1. 1 Rev: 02/12/2007 MSE-415: B. Hawrylo Chapter 8 Concept Testing MSE-415: Product Design Lecture #5

2. 2 Rev: 02/12/2007 MSE-415: B. Hawrylo Lecture Objectives: Discuss structured methods for evaluating concept designs. Homework #5 Due.

3. 3 Rev: 02/12/2007 MSE-415: B. Hawrylo Concept Selection Concept testing is part of the overall concept development phase. Perform Economic Analysis Benchmark Competitive Products Build and Test Models and Prototypes Identify Customer Needs Establish Target Specifications Generate Product Concepts Select Product Concept(s) Set Final Specifications Plan Downstream Development Mission Statement Test Product Concept(s) Development Plan

4. 4 Rev: 02/12/2007 MSE-415: B. Hawrylo Concept testing Concept testing is the attempt to predict the success of a new product idea before it is marketed. It usually involves getting people’s reactions to a statement describing the basic idea of the product.

5. 5 Rev: 02/12/2007 MSE-415: B. Hawrylo Concept Testing is Used for Several Purposes Go/no-go decisions What market to be in? Selecting among alternative concepts Confirming concept selection decision Benchmarking Soliciting improvement ideas Forecasting demand Ready to launch?

6. 6 Rev: 02/12/2007 MSE-415: B. Hawrylo Concept Testing Process 1.Define the purpose of the test 2.Choose a survey population 3.Choose a survey format 4.Communicate the concept 5.Measure customer response 6.Interpret the results 7.Reflect on the results and the process

7. 7 Rev: 02/12/2007 MSE-415: B. Hawrylo Concept Testing Process 1.Define the purpose of the test Explicitly articulate in writing the questions that the team wishes to answer with the test. Primary Questions: Which of several alternative concepts should be pursued? How can the concept be improved to better meet customer needs? Approximately how many units are likely to be sold? Should development be continued?

8. 8 Rev: 02/12/2007 MSE-415: B. Hawrylo Concept Testing Process 2. Choose a survey population Choose a survey population which mirrors the target market in as many ways as possible. But how big the population?

9. 9 Rev: 02/12/2007 MSE-415: B. Hawrylo Survey Population Size Factors favoring a smaller sample size: Test occurs early in concept development process. Test is primarily intended to gather qualitative data. Surveying potential customers is relatively costly in time and/or money. Required investment to develop and launch the product is relatively small. A relatively large fraction of the target market is expected to value the product.

10. 10 Rev: 02/12/2007 MSE-415: B. Hawrylo Survey Population Size Factors favoring a larger sample size: Test occurs later in concept development process. Test is primarily intended to gather quantitative data. Surveying potential customers is relatively fast and inexpensive. Required investment to develop and launch the product is relatively high. A relatively small fraction of the target market is expected to value the product.

11. 11 Rev: 02/12/2007 MSE-415: B. Hawrylo Survey Population Size How Big? iPhone Chewing Gum Aircraft Carrier Car

12. 12 Rev: 02/12/2007 MSE-415: B. Hawrylo Concept Testing Process 3. Choose a survey format Typical Survey Formats Face-to-face interaction Telephone Postal Mail Electronic Mail Internet Avoid inherent bias. An internet survey would be a bad choice when surveying a product geared for non-technical customers.

13. 13 Rev: 02/12/2007 MSE-415: B. Hawrylo Concept Testing Process 4. Communicate the concept Verbal Description Sketch Photos/Rendering Storyboard Video Simulation Interactive multimedia Physical appearance models Working prototypes Make sure you communicate the concept in a way that is appropriate for the survey. Example: You can’t show a video via a telephone survey!

14. 14 Rev: 02/12/2007 MSE-415: B. Hawrylo Concept Testing Process 4. Communicate the concept - Issues Description of concept should the information the user will most likely consider when making a purchase. Do not include price unless very high or very low. WHY? Present several concepts if possible.

15. 15 Rev: 02/12/2007 MSE-415: B. Hawrylo Mail Concept test - sketch

16. 16 Rev: 02/12/2007 MSE-415: B. Hawrylo Mail 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 1X a week ( ) ( ) ( ) ( ) ( ) ( ) Would never buy

17. 17 Rev: 02/12/2007 MSE-415: B. Hawrylo Concept Testing Process 5. Measure Customer Response Concept testing can measure Choice between alternative concepts (early in design) Ways to improve concept Purchase intent scale 1.Definitely would buy 2.Probably would buy 3.Might or might not buy 4.Probably would not buy 5.Definitely would not buy Example Survey, page 156.

18. 18 Rev: 02/12/2007 MSE-415: B. Hawrylo Concept Testing Process 6. Interpret Results Concept selection Relatively easy, which did the respondents indicate they liked better? Demand estimation What is the estimated demand of the product after launch?

19. 19 Rev: 02/12/2007 MSE-415: B. Hawrylo Concept Testing Process Demand Estimation Durables Products that are purchased one time. Negligible repeat purchase rate. Examples? Consumer goods Goods that have high repeat purchases. Examples? Q = N x A x P Q= sales (annual) N= number of (annual) purchases A= awareness x availability (fractions) P= probability of purchase (surveyed) = C def x F def + C prob x F prob

20. 20 Rev: 02/12/2007 MSE-415: B. Hawrylo Concept Testing Process Demand Estimation Q = N x A x P Q= sales (annual) N= number of (annual) purchases A= awareness x availability (fractions) P= probability of purchase (surveyed) = C def x F def + C prob x F prob F def – Fraction of respondents indicating they would definitely purchase. F prob – Fraction of respondents indicating they would probably purchase. C def and C prob – Calibration constants usually established by experience of company based upon similar past products.

21. 21 Rev: 02/12/2007 MSE-415: B. Hawrylo Concept Testing Process 7. Reflect on Results 1.Was the concept communicated in a way that is likely to elicit customer response that reflects true intent? 2. Is the resulting forecast consistent with observed sales rates of similar products?

22. 22 Rev: 02/12/2007 MSE-415: B. Hawrylo Next Week October 24, 2007 Homework  No Homework  Prepare for Mid-Term covering Chapters 1 – 8, 16.  Prepare for Mid-Term presentation.