Consumer in Product Development

Subject: Management
Pages: 14
Words: 4013
Reading time:
15 min
Study level: Master

Executive Summary

The role of the consumers in the process of product or service development is generally regarded as one of the central forces of customer care strategy development. On the one hand, any company has an opportunity to improve the existing product or service, on the other hand, this may be regarded as a customer care strategy when a company cares for satisfying the interests and preferences of the consumers.

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Even though the product/service development process is aimed at a consumer, there is a general tendency by most organizations to ignore the consumer in the process of developing the product. Recalling the product or making adjustments to the product hurts the product. The process of product development is important for a product since it holds the first impression that the consumers will have towards the product. Therefore, optimizing the process of product development to bring out the best of the product cannot be undermined. Consumer involvement has been an area of focus for most organizations and marketing strategists, as a way of ensuring that a product’s reception is positive. Consumers can be involved at various levels of product development and various organizations use different approaches to fit the specifics of a particular product. The stages may be either linked with the research of the new capacities and opportunities or with the technological process of manufacturing a product or providing a service.

Aims

This paper aims to outline the various stages that consumers are and can be involved in during product development. Hence, the particular instances of product development will be analyzed from the perspective of the usefulness of consumers’ involvement in the process. Additionally, the customer-led innovation concept will be regarded as the ruling force for goods and service improvement.

Literature Review

Consumers’ involvement in the process of product development has been described extensively in business literature. This process could not be left without any attention. However, any research is focused mainly on the theoretic aspects of the customers’ participation, while the clear instances of product development are not regarded as the important research aspects. This literature review aims to analyze the examples of product and service development.

Stages of Consumer Involvement

First, it should be emphasized that the stages of consumers’ involvement are defined by the stages of product development. Hence, if a product manufacturing has not been started, the manufacturer needs to know the preferences of the consumer whether the product will be accepted by the target audience. Hence, the consumers are involved in the development process on the stage of product and audience research. Considering the research by Yang and El-Haik (2003), it should be stated that mobile content operators had to research the target audience. It is stated that the developing process is affirmative and optimistic for the successful cooperation of the audience and a manufacturer. Nevertheless, the controversy is observed independently on the involvement stage. Hence, mobile content and handset producers orient at consumers as the end-users, while cell operators presuppose the consumers may change their preferred operator. Hence, the primary objective of the research is the definition of the required features of the production or service for attracting the maximal target audience. As it was stated by Tyson (205, p. 513):

The primary focus is rather on business customers’ and regulators’ requirements than on end-users’ need. The primary objective of this research is to look at the firm-customer interface, by discovering what kind of customer information is taken into consideration during the new mobile handset development process, how this information is obtained, processed, and further communicated into technical product specification.

Mobile content developers use the approach that is called “Ready, Fire, Aim”. This approach seems very confused nevertheless, this confusion of the approach is closely associated with the ambitious nature of the developers:

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  • Ready – developers study the target audience and try to satisfy the needs of the consumers while planning the service development process.
  • Fire – the service is launched, however, the features of the service are not perfect and differ from the expected project
  • Aim – the service is adjusted and suited for the target audience.

This may be suitable for some virtual goods like cell phone content, nevertheless, this approach is detrimental, as additional resources are spent for adjusting the production.

By the research by Jack (2004, p. 194) it should be emphasized that the involvement of the audience in the development process is the necessary guarantee of product popularity (or at least stable demand) in the circumstances of the shaky economic ground. Companies are aiming to re-evaluate risky behavior by involving consumers. Hence, considering the necessity to expand the model line of cell phones, the Nokia company initiated the study of the target audience’s preferences to decide whether the model with two sim cards will be demanded. Consumers were involved only in the research stage of the product development. This was the evaluation of the risk behavior needed for the implementation of the required innovations. However, these innovations could be not demanded, hence, the risk of losing resources for development might be essential. Considering the possibilities of involving consumers in the development process, there are several ways of minimizing risks exist:

  1. Consumers may be involved in the process of developing or finding a new product. This is effective for higher-priced products or services that are aimed at improving the entire business performance and leapfrogging all the competitors on the market. The only demerit of this approach is that a company may define the product too narrowly for creating a wide demand among the audience.
  2. The second approach presupposes that consumers may be regarded as the advisory board. These groups may control the development cycle of the product, and they become the early adopters of the product. Hence they also become the first buyers and the first assessors of the innovations (Colin, Pinnock, et.al. 2003).
  3. Customer input may be secured by resorting to the “Lead user analysis” approach. This may be regarded as the cutting edge of the product or service adaptation. The only difference in comparison with the previous methods is the involvement of the consumers in the R&D process as well as marketing activity. Hence, this approach is aimed at originating new products, brands, and product concepts (Brethauer, 2002).
  4. Managing marketing risks using the concept of “interactive qualitative analysis” (IQA). This is the research activity with the increased research focus. This analysis presupposes the detailed customers’ audience segmentation and definition of the marketing competitive trends. Hence, a company has an opportunity to refine and confirm the existing marketing opportunities (David, 2005).

Consumer involvement takes place at different stages of product development. According to Innovation represented by John (204), consumers can bring new ideas towards product development. Consumers are identified as being very innovative in the process of preparing a product for the market.

When the consumer is at ease with an organization that the consumer will want to assist the organization in establishing a good product for the market. (Jack, 2004). Consumer involvement is a continuous process that should not just be done when an organization seeks to launch a new product or service.

Levels of Consumer Involvement

Channel Theory

As outlined by Cook and Georgiadis (2004), the channel theory is one strategy that an organization can employ to tap the potential of using the consumer in product development. The channel theory involves the use of “communication, transaction, and distribution channels,” (Business.com, 2010) to involve the consumers during product development. The use of these distribution channels ensures that an organization can make use of the consumer information gathered within these channels to develop a product efficiently. An organization can therefore strategically place tools at various stages within these channels to obtain information concerning a product. Kamali (2002) outlines that the channel theory as applied by Kotler identified the nine objectives of marketing in general. These nine objectives, by John (2004, p. 258), are: “information, promotion, negotiation, ordering, financing, risk-taking, physical possession, payment, and transfer of ownership. These objectives also outline the various stages that the consumer can be involved. Therefore, it is upon an organization to identify the stages or stages where it can advantage.

The brightest example of this theory is the product and service development arranged in mass media. On the one hand, it may seem that this process may be attributed to online marketing, however, this process may is not the part of marketing in an online regime. Hence, internet users have an opportunity to leave their considerations on any product and influence the further development of the project. “Metro 2033” by Russian writer Dmitry Glukhovsky was written with resorting to the channel theory: the novel was posted in internet chapter by chapter. Hence, readers had an opportunity to discuss the plot development, check some mistakes, and even change the plot, as the audience did not wish to part with the protagonist who was killed in the initial variant of the story.

Additionally, most internet projects are developed by the preferences of the target audience and visitors of the web page of the project. The involvement of this type helps to collect as many opinions as possible.

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Mass Customization

The essence behind mass customization is the need to address the specific needs of various consumers. As explained by Kamali from a research conducted by Bidgoli (2010, p. 119):

Conceptualized mass customization as a business strategy that involved customers in the development process of a product or service to address individual needs. The goal was to provide business customers and consumers with a differentiated, low-cost product with input from the customer and efficient production and delivery using information and manufacturing technology.

The addressing of the specific needs of consumers is an important consideration to the consumer and even shows that a company is sensitive towards the needs of consumers. Most companies go for the majority and ignore the needs of the minority population. However, it is through consideration of the minority and the majority that a company can gain a competitive advantage in the market.

In outlining a case where a company employed mass customization as a level of involving consumers in product development, Kamali explains how a company can use it to gain a competitive advantage in the market. By this research (Organisation For Economic Co-Operation And Development 2002, p. 318)”

Empirically tested the concept of mass customization using three levels of validations: case studies of 15 companies using mass customization, plant visits and interviews in the furniture industry, and a survey of 639 companies in the furniture, fabricated metal products, machinery, electric and electronic equipment, transportation equipment, and instruments industries. She used the point of customer involvement and modularity in four production phases—design fabrication, assembly, and use—to classify the firms into four categories: fabricators, involvers, modularizes, and assemblers.

This study outlines an example of a strategy that can be employed by a company when seeking to involve consumers in the process of product development. The observation of how flexible mass customization can be is therefore made. The only pre-requisite is that before a company ventures in mass customization, a thorough study needs to be done to identify the most appropriate strategy in consideration of the targeted consumers and the nature of the product. (Tyson, 2005).

The brightest example of the mass customization approach is the development of the Canon 300 D SLR photo camera. The company collected all the recommendations and preferences from the users of this camera, and cameras of older generations concerning the comfort of regulation, adjustment, and handhold. Additionally, some functions were added based on the preferences of the users. Concerning the fact that this series of the camera is intended for semi-professional photographing, it slightly differs from the regulation principles of more complicated Canon cameras. All the following generations of SLR cameras starting from 300 D were improved by the most reasonable propositions of the target audience.

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On-Line Marketing

Technology has even made the process of buying and selling much easier through the introduction of online purchasing. Companies have rushed in a bid to take advantage of this form of marketing and it currently contributes significantly to the marketing ventures by companies. Various aspects characterize the process of buying and selling over the internet, but two factors are primary to the success; “convenience and ease of use.” In designing a website for online marketing Kamali outlines various important considerations that a company should put into perspective. The key factors that should be stated on the website are: “product description, price comparisons, and detailed information about the vendor.” (Cooper and Edgett, 2004, p. 264) Kamali provides an example of a study done by Neilson. The study by Cooper and Edgett (2004, p. 163) established the following consideration:

The main reasons people bought on the Internet and secondary reasons were the large selection of products and pricing. Shoppers only bought 5% of the time they visited a site, and the other 95% of visits were for product research, comparison-shopping, and other “non-buying tasks”. Respondents wanted detailed information about the product itself when buying a product on the Web, and also looked for price comparison information and detailed information about the vendor.

Therefore the internet does not only provide companies with the opportunity to market their products but also provides a rich environment for using consumers in the process of product development. If only five percent visited the internet and ended up buying, it implies that a large percentage of internet users go there to find out about the products offered.

Online marketing is mainly regarded as the approach which is aimed at promoting products or services. The only feature which may be regarded as the involvement of the consumers in the process development is the opportunity of collecting reviews about product or service quality.

Customer-Led innovation Concept

According to Innovation Point, the process of engaging consumers in the process of product development can be expensive in most instances. Current trends require that companies establish relatively cheaper ways to capitalize on the information provided by the consumer during product development. The traditional methods used by companies where the process primarily involved gathering data from consumers are still the major area of consideration. However, different companies use different approaches. Some approaches use data generated from various studies to make decisions concerning product development. However, this approach is not effective because it is not interactive enough to allow the consumers to be innovative. The approach employs structured questions to seek opinions from consumers. The other approach is qualitative is geared towards establishing the perception of the consumer concerning a product. Although this process is usually interactive, it still does not explore tap efficiently into the potential the consumer has concerning a particular product. Furthermore, this method is already being used extensively by most companies and it, therefore, implies that for a company that seeks to establish a competitive advantage a different approach is imperative. According to Business.com (2010), there are two reasons to obtain information from consumers:

First, these ideas provide valuable insight into unarticulated consumer issues, motivations, and aspirations – the things they are trying to accomplish. Second, while many consumer ideas may be unfeasible, this “wishful thinking” can be used as “ideation springboards” for the design, marketing, and R&D team. Highly impractical, imaginative thinking is often the essential spark for breakthrough concepts.

According to Janssen the process of product development usually follows three stages namely, discovery phase, incubation phase, and commercialization phase. The discovery phase is where a company discovers the potential that a particular product holds.

By the considerations by John (2004, p. 351), it should be emphasized that the customer’s views should be properly analyzed if a new product or service is planned. Nevertheless, most do not know what to ask:

If you are planning a new product or developing an update to an existing one, solicit your customers’ views on the existing product and potential changes to it very early in the design process. This involvement creates the perception of your product or service is tailor-made for those customers; this is a powerful means of increasing customer loyalty. Such customer involvement also strengthens relationships and provides a mutually beneficial service.

The key considerations and aspects that should be considered involve the following:

  • What is the main aim of the product or service, and how it will be used
  • How the current product may be improved
  • What are the most and what are the least obvious problems with the product
  • What are the most important features of the product
  • Which new features will be required
  • Are the innovations included in the development plan

Discussion

Investments for projects that take a very long time are always characterized by certain fears that may arise before completion. The fears are based on issues such as operations costs, revenues, and other aspects that might affect the project in terms of economics. The uncertainties can only be anticipated with a certain degree of precision and it is, therefore, hard to project the actual economic evaluations. The general methods include the application of economics project evaluation methods. Direct marketing methods require that a retailer gets in touch with the shopper on a more personal level. Companies like AGI that are established in the direct marketing business offer retailers a variety of direct marketing options. Contrary to past marketing strategies that used were geared towards reaching many consumers, the current trend is to approach consumers more personally and directly. A customer database of 3000 or more people can provide valuable information concerning issues such as customer preferences and customer purchasing trends including important aspects such as customer demographics. The information can be used as a starting point to steer direct marketing and make it successful. For instance, the reason why some brands of wine are bought more than others could be because the least bought wines are not known to consumers. Telemarketing companies first contact the list of customers targeted by a particular company and request them if they can have some time to interact with the company’s salespeople, this will prevent the company from approaching customers who do not like being disturbed over the phone. The telemarketing company will then follow up on the request and makes sure that as many customers attend the interactive sessions. Telemarketing companies also provide valuable information concerning the right questions and conduct effective marketing research. (Tyson, 2005). The initiative of conducting telemarketing, therefore, requires a professional company and therefore retailers are advised to seek the services of a telemarketing company instead of conducting it internally. Pursuing rented lists or purchasing a list from business to business sounds like a very good idea for utilizing an already available list for marketing instead of developing one’s list. It is however important to buy a particular list because in this way the business will have the chance of seeing the actual mail addresses and even reusing the list for future promotions. The only disadvantage of pursuing lists is that a company might be labeled as a spam company.

Posting information to customers is a very interactive sales tool because it gives the customers a sense of belonging and acceptance and therefore the customer will be convinced to buy more products. Although the posting of information is rather expensive, the information it carries is much and a business can use the method to relay to the customers a lot of information in a single posting. (John, 2004).

All businesses experience favorable economic times when profits are gained without stress or extra effort; however, there are also times of adverse economic situations either in a particular sector or widespread and most businesses are tempted with the choice to retreat just to accommodate the tough times. Business research has currently unfolded various trends that are geared towards cushioning businesses during tough times profit optimization during favorable times. The stiffening of competition in all sectors of the economy has driven most companies to opt for retail marketing as a way of getting closer to the consumer. The customer has principally become the target of retailers with each business striving to build a large and loyal customer base. However, consumer loyalty has proven to be an elusive aspect for most businesses because it is volatile and unpredictable. Most businesses wake up to a surprising defection of customers to a competitor and are left wondering what went wrong. (David, 2005). The concepts for keeping customers loyal are however simple and most businesses rush to implement complex methodologies forgetting the basic concepts. Customers require recognition and respect, they expect a business to offer a competitive shopping environment that is safe and accessible and they require the prices to be pocket friendly. A combination of these factors customers and tailored to suit a particular consumer base will most definitely offer good results for any business. Consumer information is very invaluable information to any keen business because it can be used to determine the most appropriate marketing strategy that will reach the highest percentage of consumers. Furthermore, it also saves business revenue via the use of the cheapest form of advertisement. (Colin, 2003).

Recommendations

Product development by involving consumers is very important because it ensures that what is produced is what is used by consumers. Apple in developing the iPods identified a specific need in certain consumers to listen to9 a variety of music of their choice. Therefore, the company invented the iPod. As outlined by Bidgoli (2010), “…by looking at the needs of consumers and the business ecosystem required to address these needs, it found itself in the music business.” Consumers also play an important role in choosing the kind of technology that is fit for an organization in utilizing technology. For instance, Bidgoli (2010) explains how Wal-Mart has successfully utilized the internet in marketing its products. British Airways, in seeking to establish competitive advantage sought to establish what customers expected. Some passengers through an interactive process outlined that they would want the traveling experience to be just like the experience they have in their homes. Therefore, British Airways embarked on an undertaking of providing services such as laundry, newspapers, and room service. Eventually, the airways managed to stay ahead of its competitors. According to Bidgoli (2005), the process of product development requires that organizations employ radical mental models that can steer the organizations beyond market expectations. For instance, Bidgoli outlines that when IBM established itself as the major company producing mainframes it rested on the comfort zone of being the major producer of PCs. Bidgoli outlines that IBM should have looked at itself as a major producing company in the computer business rather than the production of PCs only. IBM should have gone further and thought of computer software and perhaps it would have presented a major challenge to other companies such as Microsoft. The best strategy would have been to employ radical mental approaches such as the use of consumers in new product development. The lack of a holistic understanding of the needs of consumers’ products even when supported by sophisticated technology risks being rejected in the market. For instance, the joint initiative by Knight-Ridder and AT&T to provide the videotext version of news from the New York Times backfired although it was backed by state-of-the-art technology. (Bidgoli, 2010).

Conclusion

Even though the product/service is aimed at the consumer, there is a general tendency by most organizations to ignore the consumer in the process of developing the product. The implication is that in most instances flaws within the various aspect of the product are realized too late when the product has already hit the market. Recalling the product or adjusting the product hurts the product. The process of product development is important for a product since it holds the first impression that the consumers will have towards the product. It should be emphasized that there is substantial evidence to support the fact that companies that involve consumers during product development experience good results with the products once the product hits the market. Consumer involvement helps companies to mitigate or eliminate challenges, anticipate the degree of competition to expect, and make adjustments early enough.

Reference List

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