of use to small businesses.
“Apart from that, there are free tools like SurveyMonkey that aren’t always reliable but do give you a feel for what your customers want.”
There are several milkshake shops in Ireland – all opening long after 8am. A revised look at your research approach into what people want could lead you to the very heart of your marker, or your next spark of genius.