In order
to survive, firms must innovate and innovation usually means
new products, new technology, and new production techniques.
But new technology is not sufficient for profitability. Profits
come from sales and sales come from products that fill consumer
needs. Utterback {15}, in a review of studies spanning over
2000 products and 100 industries, indicates that 60-80% of the
successful innovations come from an identification of a consumer
need. To facilitate the effectiveness of R&D spending, market
research must provide diagnostic information on consumer needs.
This does not mean that market research directs R&D but rather
that market research provides key inputs to enhance the creativity
of R&D and focuses problem solving on those technologies that
fulfill consumer needs.
In Allen's
working model of the R&D problem solving process {1,2}, some
of the key steps are to generate critical dimensions, rank these
dimensions on the level of importance, and evaluate alternatives
with respect to these dimensions. Von Hippel {16} suggests that
successful technology fulfills consumer's "dimensions of merit."
That is, criteria that the consumer values such as speed, reliability,
and economy of operation. For example, for analog-to-digital
converters, dimensions of merit might include resolution and
sampling rate. Identifying these dimensions, establishing the
importance of these dimensions, and evaluating technologies
relative to these dimensions are all marketing tasks that can
be accomplished by the analysis of consumer perceptions and
preferences.
This article
presents a case study of one way in which market research can
help focus R&D. We draw on consumer theory and models of new
product concept evaluation to illustrate how R&D can be focused
with marketing analysis. We present the analysis through an
application to the development of new telecommunication technology.
The specific
case is a study funded by the National Science Foundation to
develop telecommunication technology to enhance communication
within government research centers and to lead to decreased
travel and its inherent cost and energy usage. The particular
technology is slow-scan televideo equipment which can transmit
still pictures over ordinary telephone lines. This technology
cannot transmit motion such as that transmitted with closed
circuit telephone or with AT&T's Picturephone, but it is significantly
less expensive to install and use than these technologies. The
target group is scientists, engineers, and managers at one of
the scientific laboratories funded by the United States Department
of Energy. This laboratory, Los Angeles Scientific Laboratories,
has component groups in New Mexico, Nevada, California, and
Washington, D.C.
Although
the basic underlying slow-scan technological capability did
exist at the time of this study, the (applied) R&D task was
to refine the technology to increase consumer acceptance. Possible
improvements included increased resolution, faster transmission,
hard copy availability, reduced size of unit, and other design
improvements. Since each improvement required research effort
and ultimately would increase the production cost of the units,
the task of market research was to focus the development along
those dimensions most likely to increase consumer acceptance.
The market
research in this case is standard, thus we have chosen not to
dwell upon the statistical details, but rather we illustrate
how market research can be used by R&D departments. For technical
details and "how to" suggestions, we refer the reader to three
new product development textbooks: Urban and Hauser {14}, Pessemier
{10}, and Wind {17}. Finally, we note that some early results
of this case are contained in Urban and Hauser {14}.
We begin
by briefly reviewing a model of consumer (or buyer) behavior.
We then present the detailed analysis and resulting managerial
actions.
