New Product Development:

Key Considerations in
Market Research
By Roxanne Salen & Susan Stickling

The introduction of new products into
the market - whether new-to-the-world
innovations or product line extensions
- can be a process shadowed by great
uncertainty. This article explains how
market research can support the devel-
opment of a new product by putting the
product innovation managers in touch
with consumers’ needs and wants. Each
stage in the new product development
(NPD) process – from ideation through
the market launch – is explained with
recommended market research methods
per each step.
Background
The fail rate for new products entering
the market place is appallingly high.
With conservative estimates noting that
at least 75% of new products fail, and
more aggressive estimates placing the
fail rate as high as 92%, it becomes
obvious the market for new products is
not always easily discernible. While
new product development (NPD)
market research is not the only indica-
tor of whether the new product will fail
or succeed (in that it cannot produce a
complete picture of the market and its
nuances), conducting market research
can result in a better understanding of the
market, the product audience and target,
and any strengths and weaknesses
associated with the product itself (wheth-
er conceptually, visually or regarding
usage intent).
New product development research is
not solely limited to new-to-the-world
products; adding a line extension to a
previously existing brand is also an area
concept, market research can help
managers make better informed
decisions.
Market research can assist product
managers in taking proactive steps
towards better understanding the market
(or lack there-of) for a new product.
Conducting market research allows for
a proactive, in-depth look at how well
perceived the product will be among po-
tential consumers – and helps to reduce
the new product fail rate.
New Product Development Stages
Outlined below are typical stages that an
innovation team may go through as they
develop their new product/line extension
and the recommended research for each
stage.
1. Ideation - This stage involves
brainstorming for new product ideas.
New product ideas can come from a
Ideation
New Product
Development Stages
Idea
S creening
R efinement
Q ualitative:
F ocus G roups
1-1 Interviews
variety of sources, such as past market
research, salespeople and/or employees.
There are firms that specialize in specific
idea generating techniques to aid
businesses in this phase. Whether a
business conducts this phase in-house or
using a specialized firm, it is important to
review and utilize as many resources as
possible in order to generate a robust list
of potential ideas.
2. Idea Screening - The purpose of this
stage is to understand which product
concepts warrant further testing and/or
refinement and which ones should no
longer be pursued. The product during
this phase may be fairly developed or
may just be an overarching concept.
Although there are several types of
research methodologies that can be
employed at this phase, the majority of
them take the form of qualitative
research. Taking the form of focus
T es ting R efinement T rial
Launch

where NPD research can help form a Unders tand Qualitative:

FChanges
ocus G roups / C apture
which product C hanges / R eleas e of the
clearer picture of how well the new concepts Alterations
1-1 Interviews
to feedback to Alterations to product in
warrant further product based unders tand
product line will fare. Whether adding a tes ting and on research & demand and
product bas ed
on res earch &
limited markets
with controlled
new flavor, changing a product formula, which ones do analysis interes t levels analys is media s upport
not
developing a new line of an existing
brand, or introducing a new product

38 MRA’s Alert! Magazine - 11/09 www.mra-net.org/alert

 groups, one-on-one interviews, and/or
ethnography, qualitative research can
help to explore in-depth how well
received the product idea is. The
moderator or interviewer can help to
uncover what initial impressions
consumers may have about the product
as well as whether or not the idea makes
sense and / or fills a consumer need or
want. Qualitative discussions can also
reveal some preliminary insights into
which type of consumer segment(s) the
product may appeal to the most.
Specific questions that can be better
understood at this stage are as follows:
• Is the new product idea easily un-
derstood by customers?
• Is the product addressing an existing
unmet need?
• Which type of consumer segments
are most interested in this product?
• How can my new concept be im-
proved?
Remember that qualitative research
is an opportunity to understand initial
reactions and perceptions of a product.
Observers should try and remain
objective and flexible as respondents
share their ideas and impressions, for
gems of consumer insight - that are not
always initially obvious to product man-
agers - may surface. However, since
this stage of research usually involves
qualitative exploration, it is important to
remember that it is typically comprised
of a small and non-random sample.
Therefore, while the feedback gathered
may be valuable in forming directional
strategies for the product, it is not suited
to drawing universally applicable
conclusions.
Idea Screening can be an especially
cost-efficient way to learn early on that
a product concept is flawed so that no
more valuable resources are put towards
it.
3. Refinement - After taking into
consideration the analysis and recom-
mendations made during Idea Screening,
the product or product concept will usu-
ally be refined, tweaked and fine-tuned.
Sometimes, the product itself is fine the
way it is and just the product positioning
needs to be altered. Conversely, some-
times there is a disconnect between the
product idea and that product itself (i.e.,
the product is not delivering on the prod-
uct idea). In this latter case, the product
itself needs refinement while the concept
as a whole can remain relatively intact.
4. Testing - Once the product concept
has been fairly well configured and key
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attributes have been identified, quantita-
tive research can help to estimate interest
and demand levels for the product. For
example, choice studies can help in
understanding strengths and weaknesses
of the various product attributes, so that
the innovation team can optimize the
product’s strengths accordingly. Choice
studies help to refine your product’s most
“Remember that qualitative research is an opportunity to
understand initial reactions and perceptions of a
product.”
desired or strong characteristics through
a couple of methods:
Discrete Choice: Discrete choice is a
tool for better understanding choices that
consumers make. Discrete choice studies
present respondents with several
different products and ask them to
choose the one which is the most ap-
pealing (or some similar scale). Discrete
choice focuses on the effects of product
and market attributes (e.g., color, brand,
price, etc.) and attribute levels (e.g.,
blue, red, etc.) on buyers’ choices among
several competitive offerings. Discrete
choice helps to understand how to best
differentiate or express the product amid
competitors.
Conjoint Studies: Conjoint analysis
compares consumer preference among
multiple features inherent in a single
product or alternatives offered in a
service. Conjoint analysis aids innova-
tion managers in concentrating attention
on attributes that are seen as more ap-
pealing by the product’s audience, while
either lessening or removing attributes
that are less appealing.
Relevant questions at this stage include
the following:
• What is the optimal concept offering
(within a specified set of attributes)?
• Which combination of attributes /
services yields the highest level of
interest among target consumers?
• What price point / pricing structure
is most acceptable?
Again, it is imperative for product
managers to keep an open and flexible
view of their product, as what consumers
may find to be most appealing may not
be in line with what managers previously
believed. By giving way to consumer-led
innovation, the product becomes closer
to success by mirroring the needs and
wants of its consumer audience.
5. Refinement - After the results from
the testing phase, your product will likely
need to be refined in some way. It’s
possible that the product idea would be
cancelled or sent back to the drawing
board at this stage if the demand is too
low to warrant any future expense. If the
product will continue moving forward,
the product managers will want to use
the findings from the testing in order to
optimize on the product’s strengths and
reduce or remove any perceived weak-
nesses. The product should be carefully
refined to capitalize on the most appeal-
ing attributes and strongest concepts, as
well as be matched to its most reasonable
price point before entering a test market.
6. Trial Launch - A test launch can take
the form of quantitative research and /
or qualitative research. The quantitative
portion of a test launch involves releas-
ing your product in certain specified
markets with controlled media support.
By implementing brand and advertising
awareness research in conjunction with
your initial product launch, the product
(Continued on page 40)
MRA’s Alert! Magazine - 11/09 39
(Continued from page 39)
team can follow how awareness levels,
perceptions, and sales (via scanner data,
for example) change over a period of
time. A brand and advertising tracker
usually starts with a benchmark study,
which takes place before the test market
release of the new product. Respon-
dents in the market area are contacted
and asked to recall (on both an unaided
and aided basis) which brands and what
advertising they recall seeing / hearing.
“In-store interviews can help to gain insight into
consumer perceptions (or misconceptions) and to
understand the nature of at-the-shelf decisions.”
This also helps to establish any levels of
ghost awareness (i.e., those who think
they saw or heard about the product
before it was actually on the market), so
that changes in awareness levels can be
accurately tracked.
The following are examples of ques-
tions a brand / advertising tracker study
should answer:
• Is there any confusion between the
product and an existing, competing
product?
• Does the product stand out from
other products on the market? If so,
how?
• Is the advertising reaching the tar-
geted audience?
• Does the advertising correctly por-
tray the product?
• Do respondents have correct brand
recall of the advertising? (Is the
ad being attributed to the correct
brand?)
• Are there any misconceptions that
are arising from the ads that are
running?
• Is any type of advertising media
turning out to be more successful /
less successful than others?
Another way to follow the product’s
launch is through on-site qualitative
studies. In-store interviews can help to
gain insight into consumer perceptions
(or misconceptions) and to understand
the nature of at-the-shelf decisions. It is
important that the market research firm
has interviewers that are well trained in
on-site, in-depth interviews. While a
semi-formal questionnaire format is
usually followed, interviewers must be
40 MRA’s Alert! Magazine - 11/09
able to explore ideas as they come up
from the consumer, to try and grasp not
only the meaning of what the consumer
is saying, but to understand why the
consumer is saying it.
In-store interviews can help to answer
the following questions:
• Is the concept behind your product
understandable?
• Is the product something that con-
sumers think they need or that fits in
with their lifestyle?
• Is the expected consumer usage oc-
casion / context what was intended
by the innovation team? Or do
consumers see / find a different ap-
plication for the product?
• Does the product stand out on the
shelf?
• Does it seem to be in the correct
location in the store?
In store interviews offer not only an
opportunity to discuss the product with
consumers, but it is also sometimes
possible to let consumers try the product.
This allows researchers to witness first
hand non-verbal clues such as facial
expressions or body language, which can
often say a lot about consumer reactions
to the product.
In Conclusion
New product development is a process
engulfed by uncertainty. Market research
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Focus Groups ▪ Usability ▪ IDI’s
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helps to understand how well the new
product will fit in and fare with consum-
ers. By putting you in touch with the
voices and needs of your consumer,
market research presents consumer-led
innovation to aid in the new product’s
development and can reduce the chance
for product failure.
While market research is particularly
useful during the development of a new
product, it is applicable and helpful at
any point in a product’s lifecycle. Since
both segmented and mass psychograph-
ics are constantly shifting and evolving,
so are perceptions of existing products.
Market research can help to keep prod-
ucts relevant and competitive by
connecting product and brand
managers with the most important factor
in the product’s success: the consumer.
Resources:
Cupman, Julia, “Using Market Research
for Product Development.” www.b2in-
ternational.com.
Reisdesel, Paul, “A Comparison of
Discrete Choice Analysis with Conjoint
Analysis.” www.action-research.com.
Roxanne Salen is the project coordinator
at The Praxi Group.
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