The Lead User Method: A solution to improve new product success in rapidly changing markets?

Résumé du document

Innovating is crucial for a company in order to satisfy its customers' expectations and to cope with the competition in a market which is everyday more challenging than before. However, coping with the competition doesn't mean offering products which are somehow better or cheaper than the competition. Not at all. One must differentiate itself from the competition by offering innovative products, and the only way to be acknowledged as an innovative company is to stand one step further than the competition. Of course, it is easier to say than to implement.
Indeed, most of the companies try to innovate to rejuvenate their portfolio and to meet new trends. However, around 90% of the new mass consumer goods launched in Europe are failures compared to the 95% rate in the US. It is quite worrying and it is not only a reality in the mass consumer goods market but also in all the rapidly evolving markets. These rates also stress on the importance of new product development processes which can be used as a major tool to decrease these risks of failures.
Most companies implement the traditional marketing research methods to generate new ideas, to develop and assess the potential of new concepts. These methods often try to discover new customer needs by analyzing customer complaints, buying patterns, preferences and enable to test the rate of customer acceptance once a prototype has been created through customer testing, pre-testing before marketing etc. However, these methods rarely offer insights to identify innovations that could have already been developed by users.
A professor of the MIT Sloan School of Management focused his studies on this poorly-known side of the new product development process. Professor Eric von Hippel then defined the Lead User Method, a method designed to deepen our understanding of the innovation process and to improve the success of new product development by identifying who he calls ?Lead users'.

Thus, a company undertaking a new product development process will experience a lot of pressure due to the high rates of new product failures.
How can we decrease the risks of failures and thus improve the chances of success of new products? Would the Lead user method provide a solution? Would it help better assess the needs and trends of the market and design a product that will fit these needs and trends?
This thesis will be aimed at understanding the reasons linked to new product failures and at assessing the conventional new product development methods and the Lead user method in order to provide a hypothesis that will improve the chances of success of new products.

Extraits

[...] What will this product provide the consumer with? From a same idea, many concepts can be 12 Kotler & Dubois, Marketing Management, Pearson Education, 11ème Ed The Lead User Method found according the market the team will decide to target at, the positioning it will give to the product etc. Then the concepts will have to be tested. Usually, a panel of consumers chosen among the target market will be presented the different concepts and their behaviour will be recorded so as to be analyzed later on. [...]

[...] However, it is very important that a good communication and information exchange occur with the marketing department in order to transform the benefits expected by the 19 The Lead User Method consumers into technical characteristics. Communication issues between the R&D and marketing department can produce major misunderstandings and can be very cost-expensive in the end. This step will also enable the NPD team to know the feasibility of the product. Is it feasible? Can we achieve customer expectations? Are the production costs acceptable? How many months will the R&D team need to develop the product? Can we wait for months? [...]

[...] The Lead User Method: A Solution to Improve New Product Success in Rapidly Changing Markets? The Lead User Method TABLE OF CONTENTS ACKNOWLEDGMENTS LIST OF ACRONYMS: LIST OF FIGURES: INTRODUCTION: I. THE INNOVATION PROCESS: TYPOLOGY OF INNOVATIONS AND RISKS A. TYPOLOGY OF INNOVATIONS FROM RADICAL INNOVATIONS TO INCREMENTAL INNOVATIONS 2.THE BOOZ ALLEN TYPOLOGY B.TYPOLOGY OF RISKS LINKED TO INNOVATION II. INPUTS PROVIDED BY TRADITIONAL NEW PRODUCT DEVELOPMENT RESEARCH METHODS A. STEPS OF THE TRADITIONAL RESEARCH METHOD FOR NEW PRODUCT DEVELOPMENT B. [...]

[...] The Adopter Categorization during Innovation Diffusion Process After analyzing the different steps of the NPD process, it is important to understand how the process of innovation diffusion works. The process of innovation diffusion is the process through which the potential customers will become aware of the existence of the new product, will try it, and finally adopt or reject it. Of course, all the consumers won't react the same way and thus won't adopt the product at the same moment. Fig 2 represents the different categories of consumers according to the time they need to adopt a new product. [...]

[...] Eric von Hipple then defined the Lead User Method, a method designed to deepen our understanding of the innovation process and to improve the success of new product development by identifying who he calls “Lead users” Kenichi Ohmae, La Triade : émergence d'une stratégie mondiale de l'entreprise, Paris, Flammarion The Lead User Method Thus, a company undertaking a new product development process will experience a lot of pressure due to the high rates of new product failures. How could we decrease the risks of failures and thus improve the chances of success of new products? Would the Lead user method provide a solution? [...]