Product and Innovation Management Topic 7 Concept testing Product and Innovation Management Topic 7

What is a new product concept statement? ‘A new electric razor whose screen is so thin it can cut closer than any other electric razor on the market’ ‘A copier that has twice the speed of current models’ ‘This new refrigerator is built with modular parts; consequently, the consumer can arrange the parts to best fit a given kitchen location, and then, rearrange them to fit another kitchen’ Positioning

Considerations in concept testing Decide on target market segment – Targeting and Segmentation Decide on the format Decide on whether to ‘commercialise’ the new product concept statement Decide on whether to provide information of competitive products Decide on whether to tell the price Decide on the respondent group Decide on the response situation Decide on the information required

Types of format 1. Narrative 2. Picture 3. Prototype 4. Virtual reality

Narrative format New diet soft drink A major soft drink manufacturer would like to get your reaction to an idea for a new diet soft drink. Please read the description to the right. Then ask questions … New diet soft drink Here is a tasty, sparkling beverage that quenches the thirst, refreshes, and makes the mouth tingle with a delightful flavour blend of orange, mint, and lime. It helps adults and kids control weight by reducing the craving for sweets and between-meal snacks. And, best of all, it contains absolutely no calories. Come in 330 ml cans and price 80 pence each.

Picture format Aerosol hand cleanser A large-size can of hand cleanser concentrate that completely eliminates those lingering unpleasant odors that come from handling fish, onions, garlic, furniture polish, etc. Just press the button and spray directly on the hands, rub for a few seconds, and rinse off under the faucet, 500 ml aerosol can will last for months. Price £3.50 each. Then ask questions …

Prototype format Useful in special situations -> Simple-to-prepare food products -> Very complex concepts

Virtual reality format Do we need to provide lots of detail for respondents to concept testing? Capture the advantages of the prototype format without most of its disadvantages

Should the new product concept statement be in a commercialised tone? Compare these two statements: ‘Light Peanut Butter, a low-calorie version of natural peanut butter that can provide a tasty addition to most diets’ ‘A marvellous new way to chase the blahs from your diet has been discovered by General Mills scientists – a low-calorie version of ever-popular peanut butter. As tasty as ever and produced by a natural process, our new Light Peanut Butter will fit most weight-control diets in use today’ Reason why choose second one: More detail/reality/ First one is clear to find key benefit Solution: cannot commercialise too much

What is the typical information required in concept testing? Explore respondents’ current practice in the product area concerned Then explore their understanding and comment about the new product concept -> Understanding of the concept -> Uniqueness of the concept -> Believability of the concept -> Importance of the concept -> Interest in the concept -> Usefulness of the concept -> Possible changes made in the concept -> Applications of the concept -> Product/process replacement arising from the concept -> Users of the concept -> Adoption of the concept – buying intention question

Typical buying intention question How likely would you be to buy a product like this, if we made it? □ Definitely would buy □ Probably would buy □ Might or might not buy □ Probably would not buy □ Definitely would not buy Two issues: (1) Use ‘try’ instead of ‘buy’? (2) How to interpret the result?

Purposes of concept testing 1. Be assured of the quality of the product 2. Save time 3. Reduce cost 4. Identify the very poor concept so it can be eliminated 5. Estimate sales or trial rate that the product would enjoy, through asking a buying intention question 6. Fine tune the concept 7. Breed ‘basic’ marketing strategy

Advantages of concept testing Quick and easy Sort out less valuable concepts Learn a lot about buyer thinking of the concept Develop positioning, targeting, and segmentation

Disadvantages of concept testing Respondents need a learning period Stimulus of a concept statement is very brief Situational variables may change between concept testing and launch Some attributes cannot be measured through concept testing

When concept testing doesn’t help … 1. When the prime benefit is a personal sense … 2. When the concept embodies new art and entertainment … 3. When the concept embodies some new technology that users cannot visualize … 4. When users don’t know what problems they have … 5. When it is mismanaged …

Identify benefit segment Why? How?

Perceptual map Cola flavour 0.8 0.4 Dietness 0.0 -0.4 -0.8 -1.5 0.0 Dr Pepper Tango 0.4 Coke Pepsi 7-Up Dietness 0.0 Diet Tango Diet Pepsi -0.4 Diet 7-Up Diet Coke -0.8 -1.5 0.0 1.5

Importance map Cola flavour 0.8 0.4 Dietness 0.0 -0.4 -0.8 -1.5 0.0

Joint space map Overlay the benefit segments onto the perceptual map What if there are more than two attributes that are important to customers in choosing products

Full screen 1. Score each hypothetically important factor of technical and commercial accomplishment of each new product concept 2. Weigh each of these factors 3. Calculate weighted score for each factor 4. Calculate grand total of weighted scores of all the factors being considered

An example of full screen scoring form Category Factor 5-point Likert scale Score Weight Weighted score Technical accomplishment Technical task difficulty From ‘Very difficult’ to ‘easy’ 4 16 Research skills required From ‘Have none required’ to ‘Perfect fit’ 5 3 15 Development skills required 2 10 . Commercial accomplishment Market volatility From ‘High/erratic’ to ‘Very stable’ 6 Probable market share From ‘Fifth at best’ to ‘Number one’ 25 Probable product life From ‘Less than a year’ to ‘Over 10 years’ 9 Grand total 450

Why full screen? 1. To decide whether and how much technical resource should be devoted to the concept Whether we can do it and whether we want to do it 2. To help manage the new product management process (1) Cycling unacceptable but potentially worthwhile concepts back into concept development (2) Rank ordering acceptable concepts (3) Recording appraisals on rejected concepts 3. Encouraging cross-functional communication