In 2007, 10,000 people around the globe were asked about portable digital devices. It was part of a study conducted by the global media company Universal McCann. One of the hottest topics at the time was the first iPhone, which was announced but hadn’t yet been released. Once researchers tallied the results, they reached an interesting conclusion: Products like the iPhone are desired by consumers in countries such as Mexico or India, but not in affluent countries. The study stated: “There is no real need for a convergent product in the US, Germany and Japan,” places where, one researcher later theorized, users would not be motivated to replace their existing digital cameras, cellphones, and MP3 players with one device that did everything.
There’s a growing feeling that something is not working with market research, where billions are spent every year but results are mixed at best. Some of the problems relate to the basic challenge of using research to predict what consumers will want (especially with respect to products that are radically different). But marketers face one additional key problem: Study participants typically indicate preferences without first checking other information sources—yet this is very different from the way people shop for many products today.
In the Universal McCann study, for example, people were asked how much they agree with the statement, “I like the idea of having one portable device to fulfill all my needs.” Indeed, there was a significant difference between the percentage of people who completely agreed with this statement in Mexico (79%) and in the United States (31%). So, in theory, people in the United States were much less excited about a phone that’s also a camera and a music player.
But it was a different story when people got closer to making a decision. They heard about the iPhone in the media, where it was declared a revolutionary device, and read blogs and reviews from real users. As iPhones started rolling into the marketplace, the idea of “having one portable device to fulfill all my needs” was replaced by actual reports from users.
It’s easy to blame the market research firm for this, but this is not our point. We are trying to explain the inherent difficulties in assessing consumers’ reaction in this new era. First, more decisions today are impacted by what we call O sources of information—“Other” information sources, such as user reviews, friend and expert opinions, price comparison tools, and emerging technologies or sources—whereas market research measures P sources—“Prior” preferences, beliefs and experiences. But let’s go beyond that: As we discussed, consumers have limited insight into their real preferences. This is especially true with respect to products that are radically different. Universal McCann correctly reported what it found. What market researchers often underestimate, though, is the degree to which consumers have difficulty imagining or anticipating a new and very different reality. What makes the task of a market research firm even trickier is that just as consumers’ expectations may be wrong (as was the case with the iPhone), there are many cases where industry expectations about what consumers will buy are wrong.
This is just like the research before Sony came out with the Walkman, and found there was zero market demand for a portable cassette player, but management decided to go to market with the innovation anyway.