CONCORD, Mass., June 21, 2007 — A new national study conducted by the Gantry Group LLC reveals that providers of technology based products and services rely on anecdotal data from their own sales force (52%) or look to internal executive teams (43%) to assess the likely adoption of new offerings being considered. As a result, 55% of study respondents reported that 2-4 of their new offerings in the last 3 years had failed to achieve sufficient market traction to justify their investment. In the study, only 16% of respondents report that they conduct quantitative market research to determine market receptivity, prior to investing in product development. Consistent with this data, the single most common concern around new product planning was uncertainty of alignment with market needs and preferences (36%) – no matter the size of the technology vendor.
The study reached executives within 132 technology solution providers who held leadership roles who directly influence and determine their company’s product strategy: 50% held positions of VP or higher in their organizations, with 35% in product management and nearly 30% in marketing or sales.
Without objective market data about the real needs within their target markets, technology solution vendors risk making costly mistakes. According to 43% of respondents, new offerings failed in the market because they represented solutions for which the market had no urgent need, resulting in wasted development and marketing resources (37%). In 57% of the sample the primary process for prioritizing and selecting new product concepts was based on internal management debate and discussion; only 9% of companies rely on systematic market testing to determine market propensity to buy. In the absence of market facts, companies are relying on the beliefs of their own management, introducing a bias that is skewed from what prospective customers actually value.
"Even larger solution vendors with budgets that could accommodate market research are primarily conducting market needs studies within their own customer base, assuming that their customers represent the rest of the market. Not surprisingly, the study showed that these firms (with over 10,000 employees) still wrestle with market alignment uncertainty. Lacking objective, statistically valid market insights – beyond your existing customers - it's quite easy to 'miss the mark' with new offerings," said Dawna Paton, Managing Partner at Gantry Group.
When it comes to developing the product roadmap, respondents were consistent: 58% have no formal cross-functional processes in place and only companies with more than 10,000 employees have implemented formal documentation of development and revisions (64%). Interestingly, the study showed the most likely point for technology vendors to conduct formal primary market research is after a new offering concept has been selected (based primarily or solely on internal beliefs of the management team). However equal weight is given to what the competition is doing (38%) and to the beliefs of the marketing/sales team about what the market values (33%).
"If market research is conducted at all, it is usually done after the vendor has committed internally to a new concept. Our study showed that the primary processes used for product roadmap revision were market research with current (54%) and prospective (37%) customers, and competitive analysis (38%). Unfortunately this means companies are surveying the market's response to features of a new product that was never market tested," said Dale Troppito, Managing Partner at Gantry Group. "It's great that research is used for product development revision, but without new product concept testing, you may be trying to validate features for a product that the market doesn’t really want to buy."
The study also showed that nearly 70% of companies, base decisions about product segmentation on informal input from the sales team, 51% seek input from current customers, and 49% rely on the domain expertise of the marketing group. About 60% of larger technology vendors with over 10,000 employees also use information from secondary research and analysis reports to make product segmentation decisions. Only 16% of the sample reported conducting formal market segmentation research with the broader target market.
About Gantry Group
For the past decade, Gantry Group has created business success for clients with technology-enabled solutions. Gantry Group uses its customized market research services help companies develop strategies to build and sell offerings matched to what their target markets truly value. Gantry Group delivers to corporate marketers the firsthand market insights and predictive measurement capabilities that allow them to make informed decisions as they plan ahead and prepare for future market trends and needs.
Through Gantry Group’s market intelligence, market research, and ROI/TCO benchmarking service suites, more than 450 client companies have identified, positioned and quantified their value within the marketplace. Additional information about Gantry Group can be found at www.gantrygroup.com.
For study results, please call Gantry Group at 978-371-7557 ext 18, or go to http://www.gantrygroup.com/research/category.cfm?cat_id=59 to download directly.
Entire Contents, Copyright © 2007 Gantry Group LLC All Rights Reserved. References to any of the contents in this press release must include Gantry Group copyrights and citation.###