NEW PRODUCT MANAGEMENT

Chapter 9

Concept Testing

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Many Ideas Are Eliminated Before Concept Testing
PIC eliminates most new product ideas even before they are developed into concepts.
Ideas of the following types are excluded:
Ideas requiring technologies the firm does not have.
Ideas to be sold to customers about whom the firm has no close knowledge.
Ideas that offer too much (or too little) innovativeness.
Ideas wrong on other dimensions: not low cost, too close to certain competitors, etc.

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Market Analysis and Initial Reaction
Market analysis: in-depth study of market area that the PIC has selected for focus.
Conducted immediately after PIC approval.
Initial reaction: preliminary, inexpensive assessment of concepts, which may be flowing very quickly at this point.
Avoid “bazooka effect” (quickly blasting out concepts without forethought)
Do not include idea source in initial reaction.
Respect the “fragility of ideas” — have more than a single person involved.
Use more than pure intuition — keep records and stay objective.

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Suggested Questions for the Initial Reaction
Market Worth: what is the attractiveness of the new product to the targeted customer population?
Firm Worth: Is the new product project viewed positively by management? Does this new product project enhance the firm’s competencies?
Competitive Insulation: Can the product’s advantage be maintained against competitive retaliation?

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Concept Testing Cautions and Concerns
If the prime benefit is a personal sense (aroma, taste).
If the concept involves new art and entertainment.
If the concept embodies a new technology that users cannot visualize.
If concept testing is mishandled by management, then blamed for product failure.
If customers simply do not know what problems they have.
Consider: how useful would be the concept test results for the Ferris wheel? The first microwave? Diet fast food burgers?

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What Is a Product Concept Statement?
A statement about anticipated product features (form or technology) that will yield selected benefits relative to other products or problem solutions already available.
Example: “A new electric razor whose screen is so thin it can cut closer than any other electric razor on the market.”
Recall the importance of getting responses to product concepts and not simply ideas (Chapter 4).

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Purposes of Concept Testing
To identify very poor concepts so that they can be eliminated.
To estimate (at least crudely) the sales or trial rate the product would enjoy (buying intentions, early projection of market share).
To help develop the idea (e.g. make tradeoffs among attributes).

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Procedure for a Concept Test
Prepare concept statement
Clarify specific purposes
Decide format(s)
Select commercialization
Determine price(s)
Select respondent type(s)
Select response situation
Define the interview
Conduct trial interviews
Interview, tabulate, analyze

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Some Key Issues in Concept Testing
Concept statement: narrative, drawing, model?
Respondent group: Lead users? Large users?
Response situation: Where? How?
Interviewing sequence: Is the concept understandable? Believable? Important? Interesting? Realistic? Would it work? What problems do they see? Would they buy?
Test procedure, change and implement, study findings.

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Types of Concept Statements
Noncommercialized concept statement (“stripped description”): just facts, can be in bullet points.
Commercialized concept statement (“embellished description”): sounds like the way the product would be promoted or advertised.
Both are commonly used.
Commercialized statement might produce more realistic customer evaluations, but quality of advertising copywriting can bias results.
Some prefer noncommercialized statement since it is the concept being tested, not its advertising.
Can also do a compromise: a gentle sell that keeps it simple and doesn’t oversell the concept.
If testing several concepts, be consistent and don’t mix types of concept statements.
Also, don’t mix radically new concepts with minor improvements.

Concept Test – Verbal Description
Here is a tasty, sparkling beverage that quenches thirst, refreshes, and makes the mouth tingle with a delightful flavor blend of orange, mint, and lime.
It helps adults (and kids too) control weight by reducing the craving for sweets and between-meal snacks. And, best of all, it contains absolutely no calories.
Comes in 12-ounce cans or bottles and costs 60 cents each.

1. How different, if at all, do you think this diet soft drink would be from other available products now on the market that might be compared with it?
Very different ( ) ( ) ( ) ( ) Not at all different

2. Assuming you tried the product described above and liked it, about how often do you think you would buy it?
More than once a week ( ) ( ) ( ) ( ) ( ) ( ) Would never buy it
Figure 9.1

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Concept Test – Verbal Description plus Sketch
Figure 9.2

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Real-Time Response Survey
Combines best features of focus groups and surveys.
100 participants gather information about the concept via a simulated ad.
Moderator guides respondents through computer exercise (stating purchase intentions, responses to prices, etc. on 11-point scales).
Early results from this dataset are used by the moderator to develop original open-ended questions on new concepts or combinations of attributes.
Dozens of concepts can be evaluated in a three-hour session.

Group Support Systems (GSS) Software in Concept Evaluation
Used in a focus group setting.
Participants respond to different versions of products.
For the aerosol hand cleanser, for example, different applicators, package sizes, effectiveness levels, and price points could be tried.
Group’s responses are averaged and immediately displayed on the screen in the room.
Good concepts are selected and improved on, and more responses are gathered.

Analyzing Results with Benefit Segmentation: Swimsuit Market
Figure 9.3

Comfort
Fashion
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Aqualine
Islands
Splash
Molokai
Sunflare

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Fashion
Comfort
Analyzing Results: Joint Space Map Showing Ideal Points
Figure 9.4

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Benefit Segment Profiles in Car Industry

Figure 9.5

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Aqualine
Islands
Splash
Molokai
Sunflare
Benefit Segment 2
Benefit Segment 1
Overall
Fashion
Comfort
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Analyzing Results: Joint Space Map Showing Ideal Vectors
Figure 9.6

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Conjoint Analysis in Concept Testing: EZPass
Key attributes: number of accounts to open, how to apply and pay for an account, number of EZPass lanes at each toll plaza, etc.
11-minute video of product in action and its effectiveness in reducing congestion.
Respondents all received the video, a questionnaire, and scenario cards showing combinations of attributes.

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Market Research to Support Concept Testing: BASES
300 adult female respondents surveyed.
Nestle Refrigerated Foods example (Contadina Pasta)
75% top-two-boxes score (24% definitely + 51% probably would buy).
Median top-two-boxes score for this category: 61%.
Split respondents into favorable (the 75% in the top two boxes) and unfavorable.
Both groups liked the same things: product is natural, offers variety, is fresh, saves time, is easy to prepare.
Most common negative: price.

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BASES:

Summary of Concept Test Results

BASES (continued)
BASES tried three positioning statements: Homemade, Pasta Dinner, and Superior; Superior was found to have more likes and fewer dislikes and was selected.
Obtain adjusted trial through rough rule of thumb: 80% of the “definitely” + 30% of the “probably” will actually buy, or:

(0.8 x 24%) + (0.3 x 51%) = 34.5%
Assuming 48% awareness and 70% availability, we get :

AW x T x AV = 0.48 x 34.5% x 0.70 = 11.6%

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BASES (continued)
Total number of trial households:

target households x trial rate =
77.4 million x 11.6% = 9 million.
To get an estimate of Repeat, use:

Repeat for similar products = 39%
Average customer repeat = 2.5 times
No. of units bought per purchase occasion = 1.4
Repeat estimate = 39% x 2.5 x 1.4 = 136.5%
(Note: this repeat calculation is slightly different than in the text, but is used at BASES.)

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BASES (continued)
Therefore the final prediction of sales based on A-T-A-R is:

9 million x 136.5% = 12.3 million.
According to Nestle, the greatest uncertainty was in the Repeat estimate of 39%, so a worst case scenario was tried.

Even at a worst-case 27% repeat rate, sales forecast was still 8.5 million which still surpassed Nestle objectives.

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