FOR IMMEDIATE RELEASE
FROM: Nancy Gardner (206) 543-2580
nancylou@u.washington.edu

DATE: October 11, 2004

The most successful way to develop new products is to emphasize satisfying needs consumers aren't even aware they have, according to new research conducted by the University of Washington and Colorado State University. That is, if in developing new products a business relies solely on what customers say they want in a new product, the business is economically very vulnerable to strong competition.

"Paying special attention to what customers do, not what they say, is key to the successful development and marketing of new products," said John Narver, professor emeritus of marketing at the University of Washington and lead author of the study. "In studying patterns of customer behavior, a company can truly understand its consumers' needs and can, in good conscience, occasionally disregard what they claim to want."

The researchers say it's not enough to simply deliver what customers say they want – financially successful companies create products in part based on customer feedback – but rely more on inference and intuition as to what products will appeal to their target customers. The general process of learning about and satisfying customer needs, known as market orientation, has seen a shift from responsive market orientation (knowing what the customer believes he/she wants) to proactive market orientation (anticipating his/her needs). The more proactive market-oriented a business is, said Narver, the greater its new product success will be.

Narver explains that customer needs are of two general types – expressed needs and latent needs. Expressed needs are simply what customers say they want. A latent need is one that the customer is unaware of. Companies often tailor new products to suit customers' expressed needs, a concept known as responsive market orientation. Smart companies, he says, also practice proactive market orientation, in which customers' latent needs are addressed and satisfied.

In their study, Narver and marketing professors Stanley Slater of Colorado State University and Doug MacLachlan of the UW sampled 41 businesses and compared the relationship between responsive and proactive market orientation to the level of success in introducing new products. This is the first study to divide market orientation into responsive and proactive forms and to examine their respective relationships to business performance.

"We found that proactive market orientation is substantially more strongly related to new product success than is responsive market orientation," Narver said. "For any business to successfully create and sustain new products, a responsive market orientation is not sufficient. A proactive market orientation plays a major role in a business's market success."
Examples of proactive market orientation are Steelcase and Rubbermaid, two companies that have devoted considerable effort to anticipating their customers' wants and needs by studying human behavior and have based their design and product decisions mostly on this information.

Steelcase, an office furniture manufacturer, set up video cameras at various businesses and analyzed the tapes, looking for patterns of behavior and motion. The company concluded that employees who work in teams function best if they are able to work both collaboratively and privately. This led to Steelcase's creation of modular office units that can be arranged to permit people to work in teams or alone. The company has led the global office furniture industry in sales every year since 1974.
Rubbermaid periodically sends product developers to fast food restaurants and hospital kitchens in the United States and abroad. A visit to a restaurant in China, where cooks were using ordinary rubber spatulas to stir food as hot as 500 degrees, resulted in the company creating a heat-resistant plastic spatula.

"In order to achieve financial success in the development of new products, a business must do far more than merely listen to the ideas of its customers. Customers' expressed needs are readily known by competing companies who offer the same products and services in hopes of gaining market share. Price competition becomes inevitable when consumers perceive no differences in value among companies' offerings. A company that wants to stay ahead of the game moves beyond customers' expressed needs to discover their latent needs," Narver said.

The paper appeared in the September issue of Journal of Product Innovation Management.