Companies strive to develop and produce exactly what customers want, when they want it — and to accomplish all of that with no risk of overstocks. But such a manufacturing nirvana has become increasingly difficult to attain, given customers’ quickly changing preferences, the heterogeneity of their demands and the resulting microsegmentation of many product categories. Today, many consumer goods companies have been forced to accommodate smaller markets, as these niches often provide the only path to growth and escape from heavy price competition.
At the same time, forecasting the exact specifications and potential sales volumes of new products is becoming more difficult than ever. Recent studies have confirmed the problems of new product commercialization,1 with newly launched products suffering from notoriously high failure rates, often reaching 50% or greater. The main culprit has been a faulty understanding of customer needs. That is, many new products fail not because of technical shortcomings but because they simply have no market. Not surprisingly, then, studies have found that timely and reliable knowledge about customer preferences and requirements is the single most important area of information necessary for product development.2 To obtain such data, many firms have made heavy — but often unsuccessful — investments in traditional market research.
There is an alternative. Some companies have begun to integrate customers into the innovation process,... To read the complete article, login or sign-up using the form below.
Become a premium subscriber today to read this and all MIT Sloan Managmeent Review articles.
Buy this article. Purchase one or more copies of this article in PDF form.
Become a premium subscriber today to read this article and the entire archive of MIT SMR articles.
Upgrade your existing subscription to premium
Sign in if you are a premium subscriber.
Do you subscribe the MIT Sloan Management Review in print? Enter the email address and password you used when ordering. Don't remember? Lookup your subscription account information
- Register for free access to recent articles and the current issue of MIT Sloan Management Review.
- Subscribe and read articles from the past three years online.
- Premium subscription give you access to the entire archive of articles.
