Editor’s Note: Our Consumer & Retail team is launching a blog series for the retail and FMCG industries. In the coming months, we’ll share our thoughts on recent advancements—backed by real-world examples—around the consumer journey from innovation and personalization to channel attribution/interaction and omnichannel marketing. Subscribe to FreshMR now so you don’t miss any updates.
The retail and FMCG industries face an uncertain marketplace where prior known certainties can no longer be relied upon. In that reality, there is nothing quite as exciting in product development research as helping clients discover the products of the future.
One notable example is the number of clients who have asked us to help them develop “company-specific norms.” Many clients have relied on ‘generic’ norms for their simulated market testing, but they’re now ready to move in a different direction. Why? One client responded quite clearly, “We’ve found ourselves developing concepts to ‘beat’ the testing process to move forward, rather than to actually meet consumer and market needs.” The tail was wagging the dog, and potential new products were being designed to beat the process. As a result, the process had become more important than the outcome. Changing the way they looked at normative data was just one way in which this company was trying to reassess their innovation journey to change success/failure outcomes.
Redefining the Innovation Process
Take channel attribution as an example. Our shopping demands are changing rapidly in a number of interesting and challenging ways, and many of our clients spend a great deal of time assessing channel attribution to understand consumer behaviors. I raise this point at this stage because it’s important to always be on the pulse of whom an innovation process is designed to serve – particularly when consumer behaviors (around channel use and many other issues) are changing rapidly. The point about the tail wagging the dog is around why we test. For example, if my innovation process looks to satisfy consumer needs on metrics such as ‘is credible’ and ‘catches my attention,’ the temptation is to make sure concepts are designed to score highly on these metrics. Furthermore, if my individual professional goals are to produce enough concepts that go forward in the process, it’s easy for the process to become more important than the final outcome.
Of the many articles that predict ways to succeed in 2017, this Forbes piece caught my attention. The sixth business trend focuses on why some companies are struggling with their brick and mortar channel. Generally speaking, there are three main sources of innovation (that will almost always happen in combination): technological innovation, market innovation and consumer innovation.
In retail, consumer needs have clearly changed greatly over the last five years. Many retailers tell us that they are far more advanced in the area of ‘personalization’ than five years ago—and, indeed, our own customer experience research expertise confirms this. However, they know they are not meeting all consumer needs in this regard, and they all tell me that they will be much better in another five years. The key question, as stated in the article, becomes whether the companies struggling with brick and mortar need to reposition around expertise in the marketplace or should they reposition faster and more fully around what can be called a ‘legacy brick and mortar channel mindset’ that some retailers are said to have? Have they embraced other channels, technology or consumer demands quickly enough? Have they overly focused on channels that worked in the past and were known certainties?
The Role of Lead Users in the Innovation Journey
Speaking of consumer behaviors, we will explore what we call Lead Users in an upcoming blog post. These are consumers that pick concepts apart, particularly if they don’t do the job that those consumers need to have completed to their satisfaction (by the eventual product). It is all too easy to dismiss these people as overly negative or as people who ‘don’t get it’ unless you understand their motivations. This is just one example of making sure that the voice of the consumer is accurately and consistently included throughout the innovation journey. This is an important point from one of my favorite books about innovation, Competing Against Luck: The Story of Innovation and Customer Choice by Clayton Christensen. There are a number of real-world examples and points raised by this book, but two key issues stick in my mind:
- Consumers “hire” products to do a certain job. By adhering to innovation processes, companies can do better than rely on luck.
- When a business does not rely on luck, they compete against companies that, in essence, do rely on luck. And companies want to get to the place where they are, in fact, competing against luck.
We would never advocate against a thorough innovation process, our point is that the process needs to be continually assessed on:
- Market needs and developments (for example, using your segmentation research to create a Market Map to align brands and opportunities)
- The voice of the consumer and of different types of consumers
- Asking the right questions in the right way and at the right time (i.e., using the correct research methodologies)
We have helped a number of clients reassess their innovation journey to ensure that technological, market and consumer developments are assessed using the most thorough, thoughtful approaches. Email me to discuss ways your company can strengthen its innovation process.