With a GDP of $5.15 trillion, Japan is well-positioned for international expansion and offers substantial business opportunities for brands in various industries.
The country has dramatically bounced back from the disruption caused by the 2011 natural disasters, like the earthquake and the Tsunami.
Japanese motor vehicles and electronics are prevalent globally. It is also among the world’s largest producers of steel.
The country is among the world’s largest exporters of motor vehicles and electronic equipment. The service sector makes up the highest percentage of the economy in terms of gross domestic product and employment.
Major Industries in Japan
Japan’s five largest companies by market capitalization are Toyota, Sony, Keyence, Recruit Holdings, and SoftBank Group. Sony’s portfolio includes a distinctly non-Japanese Hollywood movie and music business originally acquired through a merger and acquisition over 30 years ago. SoftBank, in recent years, has morphed into a massive tech fund run by foreign fund managers invested almost entirely in non-Japanese startups. Recruit’s new CEO spent ten years acquiring and growing recruitment businesses in the U.S. before his promotion earlier in 2022.
Japan is focused on manufacturing precision and technology products such as hybrid vehicles, robotics, and optical instruments.
Other industries prominent in Japan are agriculture, fishing, and tourism.
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What makes Japan an excellent choice for international expansion
Large World economy
The third-largest economy in the world, after the United States and China, and the fourth largest importer of U.S. products, Japan is open for international business. It is also one of the world’s most literate and technically advanced nations.
Robust Consumer Economy
Japan has a robust consumer economy with a per capita income of $42,197 and is a haven for brands that want to expand internationally. Japan’s massive consumer economy, in which consumers with considerable purchasing power seek high-quality and innovative goods and services.
Protections and Compliance
An essential member of the international trade system, Japan complies with the law, and its efforts to maintain the rule of law is one of the pillars of its foreign policy. It also provides intellectual property protection and rights.
Easy and inexpensive to set up an office
According to the World Bank’s “Ease of Doing Business” report, it takes about 11 days to incorporate. It costs 0.7 percent or JPY 60,000, (approximately USD 470 million), whichever is higher, and registration and seal fees. For companies that want to set up a branch office, the costs are low and procedures simple. Co-working spaces are also an option in bigger cities.
Rapidly Aging Population
Japan is ageing fast. One in three people is estimated to be 65 years and older by 2036, conferring the title of the world’s leading “super-aged society.”
While the nation’s rapidly ageing and declining population pose risks of an economic crisis, it also presents massive opportunities. As a result of the declining population, individual income has risen, surpassing U.S. citizens.
Fewer people in Japan mean larger living spaces, more arable land capital, more disposable income, and higher quality of living. This fuels the growth in several industries, such as pharmaceuticals, healthcare, franchising, and real estate, to name a few.
Seniors in Japan are financially secure and healthy overall and big consumers of various products and services.
Innovation and Research
Japan reigns supreme in research as a nation with a large senior population. It has a goldmine of data on ageing, medical data, and medical assessments—these datasets are beneficial for local governments worldwide. The nation ushers innovation and technological advancement in many sectors.
Just as countries can look up to Japan to help their ageing population and fill technological gaps, foreign brands can view this as a great time to expand and invest in such fields.
Significant obstacles to consider before entering the Japanese market
Entering the Japanese market is lucrative and full of opportunities, but it is not without many obstacles and challenges. It is noteworthy here that Japan is one of the few Asian countries that never had a western country rule over them, and this is because of Japanese are strong-willed and are rooted in tradition.
Although tariffs are generally low, Japan has other barriers to entering the market that may hinder foreign products’ importation into the country.
It is essential to factor in some of the most significant obstacles before entering the Japanese market. These hurdles can be measured against the brand and company goals to make the right decision and market entry plan.
Japan’s size makes it essential for brands to invest substantially, increasing risks.
Japan is a highly competitive market, and domestic brands have a strong presence. Therefore, it is not easy to compete with local Japanese companies. However, thorough market research before creating the market entry plan can help brands overcome the challenge of competing with local companies.
Japanese are discerning and look for value for money and high quality when making purchase decisions. Additionally, the Japanese culture and tastes are very different from the Western world. Therefore, brands have to redesign and redevelop their products and services to tailor them to local tastes and preferences in most cases. Market research and product testing methodologies can help brands create and tweak products to fit the Japanese lifestyle and culture.
Japan has very little foreign investment for an advanced nation, keeping the Japanese business sector isolated. As a result, only about 3-5 percent of Japanese speak good English, which can be a barrier for some countries.
Japan has a strong network of regulations, permissions, and extensive procedures as a bureaucratic country. These strict regulations keep new entrants from competing with established industries. However, these regulations are being slowly relaxed.
Management and H.R. policies are very different in Japan, and organizations entering the country must consider and adapt to the management style in Japan, because failing to do so, is a recipe for disaster.
Marketing to the Japanese consumer
Japan is a unique market, and it is crucial to understand the cultural nuances and the Japanese consumer. You cannot become a Japanese marketing expert overnight, and it is helpful to hire local advertising agencies when marketing in Japan.
For the same reason as above, it is critical to regionalise everything. Labels on products and marketing and sales materials, digital campaigns, and the website need to be in the Japanese language.
The Pepsiman commercial is an excellent example of regionalizing a brand. When Pepsi’s Japan branch decided to create something regional for Japan, they contacted Travis Charest to create a superhero mascot to promote Pepsi. This faceless superhero managed to get a cult following in the country. They developed an action game for the Playstation and created several successful commercials using Pepsiman.
Nike’s attempt to extend its marketing message to include social activism in Japan was met with criticism. Nike Japan released a video depicting the struggles of women athletes in Japan that faced bullying and racism, topics that are not openly discussed in the country.
Martin Roll, a business and brand adviser, says that Japanese consumers are not as vocal and will not express dissent unless they feel brands cross a red line. Therefore, it is important to have a deep understanding of the culture, the sentiment of the people, the root of homogeneity in Japan (post-Hiroshima Nagasaki, there was a focus on a homogeneous society), and how to carefully tread the delicate line.
https://www.youtube.com/watch?v=XkFaQuhHOtw
As in any other new country, it is also essential to have a local marketing plan and calendar.
Distribution and Sales Channels in Japan
The choice of distribution channels depends upon the product. Due to space limitations, small retail stores often stock limited inventory, and wholesalers deliver smaller amounts more frequently.
Culturally, the Japanese prefer face-to-face interactions and place a high value on building and maintaining business relationships. This distribution system is costly and increases the price of goods. The growth of big box stores and e-commerce is challenging this status quo.
In 2021, approximately 2.25 million vending machines in Japan were beverage vending machines, selling drinks like cooled beverages or coffee.
The primary distribution and logistics points are found in the major port cities, like Tokyo, Yokohama, Kobe, Osaka, and Fukuoka.
Market entry strategy for Japan
Brands need to develop and maintain strong relationships with local partners to gain a foothold and succeed in the Japanese market. The local partner can act as an agent, representative, or distributor and manage a branch office or subsidiary in Japan.
Since the business culture is unique in Japan, visiting the country several times before entering the market is good. This can help familiarise the organization with the culture and business climate.
Japan has a stable economy and is a dream destination for foreign investment. The key to successful business entry in Japan is doing the leg work using market research to understand the culture, localise the product and messaging, and find the right partner to expand the given brand in this unique marketplace full of opportunities.
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Emerging technological advancements are transforming market research forever. As many consumers move online, the way brands identify and understand consumer needs is being reimagined.
Many technology trends disrupt the market research industry —from data collection and new product launches to tracking brand performance. This blog post will focus on the breakthroughs in technology impacting brand tracking and product performance tracking.
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Brand and performance tracking refers to the process of continually measuring brand health over a period within the target audience. It allows brands to measure the performance of a product in relation to its competition. After a new product is launched, market research helps brands gauge performance to stay competitive.
With consumers increasingly moving online, brands can tap into new, vast, and reliable consumer behaviour data in real-time. This has also made Direct to Consumer marketing much more common. Brands like Happy Human (Singapore), Dime Beauty (U.S.A.), Joi (Malaysia), Sleepy Owl (India), Recess (Philipines), Adopt a Cow (China), and Knot (Japan) have eliminated the middleman to create, develop, sell, and distribute their products directly to the end-user. The absence of middlemen and brick-and-mortar stores allows them to maintain quality and reduce prices. But this is not all. These brands also have the added advantage of measuring performance directly without employing market research across several retail outlets. They can discover brand sentiment directly, making them more agile, nimble, and competitive.
While there is still a place for traditional research methodologies, technologies like machine learning, Artificial Intelligence, Virtual Reality, and chatbots continue to reinvent the market research industry.
Let’s look at the primary technologies in brand tracking and competition analysis that are changing the face of market research.
In the fiercely competitive E-commerce world, the key to outperforming the competition is tracking and monitoring the price competing brands charge for similar products and services. Brands need to keep a keen eye on their competitor’s pricing strategy and price changes over several products to stay competitive, and that’s not an easy task even for larger companies.
This is where e-commerce price monitoring technology comes into play.
Ecommerce price monitoring software allows brands to track their competitor’s price changes and dynamically adjust their pricing.
By employing this type of software, brands can stay abreast with competitor pricing and adjust pricing based on demand, competition, and inventory levels.
Many such tools are available in the market, including Minderest, Price2Spy, and Prisync, with sophisticated matching technology and high levels of accuracy.
Market research utilises machine learning and A.I. for brand and performance tracking to revamp advertising and messaging.
While some grey areas are associated with A.I. in other fields, the market research industry has embraced this technology.
One of the things brands need to track constantly is how their messaging is resonating with the target audience and how the market perceives their brand. This is because a brand is not just the logo and tagline. It is a sum of all parts and is an overall feeling that tells a narrative and evokes sentiment and emotion in the audience.
Technology helps brands better understand brand performance and perception to inform better decision-making. It allows brands to measure and bridge the gaps between their intent and how the audiences interpret and perceive their message.
The use of A.I. in brand tracking has allowed market researchers to analyze qualitative surveys at a fraction of the time taken by manual data collection methods. Furthermore, this enables them to ask more open-ended and follow-up questions, find the right panellists faster, eliminate bias, write reports quickly, and significantly improve the quality of their surveys and reports.
In today’s dynamic digital marketplaces, A.I. is powering brand tracking to gauge the changing consumer perceptions.
Sentiment analysis is a sub-category of A.I. and N.L.P., which automatically uncovers feelings, emotions, and sentiments behind plain blocks of text. It is extensively used in brand tracking because it is efficient, reliable, and accurate.
Over 45 percent of the world is on social media. There are about 500 million tweets per day, and about 1.96 billion people worldwide use Facebook every day. Consumers constantly call out brands on these social media platforms and review sites. It would be overwhelming and near impossible to collect data manually. Brands can effectively gauge overall brand sentiment across platforms and channels online using automated tools.
For instance, when the popular ride-sharing service, UBER, launched a new version of its app, it used social media monitoring and text analytics to measure user sentiment about the new version of the app. Eye-tracking technology works similarly and can track users’ engagement scores and emotions on a website.
There are several brand tracking tools available for brands. Candymaker Mars used one such tool that combines the standard digital video metrics, like view-through rates and skip rates, with facial expression tracking of the viewers while watching the ad using an A.I. algorithm.
While the tool measures digital behaviours, it puts enormous weight on gauging emotion and sentiment. This technology is essential to track brand performance in a world plagued with minuscule attention spans. It allows brands to obtain a complete picture of consumer perception.
Many technologies use participants’ webcams to track their facial and emotional responses while viewing ads, providing invaluable data used to inform sales forecasts.
Chatbots are aggregating vast amounts of consumer data.
The usage of chatbots as a communication channel between brands and consumers has increased by 92 percent since 2019.
As many consumers shop online, they engage with chatbots, making them the fastest-growing brand communication channel.
A survey found that up to 80 percent of users answered questions, three times higher than responses from email surveys.
Brands like IKEA are using chatbots to gather valuable consumer feedback. Companies use Whatsapp and Facebook messenger to measure consumer sentiment and feedback efficiently.
The use of brand tracking cannot be overemphasised. It allows brands to understand how their current audience perceives the brand. It can also lead brands to uncover until now undiscovered target audiences.
With brand tracking software, brands can see the true impact of their campaigns. Brand tracking holds the key to insights any brand needs to thrive. Using the right tools and technology, brands can obtain actionable information about the brand perception among the target audience and how it scores against the competition.
A brand is one of the most valuable assets of an organization. It is, therefore, critical to continually measure satisfaction, awareness, and perception. Incorporating brand tracking into their marketing strategy can help brands understand their target audiences and consumer needs and make more profitable marketing decisions. Technology has made it easier to uncover massive data sets to monitor a brand effectively and accurately. By combining this technology with digital metrics, brands can increase their competitive advantage.
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As organisations chart their growth and enter new markets, market research can assist them with these goals through data-driven insights. Market research plays a pivotal role in identifying market trends, uncovering competitive advantages, and discovering consumer intent and behaviours. This helps brands make better decisions based on data.
Therefore, market researchers are increasingly turning to technology to improve data collection methods, research processes, and consumer insights presentations. Technology allows researchers to reduce costs, boost productivity and increase efficiencies in all primary functions.
Machine learning and artificial intelligence are at the forefront of technological breakthroughs transforming the market research industry. These and other technologies allow more efficient and meaningful data collection and analysis.
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Let’s take a closer look at the most important technological trends in market research.
Artificial Intelligence (A.I.)
Artificial intelligence (A.I.) is the ability of a computer or a computer-controlled robot to perform tasks usually done by humans and associated with intelligent beings. In market research, A.I. provides large amounts of unstructured data at scale.
A.I. is often used in conjunction with traditional methods with excellent outcomes in influencing marketing strategies, delivering service solutions, and uncovering consumer behaviour. It assists people in market research by automating tasks and increasing efficiencies, obtaining deep insights from a large amount of data, and enabling them to use natural language processing (N.L.P.) for better understanding.
Most people understand that traditional market research is about online surveys. A.I. allows surveys to be conducted via voice. For instance, brands are using voice survey tools to collect data that sounds more human. This is an incredible new development that allows users to provide feedback hands-free. For researchers, this is a qualitative approach that speaks volumes regarding the emotions behind the words. It captures the true sentiment of the participants.
2. Eye-tracking
Eye-tracking is a research methodology for measuring where a person looks, providing insight into their thinking.
It is now possible to record everything about how the eye interacts with everything in front of it. Using infrared light and high-resolution cameras, market researchers can track how eyes move in response to stimuli. They can, therefore, unlock real-time emotions and consumer reactions, obtaining insightful and quantifiable data behind consumer reactions and behaviour.
3. Real-time feedback
Real-time feedback is a type of qualitative market research methodology in which you receive live feedback from users or visitors on your website or app.
Mobile diaries allow brands to obtain “in-the-moment” real-time responses. They don’t have to recall their experiences from a few days or weeks ago; they can provide real-time feedback, for instance, while interacting with your app or product.
Most people always have their phones with them, not necessarily a traditional journal or diary.
4. Microdata
We hear and read about “big data,” but microdata is becoming increasingly crucial. Microdata is data about individual consumer activity.
Microdata is data on the characteristics of units of a population, like individuals, establishments, or households, collected by a census or survey.
A good understanding of individual consumer behaviour supports more targeted business decisions. So while big data is essential, certain decisions cannot be made using macro data methodologies.
5. Augmented Reality (A.R.)
According to Investopedia, “Augmented Reality (A.R.) is an enhanced version of the real physical world that is achieved through digital visual elements, sound, or other sensory stimuli delivered via technology.”
We partnered with Asahi on a pilot designed to explore the applications of augmented reality in package testing. The pilot was focused on one of Asahi’s flagship brands: Fuller’s London Pride. London Pride is already the capital’s number one ale. Still, as part of a strategic drive to bring the brand to more ale lovers nationally, Asahi wanted to test a new concept for the packaging against the existing bottle design.
Read the complete case study on how we ran an industry-leading pilot test on A.R. in market research to discover its applications to pack testing.
Virtual environments have provided brands and market researchers with a more accessible and less expensive way of product concept testing, feasibility analysis, and interpreting consumer behaviour regarding a new and developing product.
Brands use A.R. to help consumers view a product, like a piece of furniture in their surroundings. It provides the brand with feedback on how a product can work for customers. It is also far less expensive than a focus group or shipping the product to the consumer.
6. Internet of Things (IoT) and Wearables
Internet of Things (IoT) refers to a network of connected objects or devices that can collect and exchange data in real-time using embedded sensors. Cars, thermostats, lights, and window blinds, can all be connected to collect and exchange information over a network using sensors.
Internet of Things (IoT) devices are a goldmine of data with many facets of consumers’ everyday lives. Let’s say a company wanted to measure the activity levels of consumers in the new year. They will get rich data from a wearable device like a Fitbit or Apple watch (with the user’s permission).
7. Social targeting
Social media targeting is the ability to post or advertise certain content to specific audiences. These can be chosen by the person posting or the advertiser to include niche audiences based on demographics, interests, etc.
There are over 4.55 billion social media users worldwide, and that’s where most people congregate nowadays. Advertisers have leveraged the precise targeting of niche audiences to drive leads and sales.
Brands can target a specific section of the population based on age, gender, interests, behaviours, languages, and even the brands and products they currently use.
Market researchers can use social sampling to effectively target participants according to what they are looking for based on personal interests, location, and interests.
Surveying consumers virtually allows them to target specific niches of participants. Researchers can select participants who care about the product or service with precise targeting, resulting in higher response rates.
There are plenty of opportunities to adopt new technologies in market research so brands can get better insights faster. This enables brands to make better decisions based on rich data.
Technology makes it possible for market researchers to collect data quicker and more accurately and analyse it more effectively. However, they also need to sharpen their skills when using technology. In some cases, it is essential to complement traditional methods with technology. In either case, technology adoption will allow market researchers to spend less time on data collection and analysis and more time on the big picture problem-solving. This will bring more value to the brands and markets they serve.
Technology to enhance, not replace, the human component
While technology provides real-time, rich, and robust data and an efficient way to sift through vast amounts of data, it does not replace experience in interpretation. Technology should complement, accelerate, and enhance the market research methodologies, not replace them.
For instance, automation should be used to reduce the time between putting the survey in the field and retrieving the feedback and responses. But the automation should not replace the interpretation made by an experienced market researcher.
Market researchers know how to design surveys, ask the right questions, and interpret data. With the advances in technology, they can move from data collection to more big-picture thinking. In a world of automation and data, human beings remain unique in their ability to create and understand people.
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Consumer interest in Connected Technology is rising due to the accelerated digital shift to “at-home” trends during the pandemic. With an increasing number of people working, learning, shopping, exercising, and even monitoring their health from the comfort of their homes, the connected technology market is rife with opportunities for brands in a multitude of sectors.
From AI-enabled voice assistants that can be summoned on command to watches that have gone beyond telling time and have converted our wrists into smartphone holders and health monitoring devices, connected technologies are transforming the way we live, work, and play.
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Market research and product testing are paramount for the successful launch of connected technology products.
With an increasing number of consumers and households jumping on the connected technology bandwagon, we are collecting more information and data than ever before, which has positive and negative implications for the market research industry.
Market research companies provide product testing services in various industries as they conduct research studies for a range of products before they are launched and help guide new product development. These companies put the products in the hands of the consumers who will be using the technology.
Product testing is a research methodology that allows brands to gather quantitative and qualitative information about a user’s potential behaviour, reactions, and preferences, like the taste, feel, and smell. For connected technology, often, a prototype is tested in the market before it goes into development.
What is connected technology?
Connected technology is products with built-in or embedded technology comprising sensors and processors to connect with their environment and other products.
Connected technology is tied with the Internet of Things (IoT). Watches are no longer used only to tell time; their function has extended to enable text messaging, phone calls, and fitness monitoring. Our homes are getting smarter; our cars go the extra mile to deliver convenience; our offices thrive remotely using real-life collaboration and project management tools.
Let’s look at some of the main areas where connected technology is unfurling, what the future has in store for consumers, and how brands can match this rapid growth.
How are people currently using connected technology?
Connected technology has seamlessly integrated into our daily lives and shows no signs of slowing down, and for good reason. The demand for connected technology that provides convenience, comfort, accessibility, and automation is at a historic high.
To understand the benefits and use of connected tech, let’s look at the main areas we use connected technology in our daily lives.
There’s no place like a smart home.
Smart homes are redefining our living spaces and becoming more innovative. According to Statista, the global smart home market is worth more than US$126 billion.
Consumers increasingly demand home automation when they purchase a home —and for a good reason. Home automation provides convenience, functionality, security, entertainment, and energy savings. The possibilities are endless.
For instance, lighting control network systems allow you to control the whole home or building remotely by your smartphone. Sensors turn lights on and off as we enter and exit rooms. Automated window treatments allow you to control a room’s ambient lighting and other aspects remotely. Smart homes also allow for remote access.
Smart appliances are making life easier for households. Smart Appliances as a segment includes all kinds of connected household appliances. Surveillance cameras and home security systems are getting more advanced. Baby and pet monitors allow people to monitor their babies and pets.
Consumers in Asia adopt devices more quickly than in North America and Europe, and South Korea leads the way with a 27 percent household penetration rate in 2022.
Smart homes are not just nice to have anymore. Homeowners are increasingly expecting smart home features, and builders and technology companies are taking note.
Smart homes are getting smarter and now go beyond just thermostats and light dimmers. Technology is becoming much more affordable and accessible, and some smart homes will make your jaw drop.
Consumers are much savvier and increasingly demand technology built into their homes. Even the lower to mid-range new home buyers expect certain smart home features to be part of the build. Therefore, every construction company needs to include these home features or risk falling behind their competitors.
How does the demand for Smart Homes impact brands in the market?
This new trend has many implications for the market. Builders will need to consider privacy and cybersecurity, adjust agreements, make sure devices can “talk” to each other, and have the ability to offer flexibility as new technologies are added in the future.
With the average household using 25 connected devices, there is considerable pressure to provide a connectivity network far beyond what a regular service provider can deliver.
The pandemic has also created a new generation of germophobes, and KB Homes, a home builder in the U.S., has launched MERV-13-rated air filters in their communities. Compared to lower-rated air filters, these high-grade residential air filters eliminate dust, pollen, mould, and certain bacteria and viruses for improved air quality.
Home appliance brands are not only thinking of innovations but also a way to upgrade features into existing smart products. The CES 2022 show in Las Vegas saw AI-powered laundry machines, hands-free faucets, healthier microwaves, next-level smart blinds, and smart bathing technology.
Connected technology is driving the automobile industry.
Connected technology is designed to connect to a smartphone to do more than play music or route phone calls through the car’s speaker. For instance, you can turn a connected vehicle on or off using a smartphone. It can allow the owner to use an app to control the car or share diagnostic data to remind you when an oil change is due, and so on.
Connected vehicles on the road connect to a network so all types and sizes of cars can “talk” to each other as they share vital information on safety, road conditions, traffic, and mobility.
These are just a few instances that barely scratch the surface of what connected vehicles can do.
A Statista report estimates the size of the global connected car fleet to increase more than threefold in the coming years. In 2021, there were about 84 million connected cars in the United States, and it is projected to exceed 305 million in 2035, making the United States the biggest market for connected vehicles.
Europe currently accounts for around 30 percent of the global connected car fleet. The E.U. is one of the regions with significant potential for connected services.
As of 2019, about half of the motorists in Europe said they were willing to switch car brands to access new connectivity features and services.
According to 1Mordor’s 2020 report: “The connected medical device market is expected to register a CAGR of 18.92% over the forecast period from 2022 to 2027.” The same report showed the Asia Pacific as the fastest growing market and North America as the largest market.
Connected tech in healthcare is also referred to as Connected Care. It may be defined as the real-time, electronic communication between a patient and a medical provider, using digital tools such as remote patient monitors, telehealth, wearable technology, secure messaging, and mobile apps, to name a few.
It is estimated that remote monitoring for healthcare could be worth USD 1.1 trillion by 2025.
Wearable technologies hold a significant share of this market, providing real-time data so health care providers can help patients remotely. They provide convenience and cost-effectiveness by reducing multiple visits to the doctor’s office. With cardiac-related devices expected to be worth USD 800 billion by 2030, there is a massive opportunity for healthcare brands in the cardiac segment for wearables.
These medical devices can be vulnerable to security breaches, impacting their safety and effectiveness because they are computer systems.
While there are data security risks involved, wearables can detect cardiac arrhythmia conditions causing stroke and allow neurologists to diagnose seizures remotely; the benefits of these products far outweigh any risks.
Connected tech encompasses your fur babies.
The pet humanization trend and growing concern amongst pet owners about the health and safety of their pets continues to drive the pet industry’s growth at a CAGR of 6.1 percent. You can now dress your pet in a Banana Republic sweater, insure them with MetLife, and get CBD supplements to calm them down.
This trend is now dovetailing into the pet wearable devices market. According to a recent global market research study, the global market for pet wearables is expected to reach USD 2,5 billion by 2024. Pets can wear these devices to help identify, track, control, and even for medical diagnosis and treatment. Furbo is one such pet wearable in the market that aids anxiety in dogs. A remote pet camera that alerts you when your dog is barking can take dog selfies, and owners can toss treats, all from their smartphones.
Connected technology is reshaping the fitness industry.
One of the first industries impacted adversely by the pandemic was gyms and fitness centres when they were forced to close their doors due to fears of spreading COVID-19. Stuck at home and with more time on hand than ever before, consumers made a beeline for at-home gym equipment. Peloton was at the forefront of this revolution and later bought Lululemon’s Mirror.
Peloton’s stock has reached highs and has plummeted in what seems like a roller coaster ride. When gyms closed during the pandemic, Peloton’s stock price and product sales were at an all-time high, increasing more than eightfold from March to December 2020.
An Atlantic article revealed the company had 2.3 million users paying about $40 a month to take classes on its “connected fitness” products by August 2021.
Google trends show a similar picture.
At-home Fitness Trends during the Pandemic
The global home-fitness equipment market will grow to $15.13 billion in 2022 at a compound annual growth rate (CAGR) of 9.6%. The at-home fitness market is expected to reach $21.84 billion by 2026.
What does this mean for fitness brands —both in-person gyms and online fitness platforms?
Brands providing fitness solutions inside and outside the home will need to commit to the new normal and an approach that fits consumers’ lifestyles.
Brands that want to become a part of their consumer’s fitness regimen will have to consider a hybrid approach. On-site fitness studios and solutions should utilize a more hybrid approach to keep consumers physically and digitally engaged and connected. They can do this by complimenting their in-person services with a mobile application. At the same time, brands with at-home gym equipment and tools should make data security a priority.
The intersection of retail and technology elevates the shopping experience —both in-store and online.
Not all businesses survived the pandemic and the recent, rapid shifts in consumer habits, but the ones that did are thriving. These retailers have been able to master the in-store shopping experience.
Retail technology provides an exciting opportunity to both consumers and retail brands. Connected technology is taking the shopping experience up several notches. While people still shop in these stores, a brand’s physical location is considered one of the many channels. Consumers interact with these stores digitally and will come to expect this from every brand.
From using virtual mirrors to try on clothes to pointing a piece of furniture on your cell phone and placing it in your home, Augmented Reality (A.R.) is changing how we shop and try products. Car shoppers can go into dealerships and customize cars with different colours or styles using their tablets or phones. They can use A.R. to try sunglasses from the comfort of their home.
Grocery stores may look the same as many years ago, but the experience has completely transformed. The distinction between online and offline has little relevance today in the grocery space. This is because today’s consumers do not want their shopping experience to be held back by the limitations of a single touchpoint. Today’s connected consumers expect an omnichannel shopping experience, including online ordering, curbside pickup, delivery, self-checkout, scan-and-go, and contactless payment options.
Supermarket brands need to have an omnichannel approach to meet customer expectations, including convenience, speed, and efficiency. For instance, while a customer is exploring store aisles physically, they should have the option to interact with the store digitally and even complete the transaction using the store’s mobile app.
Consumers’ data is recorded and stored to provide a personalized experience with product recommendations and deals. When consumers create an online account, their purchasing habits are used to tailor relevant deals, ads, and offers. In the absence of an online account, consumer data is tied to a loyalty card.
Technology also allows retailers to alert customers when stocks of the items they regularly purchase are low or when an item is back in stock. Alexa, Amazon’s voice assistant, will notify you based on your ordering history if you are running low on a particular product, tell you how much it is, and ask you if you would like it added to your cart.
Grocery delivery services became popular during the pandemic. Now that we can go back to a physical store, many consumers have become accustomed to using delivery apps like Instacart for their convenience, speed, and seamless service. You can also watch your groceries transported to your doorstep with the app’s live map view.
Sustainability is also coming into the picture with an increasing number of younger generations that prefer buying from eco-friendly companies. Zero, a Los Angeles-based startup, is an example of an eco-friendly brand that delivers groceries in sustainable packaging.
The future of retail is hybrid with an Omni-channel approach and connected experiences across touch-points.
As customers jump across several channels when they shop, retailers need to engage with where their customers are via digital channels.
Leveraging shopping behaviours, personalisation, user experience (UX), and integration will be critical for retail success. This will help retailers engage with their customers at various touchpoints —physical stores, sites, apps, and significantly improve the shopping experience.
Retailers also need to factor in social media networks, messaging apps, voice assistants, mobile devices, and other new channels to capture their customers’ attention and engage with them. Consumers expect incredibly personalized and relevant content.
Challenges in the connected technology space and how brands can use these as opportunities to grow
During the pandemic, the older, less tech-savvy generations also adapted to connected technology and enjoyed the benefits of staying connected with friends and family. Brands should no longer ignore this segment’s needs and may need to provide more in-depth onboarding help and tech support.
Now that people are back to in-person, they will continue using these devices and technologies in and out of the home, in the new normal. There will be a need for interconnectivity across the house, car, and mobile devices will be critical moving forward.
The industry faces many challenges, including data security, privacy concerns, continuous innovation and iteration, a massive load on the network and wifi issues, theft, loss, and damage.
Here are ways in which brands can overcome such challenges:
Provide extended warranty
Put customers first
Provide multiple customer-service options
Insurance against theft, loss, and damage
Provide on-demand tech support
Help with digital identity protection
Allow trade-in offers to swap your old device for a new one at a discount
Continuously upgrade technology
What does the future hold for connected technology?
In a digital-first world, physical fitness studios and stores are still appealing. Physical stores that embraced this reality are thriving. They have gone above and beyond to offer a hybrid approach and have elevated the in-store experience. There is also a preference for in-store shopping in older generations versus younger ones.
The pandemic played a massive role in speeding up the adoption of digital-first behaviors. Now that we know consumers expect a hybrid world where digital meets offline, brands can play a role in pushing innovation and further improving customer experiences across touchpoints and channels. With a goldmine of integrated customer data, they can offer a personalized and relevant experience in a hyper-connected consumer world.
How market research can aid brands in the connected technology space
For brands aiming to disrupt the market with the next “new” thing in connected technology, it is vital to know how consumers will respond to it before going to market. Market research can provide the valuable data, and insights brands need to take action.
Brands have several critical decisions regarding target markets and audiences, price, distribution channels, promotion, and product features. How can brands bring new product lines to market without proper knowledge? The good news is market research provides unique methodologies tailor-made to capture purposeful information to inform those decisions.
Market research allows brands to collect relevant information about market needs and customer preferences, impacting every aspect of the business, product, and brand. Backed by this information, brands understand the choices and behaviors of their potential customers. Therefore, their products can meet their customers’ needs and reduce the risk of an experience gap between the company and its products or services. The experience gap is essentially the gap between what the customers expect/ want and what the companies give them.
Market research is used for product testing and development. Effective market research uses a diverse population to test a given product and ensures it works for everyone in the target market. Brands also use market research for brand name testing, concept testing, messaging and campaign testing, branding, and logo testing, and pricing testing, to name a few.
For brands in the connected technology space that are often under high pressure to quickly produce and iterate high-quality products with an enhanced customer experience in a competitive market, the importance of market research cannot be overstated.
Brands in connected technology need to utilize a comprehensive testing strategy beyond traditional product and messaging testing. Market research can study the preferences and User Experience (UX) throughout all touchpoints within the customer journey.
For instance, connected technology brands can use market research to ensure customers are surveyed on current technologies and UX and online shopping cart abandonment. Likewise, the data from connected tech can (with permission) provide a goldmine of information about specific market segments, which can inform better decisions based on hard facts rather than gut feelings or assumptions.
For smart product companies, it is also essential to make sure all their products connect seamlessly to make their customers’ lives easier and more comfortable. Therefore, market research is utilized to make sure the product works and connects with other smart products to enhance the customer’s life.
Connected technology became popular before the pandemic. The pandemic only accelerated its adoption. The rise of connected consumers across the globe has led to connected technology trends across industries. As brands navigate the challenges of wifi capabilities and data privacy, they are continually innovating and iterating smart, connected products that are relevant and user-friendly.
We don’t need a crystal ball to make this prediction: the future belongs to a connected world.
Learn more about how Kadence International’s Marketing Research is driving growth for leading technology companies here.
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Launching a new fast-moving-consumer-goods (FMCG) product is a process wrought with challenges and notoriously difficult to pull off successfully. In fact, it’s such a treacherous domain that approximately 80-85% of all FMCG launches fail! So how do you successfully launch a new FMCG product in the market?
Companies need to do all they can to maximize their chances of success when it comes to launching their product. This means getting all the different stages of the process right, investing the right amount of time and resources into planning, and making use of all the tools and knowledge at their disposal.
In this article, we’ll show you how to launch a new FMCG product in the market successfully. To do this right, you need to start at the very beginning by considering what makes any FMCG product successful.
What makes an FMCG product successful?
There are a number of factors that successful FMCG products have in common. Let’s take a look at 3 things that separate good products from failures.
They’re distinct
Successful FMCG products have to offer something that sets them apart from all the other similar products on the shelves. However, this can be a tricky balancing act — you don’t want your product to be so different that it moves away from what the customer wants.
If, for example, you’re selling a brand of instant coffee, you know your customers want some variety of coffee that they can pour into a mug and get a fresh beverage in seconds. But at the same time, you want your product to stand out and offer something more than all the other instant coffee brands.
Brands that can strike this balance right and create a distinctive FMCG product that continues to delight the customer will be on the road to success.
They’re what people want right now
The FMCG space is defined by being in a constant state of change and flux. Innovation is happening all the time, and people’s tastes are constantly changing.
Successful FMCG products are able to tap into trends and popular demand, giving customers what they want right now as opposed to what they wanted five years ago. For example, as people become more health-conscious their taste in snacks has changed. The companies who picked up on this change in demands and adapted their product offering to include healthy, low-calorie, high-protein snacks were the ones most able to adapt and succeed in a changing market.
They persist
In a market where goods go in and out of fashion quickly, brands that can stand the test of time are at a huge advantage. Household names like Coca-Cola, L’Oréal, and Nestle are household names because they’re masters at staying relevant and in-demand in markets that are prone to constant change.
Doing this successfully requires an intimate knowledge of your market and customers and a knack for constantly delivering even as tastes and trends evolve.
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Why do FMCG product launches fail so often?
There are lots of reasons why launching an FMCG product is so hard and why so many fail. Here are some of the main reasons FMCG launches tend to come up short.
It’s a competitive space
There’s no getting around it — there are lots of FMCG products out there. When you enter this market, you’ll be competing with many other brands, brands that have often been in the game for many years.
If you don’t get it right from the very beginning, you’ll never be able to effectively compete and your target customers will go straight to the brands they have been using for as long as they can remember.
Failure to use data and market research properly
Today’s businesses are blessed with more data than ever before in history. Much, much more. And this can be augmented by wider market research to understand the market, the key trends at play and reactions to your concept or product. If used correctly, this data and insight allows you to better understand your customers, and launch a product that takes the market by storm.
Unfortunately, many FMCG brands fail to tap into that rich reservoir of data, missing out on the advantages it offers and instead launching a product that isn’t closely aligned with what customers want.
Development costs and lack of funding
Another characteristic of FMCG launches is that they’re expensive. Developing a successful FMCG product can cost a huge amount of money, and this typically requires a lot of reliable funding and investment.
If you fail to secure enough funding for your project, you’re setting up the entire launch for failure.
Failure to understand timescales and stick to them
Launching an FMCG product involves a huge number of moving parts and deadlines. If you aren’t careful, it’s easy to mess this up and end up falling behind the dates you promised.
One clear example is shipping times. If your product fails to reach your customer within the time they expect, you’re creating a recipe for canceled orders, damaged reputation, lost money, and a failed launch.
Failure to understand the importance of constant innovation
The FMCG space is defined by constant, ongoing innovation. Companies are investing vast sums of money into making sure their next product is enough to stand out from the fierce competition and keep customers delighted. To survive and succeed as an FMCG brand, you need to be constantly learning, adapting, and innovating. It never ends, and it’s the only way to avoid failure.
How to launch a new FMCG product in the market successfully
Understand the market and your customers at the outset through market research
Understanding your customers and the market is absolutely critical when thinking about how to launch a new FMCG product in the market. You need to know as much as possible about your customers’ pain points, desires, their demographics, what they’re already buying, and more.
Understanding the broader market you’re operating in is important too. This can help you identify trends to capitalize on and size the opportunity for your FMCG launch.
This research should take place long before the product launch, in the initial stages of planning to help inform the ideation process.
Testing, testing
Research is also important later in the process when it comes to testing your ideas with consumers. Quantitative concept testing can help you whittle down your ideas and select the ones with the best chance of success to take forwards. Qualitative concept testing can help you to further refine those ideas in line with consumer wants and needs. There are also other elements of research to consider further down the line once you reach the prototype stage, such as pack testing, central location testing or test tastes to optimise your product ahead of launch.
You can read more about what research you need to consider at each stage of the new product development process in our guide.
Get your marketing right
Effective marketing is a crucial element of every FMCG product launch. Use insights from the NPD process to guide your messaging – on the pack, at the point of sale and in your marketing and comms – to cut through with consumers and steal share of market.
Always be learning
Testing should be an ongoing process — make sure you continue to test, measure and learn, even after the product launch. Collecting data, and making tweaks in response to the feedback you receive can help inform product relaunches or line extensions to keep you at the forefront of your category.
Launching an FMCG product is no mean feat. It’s famously hard to pull off, and statistically most brands who attempt it fail. But that doesn’t mean it’s impossible, and with the right approach and expertise, you can significantly improve your chances of success.
To find out how Kadence can help you boost your chances of success with an FMCG product launch, get in touch.
Concept and pack testing is an area that’s ripe for innovation – a need made ever more pressing during the Covid-19 pandemic. Watch this 15 minute video to hear how we worked with Asahi UK to pilot the use of augmented reality for this purpose, testing pack designs for Fuller’s London Pride.
We’ll share our key findings, focusing specifically on what we discovered about the value of using AR versus static 2D images. These insights will have value to any researcher looking to broaden their toolkit and harness new technologies in the “new normal”.
This is is the first of Kadence International’s Micro Masterclasses, 15 minute videos designed to provide fresh thinking and a new perspective on research methodologies.
Concept testing and test marketing are two very important concepts when it comes to developing new products for the market.
It’s common to confuse the two ideas – indeed there are indeed several significant similarities between the two. Both concept testing and test marketing play a similar role: ostensibly, to make sure a product is ready to launch and to iron out any issues that might have gone undetected during the design and planning phase.
However, concept testing and test marketing are different processes and are used for different reasons. In this article, we’ll take a look at each, exploring both their similarities and their differences. Let’s start with concept testing.
Concept testing
Concept testing is how we test a product idea before it enters the market. As the name suggests, it involves putting the concept in front of real customers and asking them to evaluate it in multiple areas. This helps us find out how real-life customers will react to the product.
Concept testing has a series of powerful benefits for marketers. It allows you to quickly notice and fix potential errors before the product launches for real, brings fresh insights to your project, and gives you data-driven feedback that you can use to get buy-in from other members of your organization.
There are a number of methods for doing concept testing, spanning quantitative and qualitative methodologies. Each has its own pros and cons and they have different applications.
Now we know the basics of concept testing, let’s take a look at test marketing and how it’s different.
Test Marketing
What is test marketing?
Test marketing plays a similar role to concept testing. Its goal, like concept testing, is to assess how well a product will perform in its market.
However, test marketing has a broader scope. Instead of focusing solely on the concept or product, test marketing aims to evaluate your entire marketing plan. It takes into account advertising, distribution, sales, and many other components of your overall strategy, but it does this without actually fully launching the product and taking on all the associated risks.
In product test marketing, you basically run a mini launch for your product in a selected market and see how it performs. It’s like a crash run of a product launch.
Neither the launch nor the test market is big enough that you would suffer greatly if the product were to fail. The goal is to trial run your entire strategy to get an idea of how it would fare on a bigger scale. This allows you to pinpoint any errors and make any changes in a relatively low-risk way.
What are the advantages and disadvantages of test marketing?
The pros of test marketing
You get real insights into how the product would perform in a natural marketing environment. There are many things you simply can’t predict or anticipate and the only way to highlight these issues is with a real test in a real-life environment.
You can gain an idea of how well the product will sell. This allows you to extrapolate predictions to the wider market, build more realistic budgets, gain buy-in from other members of the company, and make any changes needed.
It helps you determine the most suitable and effective channels for marketing. A small-scale test, as long as it isn’t too small, can give you a solid idea of the marketing channels your target customers respond best to, helping you allocate your resources and effort more wisely when the product launches for real.
It helps you identify the best distribution channels and build a data-driven distribution strategy for when the product launches.
Any weaknesses or flaws in your strategy will be exposed without any disastrous consequences. This way, you can make any changes and ensure your entire plan is on firmer footing when you launch for real. Failing during a test is far more preferable to failing on a grand scale.
You’ll see how customers react to your product, marketing, and other aspects of your brand in real-life scenarios. This gives you real data to work with as opposed to theoretical predictions and second-hand knowledge based on trends.
You’ll get a heads-up if your product is going to fail. Sometimes, despite best efforts, some products simply aren’t meant to be. If your product fails dramatically in your test (due to lack of interest, for example) it may be a sign to cut your losses and move on, avoiding a catastrophe.
The cons of test marketing
Although test marketing can be useful, there are also some major drawbacks. Anyone planning to carry out test marketing should make sure they are aware of these potential cons before they begin.
It’s expensive. Doing test marketing right involves a large-scale project which measures multiple factors across your business. This means that if you want reliable results from your test marketing, you need to be prepared to invest a lot of money.
It’s time-consuming. Again, test marketing is a big project with many different layers. It takes time to set up your test, and you’ll need to run it for a while before you get reliable results. This can delay your product launch, cause frustration among the members of your project team and cost money.
Test marketing can reveal your game plan to competitors. In a test-marketing project, you are revealing not just your product but also multiple crucial aspects of your marketing strategy in the real world. It’s very easy for competitors to view this and simply copy it with their own product before you even get close to launching.
The results can be misleading. With test marketing, there is a lot you need to get just right to yield useful results. If your sample size is too small and narrow, you’ll end up with a one-dimensional view of your market which doesn’t reflect reality. The channels you use to market your product and collect data might exclude certain demographics, too.
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Test marketing vs concept testing: which is best for me?
Test marketing and concept testing share many things in common, but they aren’t interchangeable. In this section, we’ll break down the similarities and differences between the two and help you work out which one is best for your situation.
The similarities
Both test marketing and concept testing are designed to learn about your product before doing a full launch.
Both can be effective ways to reduce the risk of failure, gain valuable insights about your product, and make necessary changes before a full launch.
Both require you to plan carefully in advance and make sure everything is set up right to get the most accurate and reliable results.
The differences
Despite their similarities, concept testing and test marketing are two very different processes. Let’s take a look at the things that separate them:
Concept testing is much easier to carry out. You can complete a solid concept test in a relatively short amount of time, and gain valuable insights from this.
Concept testing is more affordable. Concept tests can be done for a fraction of the cost of test marketing.
Test marketing involves launching a product in the market, even if it’s at a small-scale. As a result, it’s not suitable for early stage testing, where concept testing can play an important role.
Linked to this, concept testing can allow you to test ideas securely before launch. In contrast with test marketing your products are put into the market meaning that there is a risk of competitors getting hold of your ideas.
Test marketing is wider in scope as it takes a broader view of the entire marketing and sales process. It measures many different factors such as advertising effectiveness which can’t be evaluated in concept testing.
Which one should I use?
Whether you opt for concept testing or test marketing depends on your goals, the resources you have available, your product, where you are in the development process and your timeline, among other factors.
Concept testing is much easier and more cost effective to do than test marketing and can yield reliable results at speed. With concept testing, it’s not hard to get reliable feedback on your product and clear direction to inform actionable changes. This allows you to make meaningful improvements to your product and launch much more confidently.
Give yourself the best chance
Concept testing allows you to launch your product with the best possible chance of success. Instead of operating in the dark, guided only by guesswork and opinions, you can lean on real feedback from real customers.
Concept testing is a crucial stage when developing new products. Before you launch a new product in the market, you must understand how your customers will respond and how the product will perform.
Concept testing helps you avoid costly errors and nasty surprises; it is much better to understand your market and make a more confident and successful product launch. In this article, we’ll show you how concept testing works and how to do it. Let’s start with a more in-depth definition.
What is concept testing?
A concept is a precursor to every great product. It’s a detailed outline of what you’re going to produce, who it’s for, the problems it will solve, how it will work, how much it will cost, and much more.
To ensure your concept is ready to go to market, it’s essential to test it properly with real customers. This process is called concept testing, and in the rest of this article, we’ll talk about why this is so important and how to do it methodically.
The benefits of concept testing
Concept testing is the process of testing your concept before launch, so you can confidently put it into the market with a pretty good understanding of how your customers will feel and how they will respond.
There are several different methods spanning both qualitative and quantitative approaches (which we’ll dive into shortly). Still, they all involve presenting concepts to consumers and getting feedback about different attributes.
There are multiple reasons to do concept testing, such as:
You get real feedback from users. Designers and product teams are often too close to the product to make clear-headed decisions, and they might overlook some crucial things. Concept testing allows you to access honest feedback from your target customers, which you can’t replicate with your internal team.
It helps you notice flaws. No concept has ever been perfect. Testing your product with real users enables you to detect problems that flew under the radar in the design phase, giving you many new pairs of eyes.
It allows you to refine your concept. Before testing, your product is a rough prototype with all the major pieces in place, but it probably needs some extra work. By shedding light on what consumers think, testing gives you some direction for refining and improving your product so that it’s more likely to gain traction when it hits the shelves.
The importance of concept testing
The above benefits are essential for many reasons. Here are some of the reasons why you should consider concept testing in new product development:
It’s easier to get backing for your product. Testing gives concrete data about how customers feel about your brand’s products. You can then use this data to make a compelling case to others in the organization about why you are making certain decisions. With this data, it’s no longer a matter of personal opinion, and it will be much easier to convince others.
It helps you find out what your customers like the most about the product. Concept testing is beneficial not just for that specific product and how to market it but also allows you to make better decisions in the future by focusing on the things that people like most and targeting popular pain points with different products.
Testing can help you segment your customer base. Who should you target with your product? If specific demographics love the product and others are less enthusiastic, this is extremely helpful when focusing your marketing and distribution efforts.
It helps you estimate how many sales you’ll make and the ROI you’ll generate with the product when it goes to market. This is helpful when setting budgets, making plans, and getting financial backing from others in your company.
It allows you to identify a reasonable price point. It’s common to ask users how much they would expect to pay for a product during testing. This helps inform your decisions about how much to price your product.
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How to test concepts: the qualitative and quantitative methodologies
Concepts can be tested quantitatively or qualitatively. Qualitative methods for concept testing include focus groups, online communities, and in-depth interviews that allow you to uncover rich qualitative feedback from current or prospective customers relating to your planned product. Ethnography or self-ethnography are other alternatives, particularly if the concept you’re testing is worked up and in prototype form that consumers can interact with at home.
The primary quantitative method used for testing concepts is an online quantitative survey, an approach that allows you to test at scale.
Different approaches for testing concepts
There are four main approaches for concept testing a new product, each with its pros and cons. It’s best to consider your specific situation and then pick one which works best for concept testing your product.
Monadic testing
Monadic testing is where the audience is divided into groups, and each group is given one concept in isolation and asked to evaluate it via a series of questions.
For example, they might be asked to rate the design, evaluate the price, or give feedback on the packaging.
The pros of monadic testing are:
There is less room for order bias since the concepts are shown and evaluated in isolation.
It’s easier for users — they only have one product to focus on, and all the questions apply to that product.
It encourages more profound feedback as users dive deeply into one concept instead of skimming over several different ones.
On the other hand, the main drawback to monadic testing is that it requires a larger sample size to get enough reliable data. It can be costly to gather all the necessary participants and challenging to find enough people to assess niche concepts.
Sequential monadic testing
In sequential monadic testing, multiple concepts are evaluated one after the other. Each participant sees two or more concepts presented in random order. Participants answer questions about each one in turn.
The main benefit is that fewer people are needed, so this results in the following:
Being cheaper to gather enough people and set up the testing
Taking less time to collect a sufficient amount of data
It also works well with niche markets where there might not be many potential customers
The main downside is that it takes longer to carry out each test since participants evaluate multiple concepts instead of just one.
Comparative
In comparative testing, concepts are shown next to each other, and participants evaluate all of them at the same time. It’s an effective way to find out how one concept compares directly against another in the eyes of your customers.
The main advantage of comparative testing is that it’s suitable for measuring small differences and drilling down into the specific advantages and drawbacks of each product. The main downside is that its comparative nature means it’s not very effective when both products are flawed.
Comparative testing is often used as a follow-up for monadic testing to gain deeper insights into a specific product.
Proto monadic
Proto monadic concept testing is a blend of monadic and comparative testing. Customers evaluate a product via monadic testing and then are shown the same product compared to another.
It’s done to confirm the initial monadic results to gain a more sturdy overall conclusion about a product’s strengths and weaknesses.
What to measure
Once you have settled on a testing method, it’s time to consider what you want to measure. There’s a long list of possible factors to analyze with concept testing, and these might vary based on your chosen method.
Here are some common examples of things to measure:
Overall reaction to the product – this measures how customers feel about the product overall and can be measured with a Likert scale (a series of options from “strongly agree” to “strongly disagree”).
Reaction to different elements of the product – you can also use the Likert scale to rate specific aspects of the product, for example, the packaging, ease of use, battery life, and more.
Need for the product compared to the current market – how much demand does your participant think there is for the product? Is there an urgent need for it, or is the market already saturated with similar products?
Comparison with other products on the market – how does your product compare with what’s already out there in the market? Is it a significant improvement on what exists, worse, or just more of the same?
Likes and dislikes – what are the individual things people like and dislike about the product?
Purchase likelihood – this is where you ask your respondents to rate their likelihood of buying your product. You can use a Likert scale for this (“very unlikely” to “very likely”).
Pricing analysis – how much would your participants be willing to pay for the product?
Likelihood of use – how much of a need does your participant have for the product, and what kind of role would it play in their lives?
(Check out this article for examples of how to test new product concepts.)
Testing your concepts is crucial if you want to release the best products to your target market, market them effectively, delight your customers, and see your revenue soar.
How can we help?
It’s crucial to do concept testing properly, so your new products have the best chance of success when they eventually hit the market. To find out how Kadence can help you deliver this, request a proposal or contact the Kadence team here.
Have you heard the story about Steve Jobs dismissing consumer market research as a tool to shape new products? The driving force behind the Mac, the iPod and the iPhone famously said in a 1985 Playboy interview, “We were the group of people who were going to judge whether it was great or not. We weren’t going to go out and do market research.”
It is, of course, one of the most widely debunked stories in business. Apple does conduct consumer market research – and is, arguably, in its pre-eminent position precisely because it innovates using insights generated by analysing in incredible detail its consumers’ behaviours and the market appetite for its products. (There’s video of a young Jobs extolling the virtues of market research for these purposes – it’s 90 seconds well spent.)
The fact is, most new products are very similar to things people have seen before. For every genre-busting innovation there are tens of thousands of new iterations of existing ideas, tweaks to brands and updates to proven sellers. In most cases, some kind of market research will have shaped the new iteration and how it was conceptualised; helped stand up the business case for it; framed the marketing; and guided its introduction to consumers. So how does market research help businesses design and launch successful new products?
Using market research for product development at each stage of the innovation funnel
There are lots of different ways to describe the innovation process, broadly broken down into three phases: ideas, concepts and creation. It’s not a science with a standard formula, however, but there are some common steps. For example, some experts recommend breaking the process into 5Cs:
Capture intelligence about market gaps and organisational potential.
Connect opportunities to capabilities.
Convert ideas and available resources into concepts for products.
Confirm these products are viable in the market.
Conclude by executing a market entry plan for them.
Another way of thinking about it is a series of questions that need to be asked at each stage of the product development process. Market research can help answer them all.
1: What’s the opportunity?
Desk research, analysis of existing customer data and some qualitative investigation can help frame likely areas for innovation. In many cases, an organisation will face an internal problem – overcapacity, falling margins, consumer appetites shifting away from existing products – that also frame the need for new products. The output here is an extrapolation of big trends to identify emerging needs, changing behaviours and whitespace for innovation.
2: What ideas might thrive there?
In some organisations, internal R&D will have a ready supply of potential innovations that might be applied to the opportunity. More likely, R&D and marketing teams will benefit from a brief developed from the ‘opportunity’ phase to direct R&D in more concrete areas. This process might include brainstorming inside the organisation or more formal ideation sessions with an external research agency. At this point surveys can be harnessed to give more shape to the ideation process. In the search for an iterative new product (rather than a genuine technological innovation) there might be 30 broad ideas that can be tested in quantitative surveys to thin down the field.
3: What concepts deliver on those ideas?
In the next stage, focus groups and market analysis can clarify which concepts ought to progress further by exploring the strengths and weaknesses of each idea. This is also where the innovation and R&D efforts of the business are properly moulded around consumer and market insights – and some iteration takes place to align the two. Note that research here isn’t just among consumers in the core market. Channel partners, consumers and suppliers in adjacent industries are all valuable sources of insight and inspiration. For example, when Kadence worked with an airline to develop new first and business class seats, we looked to bedding experts, audiophiles and high-end restaurant maîtres d’hôtel to shape the concepts.
4: How might those concepts perform in the market?
By this point, an organisation should have narrowed its ideas down to a small number of solid concepts. At this stage, a large-scale quantitative survey can be used to identify the concept with most potential to take forward, as well as the size of the potential customer base.
5: What’s the investment case for launch?
The insights gained from market and concept testing will allow numbers to be attached to the product at this point. What might revenues be? What’s the cost to produce the product or service? With research around pricing, what’s the margin likely to be? Does this justify retooling a factory or investment in marketing? This is the “go/no go” point for a new product.
6: What should the final product look like?
Using the research on market potential and consumer attitudes to the new idea, a business can shape decisions on final feature set, ancillary products or services (again, both quant and qual market research will illustrate the need or potential for these), packaging, marketing and pricing.
7: How do we get it out to market?
Research can also highlight optimum product launch strategies, including distribution, adverting and partnerships to make the most of both existing markets and potential follow-ons – whether that’s mass-market adoption for a product designed initially for a niche or early adopters; new demographic segments; or launch into different international markets.
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The known unknowns for new products
There are broadly two types of business keen to answer these questions. First there’s the radical innovators, the people who come up with brand new ideas and product concepts and want to understand whether they stand a chance in the market. This group are interested in ‘unknown unknowns’, the broader trends in consumer behaviour that might hint at acceptance of a brand new idea. We’ll come on to these Steve Jobs types later.
The second, much larger, group understands the innovation funnel in more detail and seeks data to optimise a pipeline of new products. They are interested in ‘known unknowns’ and using the answers to justify, shape and execute a launch.
For this group, the challenge is modelling the potential performance of a new product against a number of variables already visible in the market. These organisations often have a sophisticated process in place to test new ideas and are keen to benchmark any new product in order to validate investment. They will have an algorithm for product development. The more variables they can pin down using market research, the higher the confidence in making those investments.
‘Benchmarking’ in this case might be looking at the performance of products within the target market; or evaluating consumer attitudes to particular features or benefits. This makes it a largely quantitative methodology.
This kind of quantitative approach is often applied with good reason. Standardised questionnaires and clear, consistent methodologies can help ensure that the market research process is more reliable and easier to interpret. And for many larger organisations with a wide portfolio of potential innovations, a fixed investment budget and the need for reliable returns, this rigour can be highly valuable.
But beyond simply looking at the “go / no go” result, it’s important to dig into the reasons why products didn’t pass this hurdle. This can provide valuable insights to inform future development.
Competitor analysis can also reveal opportunities for developing successful product iterations. Research might include:
Rivals’ marketing strategies – what’s their targeting and messaging; what are they missing?
Customer satisfaction with competitor products– where are there discontents that might be satisfied by your product?
Other gaps in the market – such as different price points or localised versions for international consumers.
Other competitor strengths and weaknesses – consider brand halo effects or financial status.
Early-adopter behaviours – in similar markets or using new technologies that might be adapted to your own target markets.
A word of warning – New Coke and the importance of taking the right approach to market research for new product development
But it’s not always done right. There’s no shortage of case studies of new product launches that didn’t go well. And often that’s not because an organisation didn’t do any market research. It’s because they didn’t use it deftly enough.
New Coke is a great example. Coca Cola is an innovative business and wields one of the greatest brands in history. In the 1980s, management decided to rebuild its dominant position with a new formula. Clearly this was a huge decision, and as a market research powerhouse, it took no risks. It spent $4m on development and conducted over 200,000 taste tests across the US to research how consumers would score the new flavour against rival Pepsi. And based on those tests, New Coke was going to be a hit.
But management made a series of errors. In a classic case of confirmation bias, they tended to put more weight behind positive views expressed in focus groups, ignoring those who warned a change would turn them off the brand. They discounted emotional feedback on their brand. And they over-focused on differentiation with Pepsi, which had long marketed itself as the sweeter product.
One big mistake was conducting sip tests instead of researching how consumers would feel drinking a whole can of the sweeter formulation. But narrowing down their research focus – ignoring the context for consumption – they ended up launching a product that turned consumers off the brand altogether.
The error, then, was not failure to conduct market research. It was failure to treat research objectively and apply appropriate methodologies. Management sought justification for their decision – not confidence that it was the right one.
The impact of market research on new product development – giving you the confidence to guide a product launch
The key word here is ‘confidence’. Even iterating an existing product entails risks. Using market research for product development helps reveal and manage that risk – and allows decision-makers to test rigorously against hypotheses for new products, rather than head off down potentially blind alleys.
Note that qualitative research plays a crucial role in helping product developers fine-tune their approach and create innovations more suited to particular audiences. And as the New Coke example shows, qual research can capture the emotional components of product change much better than quantitative analysis might. Every new product launch is a balance between gains and losses for the consumer and understanding that balance is vital.
When it comes to qualitative research, organisations shouldn’t just ask themselves whether to conduct it, but how to conduct it. Whilst central location testing for instance, allows you to ensure the product is experienced in a consistent way during the testing process pandemic lockdowns have obviously accelerated this shift towards at-home testing. New technologies are helping. Augmented reality (AR), for example, is an ideal way to help consumers visualise new products even at the concept stage. Using their mobile phones, they can ‘see’ products in their own home or a work setting, providing valuable depth to qualitative studies at even earlier stages. This is something we’ve piloted with Asahi to test their London Pride packaging and are seeing a number of benefits, such as respondents using AR organically noticing and commenting on small visual details that aren’t picked up by other respondents assessing a 2D concept.
Using market research to guide blue-sky thinking
So we can test against quantitative benchmarks to validate new product development. And we have qualitative studies to test emotional reaction to new products and shape their evolution in ways that will make them more successful. There’s also a third way of using market research for product development: coming up with new ideas in the first place.
This is often called ‘ideation’ and it’s an area where market research has played a key role since the birth of the industry – regardless of what Steve Jobs said. He was right that consumers are typically quite poor at predicting what might define or satisfy meet their own future needs. But understanding how R&D and human appetites come together is core to the market research offering.
Take a dairy business, as an example, that’s facing a slow decline in consumption. One solution would be to increase the appeal of organic products. How might they craft a brief to their own product development team?
Working with Kadence, the company use a structured approach to frame where this innovation might gain some traction in the market. Using proven research techniques, they also explored possible options for further innovation. These can be tweaked and repositioned using further research.
This approach can be further optimised if like us, the research agency has an in-house creative team that can quickly visualise concepts based on consumer feedback. We worked with a global beverage brands wanting to relaunch its range to make this happen. Based on focus groups, we were able to redesign the packaging in a matter of hours in a way that capitalised on insights from the research.
One other process to consider: the ideation sprint. Rather than gradually piecing together some R&D, market analysis and internal feedback before gradually building out a new product for consumer testing, this involves getting all the stakeholders into a project group together to develop new ideas within a short timeframe.
Kadence has conducted these sprints with food manufacturers – where that combination of chefs, technicians, marketing experts, salespeople and researchers working in concentrated bursts over a couple of days can see a menu of ideas created, tested with consumers and refined incredibly quickly. And because these sprints are cross-departmental, buy-in for the new product internally is much greater.
Concluding thoughts
Product development is risky even when you’re not launching a category-busting innovation or changing the world. New flavours, revived branding, tweaked feature-sets or version updates can upset existing product performance or result in costly investment in ideas that might not fly.
Far from stifling product development, market research can deliver reassurance and confidence at every stage, helping inform the choice of new products to pursue, their key attributes, how they might be marketed and what contribution they make to a business operationally and financially.
Marketing textbooks are littered with examples of products or services which flopped when they hit the market.
Take Juicero, in which investors pumped a staggering $120 million – all for a wi-fi connected juice maker which nobody had indicated they wanted or needed. Perhaps unsurprisingly, it was scrapped within two years.
Or ESPN’s mobile phone service, which was pitched at the wrong price – some $400 – whilst also offering the target audience a lack of choice around handset. The service was swiftly shut down, with ESPN instead opting to provide content to Verizon.
And remember New Coke? Launched in 1985, it’s still remembered today as a major marketing misstep.The product was abandoned after only a few weeks, with Cola-Cola reverting back to its old formula.
It’s clear that some of the world’s most innovative companies have failed to accurately foresee the impact of new launches when they hit the target market. Even Google, for instance, arguably launched its wearable Google Glass concept too soon. Its sky-high price did not help, and it failed to connect with consumers.
Fortunately there is a way to avoid this type of failure. By conducting product concept testing before a product launch, businesses are able to develop their ideas in a safe and controlled space with the target audience ahead of launch.
The concept in question can be many different things. It might be a totally new set of product ideas that no one has ever seen before. It might be a redesign or rebrand.
Testing methods can be online, for instance via quantitative surveys or via online communities focused on gathering qualitative insight; or face-to-face, in a focus group or series of in-depth interviews.
Whatever the method, conducting concept testing can pinpoint the value – or otherwise – of specific features and benefits, as well as indicating whether a product concept will be a major hit or a more niche offering which may not justify the cost and resources needed to make a reality.
Concept testing does require an investment in market research, but any costs at this stage will be minimal in comparison to launching a product which goes on to fail.
After all, testing is the process of uncovering what your potential consumers like or dislike about your concept, helping you identify which ideas will fly and guiding their future development to ensure success. What’s more, concept testing can enable marketers to understand what to communicate at launch, whilst also helping to identify the customer segments with the most potential
Here are the five key reasons why concept testing is so important:
1. Concept testing can help you filter ideas so you know which to develop further
Concept testing can help you move beyond blue-sky thinking and determine which of your ideas will be a hit. Rather than relying on subjective opinion, it gives you data that can bring the whole team on board by providing a consensus about which projects to develop and which to shelve.
In this way, great concept testing unites teams behind the ideas that have real potential. There’s no need to worry about office politics or lengthy and frustrating ‘design by committee’. With concept testing you can hear directly from the consumer what’s likely to cut it – and what won’t.
By using a range of qualitative and quantitative techniques, you can understand the consumer view of different concepts, and explore whether the products or services you’re looking to develop will resonate. Employing a range of testing tools enables you to identify the product concepts with the highest appeal, as well as understand how these can be refined. This allows you to move to the next stage of development with confidence.
It’s no overstatement to say that the use of a well-designed, concept testing survey or a skilfully moderated online community can pave the way to success. But any survey template or discussion guide needs to be designed in such a way that ensures that the overall package, as well as individual features or attributes are each assessed and fed back on.
This is something that needs to happen in the early stages of decision-making, too. It cannot be left too late as the point of concept testing is to help you iterate your ideas and to tweak them ahead of launch so that they are primed for success.
2. Concept testing can help you steer clear of bad decision-making.
Testing concepts in detail before launch may sound like it will delay your go-to-market strategy, but in the long run it can save your organisation significant time, prevent financial losses, and protect your relationship with customers. Failed products or services are enormously costly but fortunately concept testing exists not only to help you avoid the bad ideas, but also to uncover those with untapped potential.
Concept testing can help you to find the strongest option to take forward among a number of choices or find ways to improve underperforming concepts. Either way, it’s a great way to ensure, quickly and easily, that whatever you’re planning has a solid chance of success. In this way, concept testing can help you avoid an embarrassing failure and take your product development processes from good to great, thanks to that all-important feedback from those who matter – your customers.
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3. Concept testing can help you understand what elements matter to consumers.
Even if you immediately gauge that your product ideas are likely to fly, there are still many additional things to consider through testing methods – such as your positioning, the kind of packaging or branding that would be considered attractive and – arguably the most important factor in the production of any product or service – the most appropriate price.
In this way, a concept test is a way to optimise your innovation, drastically reduce the risk of project failure and limit excessive costs. Concept testing is crucial for product developers to determine the innovation’s chance of success. It can shed light on blind spots, inefficiencies, misinterpretations or problems that can lead to failure. Using testing methods like surveys as well as qualitative research, via a focus group, in depth interview or online community, can all help to tease out your target audience’s wants or needs.
4. Concept testing enables you to fix problems prior to launch.
The sooner concept testing is undertaken, the more flexibility there is for optimising your initial idea to develop a product that customers truly want and need.
Through concept testing you can understand what elements don’t fly with customers so you can ditch underperforming elements to save costs or iteratively improve concepts so that they better meet consumer needs. With an online community, for instance, it’s possible to develop concepts based on consumer feedback, and then upload them for further feedback, in this way allowing you to refine ideas swiftly.
5. Ultimately, concept testing ensures that you develop products that consumers will buy.
Concept testing puts the consumer voice at the heart of product development, thereby ensuring that new products will resonate with customers, dramatically increasing business performance.
The results of a concept test can help you to identify the pain – or the delight – relating to new ideas. Concept testing can enable you to establish how your product would fit into the lives of your target audience; how often they might use it and, crucially, which product concept they would be willing to pay for.
Good concept testing means getting under the skin of your customer and letting their feelings and needs guide you towards the solutions with the most potential. By putting consumers central to product development, you can develop products and services that outperform the competition.
In order to achieve this, it’s important to partner with skilled market researchers that can design studies that get you the insights you need. From a qualitative perspective, this means professionals that can help people open up, answer fully, and elaborate on their responses to concepts. In an online community for instance, the researcher must carefully guide and curate the discussion in order to gain in-depth feedback.
Ultimately, concept testing gives you a better idea of consumers’ reactions to your ideas. It clarifies the need your solution is addressing, consumers’ perceptions of the product, how it fares against other similar solutions, and what can be done to maximise adoption and market impact.
So it should come as no surprise to learn that this type of market research can have a huge impact on your business, enabling you to understand where to focus efforts in product development by uncovering the view of the target market.
Product development need never be risk, nor the creation of successful products be a wild stab in the dark. If you’d like our support with a concept testing project, please get in touch or request a proposal.
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Senior Marketing Executive
Sales & Marketing
General Manager PR -Internal Communications & Government Affairs
Vital Strategies
Customer Intelligence Director