In a recent letter to Amazon shareholders, Founder and CEO Jeff Bezos said consumer feedback didn’t lead to the development of Amazon’s popular Echo device.
“No customer was asking for Echo,” Bezos wrote. “This was definitely us wandering. Market research doesn’t help. If you had gone to a customer in 2013 and said ‘Would you like a black, always-on cylinder in your kitchen about the size of a Pringles can that you can talk to and ask questions, that also turns on your lights and plays music?’ I guarantee you they’d have looked at you strangely and said ‘No, thank you.’”
As Mr. Bezos admits, they were “wandering.”
This statement by Bezos sparked a lively dialogue in our own MarketResearch.com offices. Many of our analysts found it laughable that the Amazon Echo was truly developed as a result of an intuitive, non-linear hunch — without significant consumer data and analysis to back it up. Others contested the idea that Echo’s launch was a pure success story, and that market research wasn’t a much-needed step to help prevent costly missteps.
“He’s wrong, of course… in his example, he was asking the wrong question,” according to one long-time analyst. “Of course, no one was looking for that exact item… you don’t ask your customers to INVENT your product… but you do look for how you can solve your customer’s problems. Good market research addresses trends in pain points and notes how people are using products in an unorthodox way. That is what tells you where industries are headed.”
Another analyst commented, “Amazon surely had market research indicating that customers wanted hands-free music, home connectivity, multifunctional devices, and faster/easier searching for information. It was then Amazon’s job to develop a product to serve all of those needs. Market research tells you what you need to know, but the company has to decide how to act on it. Without market research, you’re flying blind. If Amazon didn’t know that customers wanted all of these things, there’s no way the development of the Echo would have been as successful as it was.”
Mr. Bezos is overlooking another key point: How many mistakes and problems the roll out of the Echo had. "The development process is always improved by more information," noted one analyst. "Mistakes are costly." After all, Amazon may be willing and able to take large-scale risks and survive the occasional "multibillion-dollar failures," as Bezos mentioned in his letter to shareholders, but most companies have a much smaller margin for error — and cannot afford to waste resources on this level. One of the main benefits of third-party market research is its ability to mitigate risk and help prevent outsized mistakes, which is why it's often required in order to secure investment backing.
“Is it crazy to call Bezos wrong?” another analyst said. “Not at all. If he wants people to think that Amazon wasn’t monitoring purchasing trends/consumer attitudes toward utilization/acceptance of that sort of technology in their daily lives, then all I can say is ‘I’m sorry, I didn’t quite get that.’”
But perhaps the crux of the issue is misunderstanding what market research is and what it can do for you.
As one analyst points out, it comes down to semantics: “From our perspective Bezos was talking about consumer research, and not really market research as we use the term. Both are useful sorts of information, but they aren’t really the same thing.”
So what’s the real story here?
Throughout his letter, Bezos applauded the idea of "wandering" and using your "intuition and heart," as opposed to the cold efficiency of data-driven decision making. But if you look on Amazon's current job board, you'll see plenty of positions that are focused on market data and insights. Search for "market research" and other related keywords, and you'll see dozens of job openings, including "Market Segment Research Manager," "Sr. Segment Research Analyst," "Senior Market Intelligence Research Lead," "Senior Customer Research Manager," "Consumer Insights Manager," "Competitive Intelligence Manager," "Commercial Insights Manager" — and the list goes on. Bezos may be vocally championing the idea of following your gut, but he's investing in market research, too.
At MarketResearch.com, we’re not surprised. Most companies don’t have the time to “wander” through their next market, acquisition, or fundraising, so they rely on market research — because sometimes you need to get it right the first time.
