Customer Preferences Shape The Innovation Process Business Essay

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This report critically analyses the topic "Working paper on Demand and Innovation: How customer preferences shape the innovation process" This study has been presented and published by NESTA. The analysis has been performed in the following parts

Introduction to the topic

The methodology followed

Evidences and Highlighted Issues

Justification of the recommendations through the evidence

Ethical Issues



The report aims to put forward the extent of influence of the consumer demand on Innovation. The author has tried to present the key findings that investigate as to how Innovation is affected by consumer demand and has therefore managed to support the knowledge for the existing companies which are formulating their strategies and policies according to this fact. The report talks about certain organisations that are losing on this context i.e. missing out on the opportunities where they can take indirect help from the consumer itself by involving them into he processes at an early stage. The author states that these companies can hence gain competitive advantage and profit themselves.

Author states that for any organisation the most important tool for innovation must not be the inputs and the supply side but the consumer demand. (David Mowery and Nathan Rosenberg, 1979) This report says that the process of innovation is driven by the external forces. Hence the strength of any organisation with context to the innovation process must be judged by the consumer demand and not the organisations internal factors like supply and inputs.( (Schmookler, 1966) According to the author the existing technique of measuring the ability of any organisation to innovate is impaired and needs to be repaired. Further along the report explains the process of innovation. This process is divided into eight stages. Author states that consumer demand plays a vital role in all the channels and practices of the innovation process.

Consumer preferences are very important for the innovation process (Schmookler, 1966).Hence the study in the report explains the role of a consumer in the process of innovation. Consumer preferences and their relationship with the innovation process has been stated in the report. Author has tried to focus all attention of the managers and the strategy makers towards the factors and areas that are not yet explored fully. This will help them to consider consumer demand while devising new strategies for innovation. The study has also touched several problems like the data recovery and then further using that information in the Innovation Procedures.

It is being observed that these days a consumer prefers to spend more on his entertainment rather than consumer goods or goods like alcohol. The samples that have been used have failed to show any connection between the demands of the consumers and innovation. But we can see that the innovations that have been made have been possible due to the relation between the staff and the consumer. Hence knowing about the consumers and their preferences has helped in a way or the other. The report talks about the obvious change in the economy. More importance is being paid to the individuals' needs demands and preferences. The economy is gradually shifting to the more knowledge based view. Author has also stated that for the economic growth of any country, there has to be stability in the market forces. Hence the market demand and supply have great importance in the success and the progress of a nation. According to the author if the innovation is led by the consumer demand and preferences, it will be beneficial for the nation as well. It will affect the Nation's economic growth positively and help it in compensating the losses incurred in the Economic downturn.


Author has conducted the research by following the qualitative approach. As the study has been stretched out as a case study, the data collection has been done by conducting interviews and surveys. Qualititative methods includes various approaches one of them being the techniques of observing. Here the researcher silently observes the subject and does not interfere with any of the subject. This method is not considered to be very reliable as it is purely based on the perception of the observer. Other approaches include focus groups, material studying and conducting interviews. The researcher can directly interact with the participants and keep a check on their response. These interviews can be recorded for further accurate results but are still not considered to be that accurate as a limited size of a sample may or may not be a correct representation of a large number of people and the results may vary. (Silverman, 2006)

Primary data collection is the most important part for the quantitative approach of research. It is that information that is collected to contribute to the existing literature so that it can be used further in future. The author has performed certain semi structured interviews. As the study revolves around a topic which are very vast, surveys have also been done so as to collect appropriate data for the research. Author has collected data about the organisations like ASDA, TW etc. All kinds of cases have been taken into account while re searching so as to get a fair result. These questionnaires and interviews covered factors like consumer's preferences, behaviour and demands at different points of time. It covered factors like as to what extent can a consumer agree to pay for an innovated product.


The research has made full use of interviews with well structured questions so as to get the maximum out of the respondent. The questions were drafted in such a way that the respondent's answers were not restricted to the depth of the questions.. These questions were designed keeping in view all kinds of participants categorised according to their age taste and preferences.

Questionnaires for Consumers were prepared according to their point of view and requirements to get their state of mind. The consumers were not selected separately as it was not possible to select from a large number of consumers, but the researcher took care of the fact that the questionnaire was filled by all the people from different strata's of the society to avoid getting a biased response.

Limitations: The efficiency and the reliability of the data can be questioned because the data that has been given for the research can be biased. This also affects the authenticity of the research. The consumers are very directly linked to the research. The study has targeted many different areas of the business. There have been some noticeable changes in the researchers conducted by the past researchers on the same topic.


The report has aimed to extract information and literature from the past researchers. Author has tried to gain and has made available data from same kind of previous researches. However the report has not used any kind of flow charts and graphs therefore by adding the same the quality of the study can be increased. Author has explained with the help of sections and tables which makes it even more convenient for the readers to understand and comprehend from the report. The key findings can be viewed properly and can be easily perceived. The author is of the view that the data that has been collected and has been used is not very satisfactory and cannot be relied. Therefore the conclusive testing is not possible making hypothesis testing difficult. Hence the deductions at the end of this research paper are not being backed by any hypothesis.

Also the author has formatted the data and has presented it in a way which makes it very easy for people to use and understand. All the data that has been collected from different organisations has been set in table with the name of the firm adjacent to it for easy access. The entire data collected by the employees about the customers is affected by the time factor. The responses and their views have been recorded and saved by the employees so it is possible that the time variance can affect as they can forget or not remember the data properly. Another fact that came into light is that there is no organisation which has practically involved any consumer into the process of innovation of the products.

The author has designed a framework for the research which has been made possible because of the data collected from a number of different organisations. Author has attempted to lay down different techniques that can be used to transform the data which is collected in to useful information. This framework has helped to understand the influence of consumer preferences, tastes and attitudes in making a new product. This has helped the business organisations and the people involved in innovation to alter their already made policies regarding innovation and also helped in framing new ones according to the consumers. It is being observed that this framework has given a clear view of the stages when a consumer is and can be included in the process of innovation and also highlights the changing trends in the tastes and preferences of the same.

The research put forward certain recommendations that have affected a few companies and as a result it was found that one organisation did make some changes in the ways of collecting data from the consumer. Thus this is a positive sign and can be considered as a step towards change as a result of the research. The company has altered its process of innovation and has included the involvement of consumer on a bigger scale. Great importance is given to the relationship between the staff and the consumer and interactions are being encouraged.


Knowledge-based economy has come up as a major trend in the International Economy Exploring the characteristics of the knowledge-based economy and establishing an appropriate economic paradigm for accelerating technological innovation is an urgent task for governments. Therefore, in a knowledge-based economic system, the issues concerned with the challenges and the adaptation of competition policy require profound discussion.(George J.Y Hsu, 2008) A framework is devised by the results and findings of the study which is used to depict the trend in the change of consumer demands over a period of time. This trend of consumer demand is one probable factor that is responsible for the inclination of the economy towards the knowledge based economy.

One of the evidence states that consumer needs to be aware of his/her importance. This a very important factor for the organisation and can be a major one in its success in future. But one of the key findings is totally opposed to this evidence.

Another finding states that the organisations do not involve consumer at an early stage of the process of innovation and production. This factor hence makes the organisations lose the chance of gaining more and takes away this opportunity. The findings and the results of the research are not in synch with the evidences.

Organisations can't benefit from the innovation process due to another reason. As one of the key findings starts that the relationship and the connection between the consumer and the staff is passive and indirect. It states that success is basically due to the organisation and not because of the consumers' interaction and involvement. So this is another factor which prevents the organisations to benefit fully.


In any research endeavour, researchers are expected to employ high standards of academic rigour, and to behave with honesty and integrity. By its very nature, qualitative research, is immersed in a 'messy, chaotic reality of on-the-spot personal interaction....sensitivity and experience' Deslea Konza

The author has attempted to collect data from various organisations to support the study and the research. Moreover several interviews and surveys have been conducted which make the process of the research even more sensitive because of the information that is sensitive. Whenever a Qualitative research is being conducted there are a number of issues that need to be taken care of. These issues revolve around the rights, and privacy of the respondents and the researchers. It is not easy to target these issues as the information and the data collected is very sensitive where surveys and interviews are involved. The various factors that need to be considered are:

Privacy: The researcher needs to take care while framing the questions that the questions are not harming or interfering in any ones private space.(Punch, 1986)

Consent: The research involves surveys and interviews. Hence any kinds of questioning or survey need to be done with the consent of the respondent and any kind of information should not be let out without their permission. The researcher should take care that the respondent is able enough to understand and the consent given by him/her is after he has understood the situation and the intention of the survey. (Bogdan, 1992; Evans, 1996)

Confidentiality: The researcher may gain access to any confidential information about the respondent which may be too personal to be let out. In such cases if the information or data is let out this can be harmful for the respondent and can impair his/her image or may cause any kind of loss related to the data exposed.


There are certain ways of dealing with these issues. These are recommended as under:

Issue of informed consent: The researcher should make sure that he has got the informed consent from the respondent and that there is no risk to the participant, before the study or the interview begins. (Fine, 1992)

Privacy: The researcher should keep in mind to avoid talking about personal and private affairs with the respondents. It is advisable to touch such sensitive issues only after a level of comfort has been gained between both the parties.

Confidentiality: Special care must be taken while dealing with confidential data and it should not be mishandled in any case or circumstances. The questions that involve personal issues must be dealt in a way that the respondents don't feel uneasy. This can be done by not including names and any signs of their identity.(Fraenkle, Raffe, 1989)

Comfort: The researcher should maintain level of comfort between both the parties for better results this can be done by gaining proper knowledge and history of the culture and habits of the respondents. In this way the respondents will feel easier to communicate and open up and will benefit the results and the findings will be more accurate.(Raffe, 1989)

Every research has to undergo these and many more ethical issues that arise whilst the study. The researcher has not talked about any such issues in the study. There are no issues of privacy and confidentiality and nothing has been mentioned in the report. Also the report has no clue of any kinds of benefits that can be gained by the respondents and the researcher both by this study and the processes involved.


The conclusion of the report is Ambiguous. Since the authenticity of the research and the study is based on how the researcher has perceived different factors. So it depends on the approach and the perception of the researcher. The data that has been collected by different organisations has not been fully provided for a better understanding of the factors and key findings. Surveys and interviews have been conducted but the questions are not provided properly so the readers can't comprehend the report and the purpose and intention of the survey neatly. The answers and the responses of the questions are not listed and this makes the credibility of the survey results even more doubtful.

The size of the sample used in the research is very small and should have been large for a better understanding. It is difficult to understand the key findings and the conclusions as they are related to big issues like the growth of the economy and its affect on the nation to move and shift to knowledge based economy. The author has indeed tried to put forward an important factor that affects the process of innovation. But the conclusions and the recommendations that have been listed can only be tested once they have been used and tested by some companies so as to gain a practical understanding of the affect of consumer tastes and preferences on the various stages on innovation.