The problem with market research is that it attempts to find out what the customer wants, but the customer can only answer based on experience. As such, the answer to the question is market research really effective to find solutions in an innovative world is no. We have already looked at this in Effectiveness Is Not About Faster Horses but we should consider it a little more as it is so important.
In his book Alchemy: The Surprising Power Of Ideas That Don’t Make Sense Rory Sutherland quotes David Ogilvy as saying “The trouble with market research is that people don’t think what they feel, they don’t say what they think, and they don’t do what they say.” This sums up the situation beautifully. I would also add that they don’t know what they don’t know. The problem with market research is that it assumes customers know what they want. Really innovative businesses come up with ideas that customers have never considered and the problem is that the customer doesn’t know they want them until they try and the supplier doesn’t know if they will be a success until the customer has tried them.
Take a few simple examples:
The first people to use mobile phones in the street were laughed at and even abused (the term YUPPIE came into being as a term of abuse) as a result of using them. If you had asked the average “person in the street” if they would pay over £1,000 for a mobile phone they would have told you that under no circumstances would they buy one.
If you had asked most people if they would buy a device that they put in their kitchen that would blast their food with microwave radiation before they ate it then it is unlikely you would get much of a positive response.
How can you possibly sell a car that you need to plug in every night and has a range that drops by up to 30% when it gets cold when you could have a cheaper, more efficient one with an internal combustion engine?
If you had checked on the demand for a platform where you could publicly post all the intimate details of your life and share them with complete strangers – well you get my point.
Market research works where you are trying to find out about minor changes to existing products and services but not where you are being innovative. The problem for market research is that the organisations that will win in the future are those who innovate not those who adapt. Basing what you do tomorrow on what the customer likes you to do today is not effective.
The same problem applies to old fashioned funders like the banks. Before they will look at a project they want to see evidence that there is a market. The problem is there for innovative things is none at the moment. The only evidence for existing things is that there WAS A MARKET not that it will continue. Things are changing fast. Great businesses need to build in budgets for failure as it is only by launching that they will see if something will work.
The only thing that is certain is that on this modern world the winners won’t be those who give the customer what they say they want, they will be those who give the customer what they didn’t even dream they would want until they got it and then couldn’t imagine life without it.
Whilst market research may well be effective at identifying problems it is no longer effective at finding the solution.
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