Customers And Open Innovation Model For Product/Service Development And Improvement

Open innovation model ⁽¹⁾ simply refers to the involvement of customers, their ideas, feedback into the development or improvement of products/services (what customers want).  

This model sounds reasonable, because customers know what you may not know (customer angle) about your product/service, as they have been the ones utilizing it, so they know where you can further improve your product/service and where the problems are.

This model is also in line with the purpose of marketing discipline (theory & practice), in the last five decades both practitioners and scholars have been in agreement that marketing represent the customer focus (what customers want) of an organization, business ⁽²⁾ and that Marketing Managers are middlemen between customers and products ⁽³⁾.

Therefore it is a key responsibility of marketing Managers to create that essential fit between their products/services with its customers, to deliver and capture value. 

Now to develop and maintain that essential fit, I have developed a framework (based on logic, objective facts) that will surely help Marketing Managers to achieve that essential, vital “Fit”.

Okay Got It, So What’s Next ?!

Well when open innovation model is used effectively, it can deliver you (Business/Organization) the precise information/data (yes! No ambiguous, unreliable information) regarding your product/service that if you (as an organization, business) work on would result in right product/service improvements and development of new products/services as per your target market recommendations and that means success, isn’t it?!.

Right! Tell Me How ?!

Let’s start with the customers; basically there are three types of customers

1.      Loyal customers

2.      Customers

3.      Dissatisfied Customers

Loyal customers are usually those 20% (according to pareto principle) percent who delivers 80% of your profits ⁽⁴⁾ while the remaining 20% profit comes from Customers, these customers represent the middle layer between your loyal customers and dissatisfied customers.

Identify your loyal and dissatisfied customers, once you identify who are exactly your loyal and dissatisfied customers. It’s time to move to step two.

Make sure you understand the following chart before reading the rest of the article!

Step Two

Loyal Customers: These customers can tell you how to further improve your product/service, where to go, what they would like to have in your product service.

Dissatisfied Customers: These customers can tell you what’s wrong with your product/service, what they don’t like, what are the reasons they prefer competitors products/services over yours.

Right!, Tell Me More!

Well now you got to find out what loyal customers have to say and what dissatisfied customers have to say about your product/service.

Step Three: Target Market Research

Qualitative and quantitative research methods have been confirmed to deliver relevant data on target market, its structure, trends, competitors and consumer behavior, attitude ⁽⁵⁾. So to know what loyal customers and dissatisfied customers have to say regarding your product/service, go for the traditional research approaches.

Remember that each and every research approach has its strengths and weaknesses therefore use a combination of different research approaches so that weaknesses of one approach are covered by strengths of other and vice versa ⁽⁶⁾.

And to further improve the results of the research, to get that precise information from both loyal and dissatisfied customers, use web and social media research to get to the bottom of what really loyal customers want to say and what dissatisfied customers see as the real problems with product/service that leads to their dissatisfaction.

Web and social media research can reveal those ideas, opinions of the target market which traditional research (qualitative and quantitative) is unable to unearth ⁽⁷⁾.

So utilizing both traditional research methods and web/social media research methods would deliver that precise information (what exactly loyal customers have to say and what exactly dissatisfied customers have to say about your product/service). 

Step Four: Critical Information

Research on loyal and dissatisfied customers would reveal common points, findings (about your product/service) that are common between both customer types.

These common findings are actually the critical points, findings, information and thus should be seriously considered when improving or developing products/services.

Similarly other uncommon findings from both customer types should also be considered.

Step Five

Present these findings to all relevant departments like R&D, Finance (to fund improvements/development of product/service), Human Resource (to hire and train human resource with essential skills required to improve or develop product/service) so on and so forth.

Step Six: Assessment

Once the product/service is altered, improved, developed as per that "precise information" it’s time to assess that development/improvement by conducting target market research in similar fashion.

This will help the business, enterprise to assess the overall progress, where things are heading and what aspects of product/service needs further development or improvement.

Over to you guys, I would really like to have your ideas about this whole framework, what else can be done to improve this approach (winks!).

You may also like to read Do You Have What It Takes to Buy Right Business For Yourself

You may also like to read Product Design: What You as a Designer/Marketer Must Know!

References:

1.      Chesbrough, H. (2003), Open Innovation: The New Imperative for Creating and Profiting from Technology, Harvard Business School Press, Boston, MA.

2.       Gro¨nroos, C. (2006), “On defining marketing: finding a new roadmap for marketing”, Marketing Theory, Vol. 6 No. 4, pp. 395-417.

3.      Moorman, C. and Rust, R.T. (1999), “The role of marketing”, Journal of Marketing, Vol. 63, pp. 180-97 (special Issue).

4.      Pareto principle

5.      Proctor, T. (2000), Essentials of Marketing Research, Pearson Education Limited, Essex.

6.      Deshpande, R. (1983) ‘Paradigms lost’: on theory and method in research in marketing. Journal of Marketing, 47, 101–110.

7.      Mahr, D. (2011), “Customer co-creation of knowledge during the innovation process”, European Marketing Academy Conference (EMAC 2011), Ljubljana, May 24-27, 2011.