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Test Your New Product Concepts

Test Your New Product Concepts

How much do you spend developing new products each year and how much do you spend marketing these new products? Be honest now. Have all these exceeded your expectations? All right, now, how much did you spend to test these ideas before launch? Iím not talking about showing prototypes to management, investors, or the sales force, but actually measuring the reactions by a good cross-section of your potential customers?

Itís an increasingly competitive world out there and success for new products is not guaranteed by any means. Look around. If one of your competitors has a better track record than you in developing and launching successful new products, I can guarantee that they are doing a better job of testing their new product concepts before launch. Want to improve? Read on . . .

There are a number of different approaches you can use to test your customerís reactions to new products before you roll out the launch. The suitability of a given approach often depends upon where you are in relation to development? Are you at an experimental model stage or has the design been largely frozen? For many clients, the realization that there are major unanswered questions doesnít materialize until shortly before launch, perhaps with internal dissention over what the production forecast should be or where to set pricing.

Letís review some approaches that can be used, starting with products almost ready to launch and working backwards to earlier stages of development.

Test Marketing

Okay, market research is fairly new for your company and you thought you understood the your customersĎ requirements. Youíve developed something and you are practically set to go. The design is set in concrete, the production forecast has been made, and the pricing is pretty firm. What can you do at this late stage?

Most firms would probably consider a test market, sometimes without realizing it. You need not roll out the launch worldwide simultaneously. At the very least, you could consider launching in your home market initially - or perhaps just a region of your home market. You might try launching with different approaches - different price levels, packaging options, advertising approaches, incentives, and so forth. You can observe the results and incorporate the most promising approaches into a larger rollout down the line.

Now, this is better than nothing, but not by much. Suppose there is a major flaw in your new product - if only you had made it faster, smaller, cheaper, priced it lower, planned to manufacture four times as many. Too late. Worse, your competitors have probably been watching you fail and learning from your mistakes.

Suppose you start a bit earlier, a month or two before the launch. What market research could you conduct then

Focus Groups

Probably the most frequently-requested market research in our industry is the focus group. At its most simple, you gather a group of 8-12 customers in a room and show them the new product concept and discuss this.

On the positive side, your competition is much less likely to learn what you are doing compared with a test market. You have much more control over the type of customers who will attend. You control the location of the focus groups, the timing, and the total number of focus groups. Beyond this, you have the opportunity to separately obtain individual reactions and suggestions as well as see the group consensus. The participants generally have a real opportunity to see and touch instrument prototypes and examine results or engage in discussions with product developers. Finally, focus groups represent an in-depth opportunity to go into great detail and frequently last hours to half a day.

On the negative side, clients never want to conduct enough focus groups and the numbers are perilously low to a good statistical relevant extrapolation to an entire market. One or two strong-willed participants can dominate a meeting, overriding a poorly-trained facilitator and drowning out opposing opinions. Many amateur-run focus groups forego the opportunity to gather individual reactions and only capture the group consensus. Three poorly-conceived focus groups involving 36 people, therefore, might just yield three group reactions and lose the value of three dozen individual responses. Finally, since the numbers are quite small, it is difficult to test different price points since you are generally limited to one price point per focus group.

In practice, we find we run relatively few focus groups these days, in preference to running web-based new product concept tests.

Web-based New Product Concept Tests

In such a test, we create a web-based survey questionnaire that gathers background demographics and current usage patterns from a cross-section of potential customers. The new product concept is explained in words and pictures and a series of questions is asked to determine how well the concept was understood and what the reaction to this concept was. Instead of contacting a few hundred potential customers and recruiting a few dozen participants, several thousand potential customers across a broad geographic area are invited to obtain hundreds of participants. Invitations can be sent via traditional mail or, more commonly, via personalized email messages.

The positive side to this approach is the greater statistical relevance from the larger number of participants. Being web-based almost eliminates geographic constraints and a global study can be conducted almost as easily as a national study. Due to the large number of participants, demographic segments can be individually analyzed (academic versus industry reactions, for example). Web-based studies are rapid. When, invitations to participate are sent out via personalized email messages, we begin to see completed responses accumulating within minutes of sending the invitations. Hundreds of responses can be provided to the client within 24-72 hours of beginning the field work. Furthermore, multiple price points can be easily tested by dividing the invitations into groups and directing each group to a separate survey page that tests a different set of prices. Since participants fill out the surveys themselves, there is no need to manually read respondentsí handwriting eliminating data entry time and errors. Finally, since respondents answer the survey at their own convenience, compared with telephone interviews, the respondent is more likely to take time to generate a thoughtful response.

There are a few drawbacks to this approach. Since this is not a face-to-face approach, the new product concept is presented in less depth and detail than in a focus group. Finally, while it is possible to test some tradeoffs in the new product concept and to force respondents to make hard choices, one is still limited in the number of these tradeoffs that can be studied.

We frequently find that the real key to successfully understanding how a customer evaluates a new product concept is by forcing him to choose between sets of alternative features or capabilities. Otherwise, it is all too easy for the participant to decide that everything would be nice to have. Is there an approach that allows the study of this? This leads us to the next stage.

Adaptive Conjoint Studies

In an adaptive conjoint study, the goal is to determine what the optimum feature set would be for hypothetical products presented to a group of respondents. Participants are asked a series of questions that require them to indicate their preference between two sets of product features. Rather than exhaustively testing all possible combinations of features, the study concentrates on finding what features (called product attributes) are of greatest importance for each respondent and focuses on understanding the relationships of these key attributes in as complete detail as possible. In order to do this, each respondentís survey is unique, varying according to the answers given in previous questions.

These days, conjoint studies are usually run over the Internet, with the survey engine residing on a server updating each respondent's choices in real-time, and delivering new sets of trade-offs to each respondent concurrently in its efforts to understand what is most important for each respondent's unique perspective.


About the Author

Michael Eby is the founder of PhorTech International, one of the leading market research firms covering the bioresearch industry. With more than a three-decade background in product management, marketing, advertising, strategic planning, and market research, he understands the need for accurate market information and has developed many of the methodologies his company relies upon today.


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