Market research: Listen and learn

The practice of mining the internet for customer feedback is not new - what has changed is that online consumers are no longer passive observers. Social media have revealed the direct relationship many have with their favourite brands. Recent youth marketing report Tech Tribe 07 showed that 17% of 16- to 25-year-olds listed brands as 'friends' on their social network pages. This generation believes it has a degree of ownership over brands, and with ownership comes rights. 'Consumers want to be heard and are already using online tools to express what they think and feel,' explains Andrew Needham, founding partner of youth marketing agency Face Group.

No matter how uncomfortable some of this online activity may make companies feel, consumers' expression of opinion is far better than indifference. It also offers an element of creativity that can be harnessed; companies can invite consumers to help develop their brand. In all stages of the innovation process, 'co-creation' is becoming a viable choice.

These developments can cause culture shocks at big companies. Adobe, for example, once jealously guarded its commercial secrets. Yet last year it worked openly with customers in the development of its Lightroom product for photographers. 'The company realised that it no longer matters if rivals get wind of what it is doing,' says Laura Morris, account director at market research agency Nunwood. 'The point is that Adobe is working on this now, it has the customers on board, and these customers will realise that any similar products that come along are copycats.'

Once the choice is made to embark on a process of co- creation with the consumer, the next step is to assemble an online community. This community will operate like a traditional market research panel and can be as broad as the total online market or as narrow as several dozen key users. The question of scale will depend on the task in hand. If the objective is to generate feedback on nearly complete concepts for ad campaigns, product packaging or the products themselves, an open approach can be taken; this means inviting input from customers from across the web. Big brands such as Procter & Gamble, with its Tremor word-of-mouth website, are already well-versed in attracting this sort of broad consumer input.

The scale becomes more intimate when the consumer is put at the heart of the product development process. 'Intimate co-creation means looking at your customer base as a pyramid,' says Needham. 'The top 9% of that pyramid will be passionate about your brand, and from here you can select the 1% with whom you want to work.'

In practice, a closed community will operate like a traditional focus group, but with some important differences. 'It's a combination of focus-group practice and ethnography,' explains Stuart Wood, senior research consultant at online researcher Market Tools. 'Rather than just putting forward questions as you would in a focus group, you observe what goes on and how the group interacts to move ideas on.'

The time period over which groups operate varies widely. Some are maintained for a matter of weeks, with participants 'hot housed' to generate ideas, while others are ongoing. Lego, for example, has run a tightly knit user panel to help develop its Mindstorms product range for the past three years.

Any closed panel has to be managed, and vital to that management is ensuring the direction the dialogue takes is one that serves the brand's needs. Regular 'seeding' of fresh topics for consideration is important. Of his agency's work for Del Monte on a pet-food brand, Market Tools' Wood says: 'Once we'd established the I Love My Dog community for the brand (see case study) we carried out a text analysis across the internet to see which topics dog owners were talking about. The results were then fed into the community to discuss.'

The advantages of the closed panel approach are clear to its growing band of advocates. 'You get left-field ideas that you would never think of yourself, and you get them quickly,' says Needham. To illustrate just how swift the process can be, he points to a recent project for Unilever. Face Group created a community drawn from the company's young consumer feedback site Headbox, whose members are advocates for certain Unilever products. 'The panel came up with detailed designs within two weeks, and in six weeks completed a process that would normally take the company nine months,' says Needham. Three Unilever products are the result, and are due to hit the shelves this year and next.

Slow maturing of response can also bear fruit in this environment. Henry Ford famously quipped that if he had asked customers what they wanted, they would have said 'a faster horse'. Advocates of online co-creation point out that Ford needed to give customers time to use their imagination. 'It's an iterative process,' says David Iddiols, senior partner at HPI Research. 'If you give a group time, it can move ideas forward. We've had focus groups where not much emerges, but through a feedback loop via email the temperature of the response rises as people have time to think about and discuss the material.'

Allowing users to throw around ideas also provides the potential to iron out flaws in a concept that might otherwise accompany a product to market. 'Technology companies in particular can rush to market with products that are inwardly conceived and full of bugs; this process allows them to fix bugs before they launch,' says Morris.

No technique is without its pitfalls, though, and there are areas of the traditional market research process that do not lend themselves well to the online arena. 'In the final stages of product development, when working out the propensity to buy, you really need to take the product to consumers, sit down with them face-to-face, and question their responses,' says Euro RSCG KLP head of planning Nick Murray. 'If a product is to be sold in a retail environment, it also needs to be field-tested and trialled in a shop, not just online.'

Ultimately, there is no escaping the extent to which co-creation devolves key aspects of the creative process to the customer - a shift in power that is not without risks. 'Customers are only one part of the equation,' warns Peter Shaw, director of Brand Catalyst. 'They won't understand what a company is capable of or see what is coming over the hill from competitors or parallel markets. If companies are struggling with innovation, there is no magic fix other than hiring people who can develop ideas, while retaining a grasp of what the company can do.'

Handing customers a blank sheet and asking for ideas potentially limits the scope of co-creation in product development to those companies with sizeable resources. P&G, for instance, predicts that 50% of its innovation over the next five years will come from outside the company. However, any organisation can seek creative input on its processes and products. With a market leader such as P&G setting the tone, it is surely only a matter of time before others follow suit.

CASE STUDY - DEL MONTE

Del Monte in the US set up a 9000-strong online panel of pet owners in 2004. In January 2007, working with Market Tools, it drew on this group to build I Love My Dog, a closed online community of 400 dog owners. Members were selected via an attitudinal questionnaire which quizzed them on the extent to which they anthropomorphised their dogs.

By March, the community was providing valuable feedback. Del Monte had toyed with the idea of launching a breakfast-specific dog snack, but initial concepts had tested poorly. The community quickly established that there was an opening in the market for such a product, with members bemoaning the lack of occasion-specific dog food, such as breakfast, lunch and dinner snacks. The community also refined the product's appearance and ingredients.

In June, Snausages Breakfast Bites was launched, an addition to the Snausages range. The food, which contains added vitamins and is shaped to look like miniature pieces of bacon and eggs, quickly gained a share of the US dog-snack market.

CASE STUDY - IWEB

After years of neglect, online share-dealing venture iWeb was looking a little tired and losing customers. At the end of 2006, the HBOS-owned brand approached direct response agency Creative Juice to launch a marketing campaign. It refused to do so. 'It would have been a waste of money,' says agency managing director James Moore. 'Nothing had been done with the brand so we had no idea what we were going to say and it had no clear identity in an aggressive market.'

Instead, Creative Juice turned to iWeb's 34,000-strong customer base to help build an identity and advertising style. In February 2007, they were emailed an invitation to leave feedback at a microsite. More than 5400 customers answered questions covering areas such as logo style, colour palette and tone of voice. The responses were used to develop an advertising style which was showcased on a second microsite in May, when further input was invited. Respondents were also incorporated in the product development process and quizzed on the elements of rival sites that they would like to see introduced to iWeb. New-look online ads for iWeb were then rolled out in June.