Concept Testing

1. Concept Testing Concept Testing Approaches Branding Decisions in Concept Testing Conjoint Analysis

2. Concept Selection • How can the team choose the best concept (even though the designs are still being developed)? • How can a decision be made that is embraced by the entire team? • How can the “good” attributes of “weak” concepts be identified and used? • How can the decision process be systematic?

3. Selecting Concepts • All teams use some method • first concept considered; external decision; product champion; intuition; voting; pros & cons; prototype & test; decision matrices • Potential benefits of a structured method include: • objectivity in decisions • a customer-focused product • a competitive design • reduced time to product introduction • effective group decision making and coordination • documentation of process

4. Concept Screening & Scoring • Prepare the selection criteria and create the selection matrix • Rate the concepts • Rank the concepts • Combine and improve the concepts • Select one or more concepts

5. Step 1 • Prepare Selection Matrix: What are possible criteria for evaluating your “automotive dining” concepts? • Ability to meet each interpreted need • Manufacturing costs • Market need, growth, size • Compatibility with firm’s other products/culture • Compatibility with firm’s current technology • Market competitiveness (cost to maintain position)

6. Step 2 • Rate the Concepts • Using a reference point • Relative performance • much worse than reference = 1 • worse than reference = 2 • same as reference = 3 • better than reference = 4 • much better than reference = 5

7. Step 3 • Rank the Concepts • Use criteria weights (if multiple segments) • Total score for each concept

8. Next Steps 4. Combine and Improve the Concepts 5. Select One (or More) Concepts 6. Move on to Concept Testing

9. Evaluating with Customers • Concept Testing • is used to help screen and refine new product ideas • Conjoint Analysis • used to determine the combination of attributes that maximizes appeal and to insure that customer needs are focused on throughout the project

10. Determine Customer Interest Concept Testing • A concept is composed of attributes and benefits for a particularusage situation • Attributes incorporate a specific product form and technology • see Page and Rosenbaum (1992), “Developing an Effective Concept Testing • Program for Durables,” J Product Innovation Mgmt

11. The Concept Statement • The Customer Value Proposition: • FOR{the ideal customer} • WHO{have the following problem} • MY PRODUCT IS A{product category} • THAT{key differentiating benefit} • UNLIKE{the major competitor} Product Usage Situation Customer

12. The Concept Statement • Format • Narrative

13. The Concept Statement • Narrative

14. The Concept Statement • Format • Narrative • Drawing / Diagram

15. The Concept Statement • Drawing/Diagram

16. The Concept Statement • Format • Narrative • Drawing / Diagram • Model / Prototype • Virtual Reality

17. Virtual Reality • Information Acceleration • http://www.wharton.upenn.edu/learning/futureview/

18. Working Model Prototype Computer Paper & Pencil Developing Concepts to Test Number of items tested More 1 Most Preferred Least Preferred Time to prepare test materials e.g., www.acupoll.com

19. yes yes Is it “believable”? Is it “unique”? Does it solve a “problem”? yes Would it be bought at one of several tested price points? yes BUYER What is generally tested? Can measure potential customer reactions using: (1) 5-pt “definitely not” - “definitely” scales (2) sorting tasks

20. Considerations in the Concept Test • Core Idea vs. Positioning/Commercial Concept Statement • New Brand vs. Old Brand vs. No Brand • Purchase Measure Decisions: • Buyer Intent • Frequency • Price • Product Diagnostics • Attribute Diagnostics

21. Ask the right people... The Chasm Sales Lead Users and Innovators vs. Mainstream Market time Early Market Mainstream Market Pragmatists Conservatives Technology Enthusiasts Visionaries See (1) Rogers (1995) Diffusion of Innovations (2) Moore (1991) Crossing the Chasm (3) www.chasmgroup.com

22. Ask the right questions... • How important is the product “experience”? • Does the customer have to “touch & feel” the product to understand the benefits offered? “Simulate” the Experience

23. How can concepts be tested? • Focus Groups • One-on-One Personal Interviews • Mall Intercept • Phone Interviews • Postal Surveys • Internet Surveys • Hybrids (e.g., phone-mail-phone) Compare in terms of: sample control, concept flexibility, cost see: (1) Pope (1993), Practical Marketing Research (2) McQuarrie (1996) The Market Research Toolbox

24. Typical Analysis Category or Industry Purchase Intent Concept Norm Definitely Would Buy 27% 20% Probably Would Buy 43 40 Top Two Box 70% 60% Might or Might Not Buy 22% Probably Would Not Buy 5 Definitely Would Not Buy 3

25. Summary of Concept Testing • Advantages • relatively easy to get customer input • can be used as an early screen for new product ideas • Limitations • not that helpful for the design and development of specific product forms • not as reliable for discontinuousinnovations

26. Branding Decisions in Concept Tests

27. What is a Brand? • Name, term, sign, symbol, or design, or a combination of them intended to identify the goods and services of one seller or groups of sellers and to differentiate them from those of competition.” - AMA

28. Why Brand? • Identify product • Reduce risk • Reduce consumer search cost • Signal quality • Legal protection • Create product associations • Differentiate product

29. Brand Equity • Sources of Brand Knowledge • Brand Awareness • Brand Image • Strength of Brand Associations • Favorability of Brand Associations • Uniqueness of Brand Associations

30. Types of Brand Associations • Attributes • Product related • Non-product related • Benefits • Functional • Experiential • Symbolic • Attitudes

31. Why Extend a Brand? • Immediate brand awareness • Transfer existing associations • Faster trial • Reinforce core brand

32. Why Not Extend a Brand? • “Boomerang” potential • Dilution (e.g., Samsung) • Bad “fit

33. Conjoint Analysis Primary benefit in addition to (or in lieu of) concept tests: forces a trade-off

34. Conjoint Analysis • Can be used to quantify the relative importance of attributes • Can be used to help determine the combination of attributes that maximizes appeal • Relatively easy for incremental innovation • Requires experts or information accelerationfor discontinuous innovations see (1) Page and Rosenbaum (1987), “Redesigning Product Lines With Conjoint Analysis,” J Product Innovation Mgmt (2) www.sawtooth.com {Sawtooth Software}

35. Major Assumptions • An offering is a bundle of attributes and benefits. An offering can be decomposed into a bundle of “features” for which “utility values” can be calculated. • The utility value of an offering is some simple function of the utilities of the offering’s “feature” levels. • Customers prefer the offering with the highest utility value.

36. Conjoint: Steps 1 and 2 • Identify Relevant Attributes • Survey/Focus Group/Intuition • Salsa Example (Thickness, Color, Spiciness) • Identify Relevant Levels of Each Attribute • Thickness: Regular, Thick, Extra-Thick • Color: Red, Green • Spiciness: Mild, Medium-Hot, Extra Hot

37. Create Profiles for each Combination • 3 thickness (reg., thick, extra-thick) • 2 color (red, green) • 3 spiciness (mild, med/hot, extra hot) • Leads to 3X2X3 = 18 Profiles

38. Conjoint: Step 3 • Choose a Sample • Considerations: • Consumer Involvement • Typicality • Diversity (if multiple segments) • Expertise (if complex or discontinuous)

39. Conjoint: Step 4 • Obtain Customer Judgements • Rank Order • Sort into categories • Rank the profiles within each category • Pair-wise Comparisons • Use a computer package to quickly hone in on important attributes

40. Conjoint: Step 4 - Example

41. Conjoint: Step 5 • Compute Individual Value Systems • Use MONANOVA for rank order data • Output in the form of standardized utilities

42. Output Example

43. Conjoint: Step 6 • Find the average utilities (part-worths) for each attribute • Intuition: Find the attribute with the biggest range in utilities across the different levels • Use graphs/calculations for importance measures • Be careful with averages • Segments may exist • Cluster Analysis can tell you

44. Output Example

45. Let’s consider golf balls... • distance and durability • durability and price • distance and control

46. Conjoint Analysis • Average Average PriceDriving Ball Life Distance • 250 yards 54 holes $3.00 • 220 yards 36 holes $4.00 • 200 yards 18 holes $5.00

47. Your“Optimal” Product Design Driving Distance of 200 yards Average Ball Life of 54 holes $5/sleeve See also Titleist’s Ball-Fitting and Wilson’s Custom Fit

48. How can conjoint analysis be conducted? • One-on-One Personal Interviews • written or verbal concept descriptions • multimedia presentation of concepts • RTI’s TradeOff VR; Sawtooth’s Sensus TradeOff; MIT’s Information Acceleration • networked computer facilities • Moskowitz Jacobs • Mail • written concept descriptions • disk by mail • Internet • the future??

49. Summary of Conjoint Analysis • Advantages • the relative importance of product features can be quantified using customer input • only need to test a relatively small number of actual product designs • Limitations • output is usually not directly linked to actual purchase