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Case Study – how market research supports the new product development process

Market research is the process by which businesses find out about customers’ needs, wants and desires. It makes possible the successful development of new products.

This study shows how an international company, Beiersdorf, combines market research with new product development on its NIVEA Deodorant brand to provide exciting new products that better meet consumer requirements.

Beiersdorf has a clear goal – to be as close as possible to consumers, regardless of which country they live in. Developing superior consumer insights is fundamental to the continued future success of Beiersdorf and its international brands like NIVEA, Eucerin and Atrixo. These are the result of more than 120 years of experience in research and development.

Beiersdorf has launched many new brands and products into a variety of countries and categories. Being an innovation leader has allowed Beiersdorf actively to shape its markets and set new trends. These product launches have led to long-term global growth.

THE KEY STAGES OF MARKET RESEARCH AND NEW PRODUCT DEVELOPMENT

Market research involves the systematic gathering, recording and analyzing of data about customers, competitors and the market. This links marketers to consumers by supplying essential information to solve marketing challenges and help with marketing decisions.

Market research helps a company create and develop an up-to-date and relevant portfolio of products.

Creating new products

Beiersdorf’s international Market Research team is based at company headquarters in Hamburg, Germany. The team’s objective is to be the voice of the consumers within the organisation. High-quality market research has helped secure the long-term future of the business. Analysing and understanding the data gathered on consumers’ behaviours, needs, attitudes and opinions minimises the risks involved in making marketing decisions.

Market research in a global organisation needs the help and support of the company’s overseas affiliate companies. Most affiliate companies (in the UK for example) have dedicated Market Research Managers. how the npd prosses worksThey help the central research team in gathering and interpreting consumer views. These views provide information or insights that ultimately result in the development of new products suitable for a global market.

This case study follows the development of a new NIVEA Deodorant called Pearl and Beauty aimed at young women. This case study will give you a clear picture of how market research has helped New Product Development (NPD).

IDENTIFYING CONSUMER VIEWS AND PRODUCT NEEDS – WHERE TO START?

Market research should start with the consumer and serves two purposes:

1) To inform companies about consumer needs and desires. What are the trends in the market? What do consumers want?

2) To give consumers the opportunity to talk to the providers of products and services so that their views are taken into account.

questions that need answering

Businesses exist in a fast-moving world with increased consumer choice. It is essential that a company knows its market and its consumers before developing any new product. Lots of questions need answering.

Consumer insights drive New Product Development. This information takes into account their behaviours, attitudes and beliefs. It is an expression of their wishes and desires. Businesses use consumer insights to create opportunities for their brands. It is the starting point that enables brands to fit meaningfully into consumers’ lives.

Across countries, consumers are different in terms of culture and lifestyle. NIVEA’s challenge was to find similar insights from consumers across different countries. This was used to optimize product development.

Secondary research

In the deodorant category, NIVEA used many secondary research sources to discover consumers’ views and their need for deodorants. These related to different markets and were supplied by local country market researchers. These included:

i. A consumer Usage and Attitude study. This had been conducted a few years earlier across various markets (UK, France and USA).

ii. An external study by Fragrance Houses. This covered the importance of scent and fragrance to people’s well-being and mood.

Primary research

The research team felt therefore there was not enough recent knowledge about the consumer in the secondary research. They commissioned some primary qualitative research in key markets (Germany, France, UK and USA). This was aided by the local Market Research Manager. The aim was to understand the motivations for using deodorant amongst the female consumer.

Primary research is used when there is no existing data available to answer your questions.

The research involved small discussion groups of females. This helped researchers understand the beliefs and motivations of this group. There were several main findings:

  • There is steady growth in females shaving. They wanted to look after their underarms throughout all seasons (not just in summer).
  • Women cared increasingly about the condition of their underarms.
  • Women desired attractive, neat underarms. This symbolised sensuality and femininity.
  • The deodorant segment remained focused on functional rather than beautifying products.

Results of the research

The market research revealed an unexplored market potential for NIVEA Deodorant. The brand did not have a specific product that addressed ‘underarm beauty’ for the female consumer. No direct competitor was offering a product to meet these needs. So there was a clear opportunity to develop a new product. This would fit across different markets and with the current NIVEA Deodorant range.

TURNING CUSTOMERS INSIGHTS INTO PRODUCT CONCEPTS

Consumers showed a need for a ‘beautifying, caring deodorant’. The team generated ideas on how to address the consumer need.

From these ideas the marketing team created ‘product concepts’. These describe the product benefits and how they will meet the consumer needs. Several concepts were written in different ways. These explained and expressed unique product attributes.

The company needed to know which concept was preferred by prospective consumers. It carried out market research to test whether the concepts would work. The research was conducted amongst the desired target market. For Pearl and Beauty, the desired target market was 18-35 year-old women who were beauty-orientated, followed fashion and looked for products with extra benefits.

Quantitative research on the concept was carried out in two test markets (France and Germany). An international company like Beiersdorf must test products in more than one market to assess properly the global appeal.

The concepts were tested monadically. Monadic testing means that the respondent of the test is only shown one concept. This stops the respondent being biased by seeing many variations of the same product concept.

A number of criteria were used to test the concepts:

1) Deodorant category performance measures. These included wetness, dryness, and fragrance. The new concept must deliver generic core benefits.

2) Product attributes specific to the new product and NIVEA core values. The new Pearl and Beauty product has additional benefits to a ‘regular’ deodorant. For example, it leaves your skin feeling silky and gives you beautiful underarms. Consumers needed to understand and see these benefits.

3) The product needed to be relevant and motivate a consumer to purchase it.

The team chose the ‘winning’ concept. This best conveyed beauty while remaining relevant to the deodorant category and NIVEA brand.

Next the research team tested various name ideas for the product and developed different designs for the packaging. Packaging design plays a very important role in helping to communicate the image of the product. Pearl and Beauty needed to communicate femininity and sophistication. Pink was a natural colour choice for the packaging. They also used a soft pearlescent container to emphasise the ‘pearl extracts’ in the product.

Various design ideas were tested using quantitative market research. In addition, this helped to predict the volume of the new products that would be sold, the optimal selling price and the level of switching from existing NIVEA Deodorant and competitor products.

TESTING THE PRODUCT, BRAND POSITION AND ADVERTISING

Testing

The stages described so far produced a product concept that consumers felt was relevant and which they were willing to buy. The next stage was to test the product on actual customers. Many product launches fail, despite great advertising. A big reason is because the product fails to live up to the promises made.

The Market Research Team conducted a product usage test. A de-branded sample of the proposed new product was given to the target consumer of females in several countries. De-branded means the deodorant was in a blank container so that the consumers did not know who made the product or what type it was. Very often consumers form opinions about products and services from advertising and packaging. This can sometimes be very strong and creates a bias in what they think of a product before trying it.

The consumers were asked to use the new deodorant for a week. They kept a diary of when they used it and scored the performance of the deodorant against a list of criteria. These included:

  • Did it keep you dry all day?
  • Did you have to reapply it?
  • Did you like the fragrance?
  • Did it last all day?
  • Was the deodorant reliable?

Consumers applied the ‘de-branded’ deodorant under their right armpit and continued to use their current deodorant under their left armpit. This helped the users gauge if it was as good as or better than the brand they normally used. This gave a measure of how likely the consumer would be to swap brands.

The results of the test were very positive. Most consumers loved the fragrance and the feel of the product on their skin. They felt it performed as well as their current deodorant. Most said they would swap their brands after trying the product.

Brand positioning

Now the marketing team had a new product idea that consumers liked. It had a name and packaging design that were well received. They now needed to check how this fitted with the rest of the NIVEA Deodorant brand positioning and range.

The brand position is the specific niche in the market that the brand defines itself as occupying.

The NIVEA Deodorant Pearl and Beauty adds a touch of feminine sophistication and elegance to the NIVEA Deodorant brand’s personality. This built on the core deodorant positioning. It made NIVEA Deodorant more appealing, modern and unique to trendy, young female consumers.

Using qualitative research to inform advertising

The next stage was to brief an advertising agency to develop communication to support the launch of the new product. Through market research the team could check whether the advertisements positively supported and communicated the new product.

The company conducted qualitative research on some advertising ideas amongst various groups of the target consumers. It presented ideas in the form of ‘storyboards’ of what a TV advert could look like. The objective was to evaluate which were the best ideas in terms of:

  • Did they stand out as exciting or different?
  • Were they relevant to the consumer?
  • Did they communicate the right things about the new product?
  • Did they persuade the consumer to want to purchase the product?

Evaluating success

Once the product is launched and the consumer can actually purchase it, the research process does not stop.

Continuous consumer tracking can be carried out to find out consumers’ views of the new product. This involves interviewing people every day to find out whether they are using the product, what they think of it and why they would purchase it.

Beiersdorf uses other, secondary data sources such as consumer panel data and EPOS (electronic point of sale) data. These monitor the sales effectiveness of the product throughout the launch phase and through the product life cycle.

CONCLUSION

New product development should start with an insight based on consumer needs.

Throughout the NPD process, market research is a valuable tool for Beiersdorf to check viability and minimise the risk of the product launches.

Being an international company, it is essential that Beiersdorf develops new products using the insights of consumers across markets and cultures. This ensures the products are relevant to a large number of global consumers and will deliver the maximum return when launched.

This maximises return on investment for the company and results in happy, satisfied and loyal consumers


Source: thetimes100.co.uk

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How to Conduct Qualitative Market Research

A variety of techniques from online chats to video logs can reveal how people feel about your product or service and how you can improve it to make more money.

Everett Collection

As seen in Mad Men, fifty years ago, research was collected by having a one-way mirror installed and adverting guys would be on the receiving end. The homemaker would host the meeting with a group of women who would talk about soap or some other consumer product.

Visualize. Just as you head off to work you get a text message asking if you’ve had a cup of coffee. You reply “no.” About 20 minutes later you receive another text asking “did you have your coffee yet?” You reply “yes” this time. Now you receive a series of texts about when and where did you buy the coffee—a corner store Starbucks or company cafeteria. What brand or flavor did you choose—regular or Hazelnut? Why did you choose it? How do you feel now that you’ve had that first cup? Will you have had a second or third cup come lunchtime? Later in the week when you’re at the local grocer, you take out your cell phone to take a picture of the one pound of ground French Roast coffee you just purchased so you can post it online.

Welcome to the brave new world of qualitative research where companies can catch or capture their customers’ behaviors in the moment using modern technology. It could be a single person doing online journaling or a video log about a product or issue, a moderator directing conversations in an online chat room, or webcam gathering of people in Hollywood Squares game show-like fashion.

It’s a different spin on the traditional focus group. Social media is playing a bigger role. “We are even monitoring whole online communities; we have a targeted representative find out what selected individuals are saying in their social networks,” says Peg Moulton-Abbott, a certified professional research consultant and principal of Newfound Insights, a Virginia Beach-based market research firm. Such tech-oriented research is generally skewed towards a younger twenty-something demographic. But more importantly it speaks to how market researchers are sprouting new methods of qualitative study as an outgrowth of old techniques.

Comparatively speaking, fifty years ago qualitative research was done in a big city likeNew York or Washington, DC with focus groups conducted inside women’s homes, notes Moulton-Abbott. A one-way mirror was installed and adverting guys would be on the receiving end, she explains. The homemaker would host the meeting with a group of women who would talk about soap or some other consumer product.

According to the Qualitative Research Consultants Association, qualitative research can help business owners identify customer needs, clarify marketing messages, generate ideas for improvements of a product, extend a line or brand, and/or gain perspective on how a product fits into a customer’s lifestyle.

Any size and type of business can benefit from qualitative market research, says Moulton-Abbott. However, “my job is not to make a sales pitch for your product; my job is to find out how people feel about your product and what you can do to improve it so that you wind up making more money selling it,” she adds.

Qualitative research can help entrepreneurs to understand their customers’ or clients’ feelings, values, and perceptions of a particular product or service. Once you know the reason “why” people react a certain way or make certain decisions, you can use that feedback to help build your sales and marketing plan, says Moulton-Abbott.

The design and implementation of qualitative research will depend on your particular situation, says Robert E. Stake, PhD, author of Qualitative Research: Studying How Things Work and director for the center of instructional research as the University of Illinois. “The means are different in different situations. It’s what you are interested in that defines qualitative research,” he adds. “It isn’t the style of data gathering, it is whether or not you are interested in the experiences of your customers or clients.”

Business owners won’t have to wrack their brains over how to conduct the nitty-gritty aspects of market research if a professional is hired. But here are some general guidelines and what to expect on how qualitative research is handled.

How to Conduct Qualitative Market Research: Determine What You Want to Study

Do you want to investigate a current or potential product, service or brand positioning? Do your want to identify strengths and weaknesses in products? Understand purchasing decisions? Study reactions to advertising or marketing campaigns? Assess the usability of a website or other interactive services? Understand perceptions about the company, brand and product? Explore reactions to packaging and design?

Qualitative (qual) research is usually contrasted against Quantitative (quant) research. Quant asks closed-ended questions that can be answered finitely by either “yes” or “no,” true or false or multiple choice with an option for “other.” It is used to collect numerical data, employing such techniques as surveys. Whereas, qual asks open-ended questions that are phrased in such a way that invite people to tell their stories in their own words. Methods used to collect data include field observations, personal interviews and group discussions.

The job of a qual researcher is to design and deliver data that drives results.

How to Conduct Qualitative Market Research: Understand What Methodology will be Used

Typically qual researchers don’t use experimental methods such as field trials or test markets, Stake maintains. “Not many use really highly-developed psychometric (e.g., personality or psychological tests) or econometric (e.g., economic statistics) indicators.” Qual researchers generally rely on methodologies rooted in ethnography (e.g. field or participant observation) and phenomenology (e.g., understanding life experiences using written or recorded narratives). Market researchers partner with professional recruiters to identify and screen qualifying customers or consumers who in turn receive an honorarium for their participation in the study.

You should rely on a market research firm to choose the best fit for you based on: what is it that you need to learn and who is your target audience demographically, where they are geographically, and what are their lifestyle behaviors or time constraints, says Kristin Schwitzer, president of Beacon Research, a qual firm that specializes in innovative online methods, based in AnnapolisMaryland.

Conducting qualitative research is about asking the right people the right questions in the right format, says Hannah Baker Hitzhusen, vice president of qualitative research at CMI, a market research firm in Atlanta. What qual researchers do is very much on the front end, it is discovery or exploratory work. “For a qual study, we generally do a discussion guide to make sure we cover certain topics or issues,” says Hitzhusen. Qual is generally used for small sample groups, because, “you want to spend a lot of time with the participants, maybe 90 to 120 minutes. Quant usually uses a larger sample size of people and a smaller amount of time, 15 to 30 minutes (for someone to fill out a questionnaire),” she explains.

How to Conduct Qualitative Market Research: Explore Various Means to Collect Data

•    Observation – Direct observation can involve a researcher watching subjects and taking notes in the background which could be from behind a one-way mirror or video camera recording the happenings. With participant observation, the researcher is actually part of the situation being studied as with a moderated focus group or one-on-one interviews.

•    Focus Groups – This technique is good if you need a range of opinions, says Hitzhusen. In general, you want to get reactions from eight to 10 people. But you don’t have to have the traditional group of people closed in a room. You can do a webcam or online bulletin board focus group, in which consumers participate in an asynchronous group discussion over the duration of three to four days. Participants answer questions from the moderator and respond to images or video on their computer screen.

•    Subject Interviews – There are times when you want to talk with subjects or participants either over the telephone or face- to-face, says Moulton-Abbott. Such as if you want them to sample a product or if it is an emotional or sensitive issue, such as taking care of elderly parents with dementia or using personal hygiene products.

•    Hybrid Studies – This is a blend of qual and quant market research. So, you get some important metrics as well as the why’s behind the numbers through narrative, photo collection, and other exercises, says Schwitzer.

Moulton-Abbott says for example, you may have a couple hundred people come into a big meeting hall. Using a handheld dialer participants respond to a survey that is projected on a screen. Afterwards, you host a town hall session to debrief the group and to find out what they think. From there, you separate the respondents into smaller focus groups based on demographics, their responses and other parameters. At the end of day you can say we spoke to 700 people today and this is what they said they like or don’t like and this is how they feel about your product or service.

•    Online tools – The online piece is an outgrowth of in-person observation. “We can use tools such as their cell phones, iphone video cameras, digital cameras, and we can have them in the moment record what is happening in their world,” says Schwitzer. Whether it is how they use a product or interact from a service standpoint.”

For example, Schwitzer conducted a study on how teenage boys were spending their money over a course of a week. They took pictures of everything that they bought and texted it in. They then created an online blog to be probed as the second phase of the study. “Online tools allow us to get even deeper into the subjects’ lives and to see what is happening to them from an experiential level. We can be with them at crazy hours of the day now or during more private moments.”

How to Conduct Qualitative Market Research: Analyze the Collected Data

A qualitative study may take one day or three weeks for the data collection and up to six weeks in total for the final report generation and turnaround solutions. Researchers will look at the collected data to come up with theories and answers to your questions or concerns. Generally, researchers will use coding to identify themes, patterns and ideas. They may also incorporate some statistics that describe what the data is showing along with narrative analysis that focuses on grammar, word usage, and underlying messages.

How to Conduct Qualitative Market Research: Review Report and Recommendations

Finally, a researcher will generate a report featuring actionable recommendations. It doesn’t have to be just a written document; it may be a video report or slideshow. As the saying goes a picture paints a thousand words; visual reports are more effective than simply words on a paper. Of course, you need to be aware upfront what the cash outlay will be for such extensive feedback.

How to Conduct Qualitative Market Research: A Heads Up

Don’t expect to pay under $10,000 for basic qualitative research, cautions experts. There are cost associate with the recruiters, facilities, moderators and reporting. It you have a small or tight budget consider working with a university such as Chicago‘s Northwestern, Atlanta’s Emory Goizueta, or the University of Maryland, suggests Moulton-Abbott. Many of the top business schools have marketing research programs.

To find a reputable market research firm, check out trade associations, including directories from The Marketing Research Association, which publishes the Blue Book, and the New York American Marketing Association, which puts out the Green Book. Also, the QRCA has a search tool for locating market research firms geographically.
Choose a firm that is knowledgeable about your industry and be sure to get a couple of proposals and competitive price offers.

Source: Inc.com By Carolyn M. Brown

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