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Concept Testing. Concept Testing Conjoint Analysis February 15 & 20, 2007. 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. Determine Customer

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Concept testing

Concept Testing

Concept Testing

Conjoint Analysis

February 15 & 20, 2007


Evaluating with customers
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


Concept testing1

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


Purposes of concept testing
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).


Procedure for a concept test
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


Concept testing cautions and concerns
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.


The concept statement
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


The concept statement1
The Concept Statement

  • Format

    • Narrative


Narrative
Narrative

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



The concept statement3
The Concept Statement

  • Format

    • Narrative

    • Drawing / Diagram



The concept statement4
The Concept Statement

  • Format

    • Narrative

    • Drawing / Diagram

    • Model / Prototype

    • Virtual Reality


Virtual reality
Virtual Reality

  • Information Acceleration

  • http://www.wharton.upenn.edu/learning/futureview/


Developing concepts to test

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


What is generally tested

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


Considerations in the concept test
Considerations in the Concept Test

  • Core Idea vs. Positioning/Commercial Concept Statement

  • New Brand vs. Old Brand vs. No Brand

  • Concept statement: narrative, drawing, model?

  • Respondent group: Lead users? Large users?

  • Response situation: Where? How?

  • Purchase Measure Decisions:

    • Buyer Intent

    • Frequency

    • Price

  • Product Diagnostics

  • Attribute Diagnostics


Ask the right people
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


Ask the right questions
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


How can concepts be tested
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


Typical analysis
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


Summary of concept testing
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


Conjoint analysis
Conjoint Analysis

Primary benefit in addition to

(or in lieu of) concept tests:

forces a trade-off


Conjoint analysis1
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}


Major assumptions
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.


Conjoint steps 1 and 2
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


Create profiles for each combination
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


Conjoint step 3
Conjoint: Step 3

  • Choose a Sample

    • Considerations:

      • Consumer Involvement

      • Typicality

      • Diversity (if multiple segments)

      • Expertise (if complex or discontinuous)


Conjoint step 4
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



Conjoint step 5
Conjoint: Step 5

  • Compute Individual Value Systems

  • Use MONANOVA for rank order data

    • Output in the form of standardized utilities



Conjoint step 6
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



Let s consider golf balls
Let’s consider golf balls...

• distance and durability

• durability and price

• distance and control


Conjoint analysis2
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


Your optimal product design
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


How can conjoint analysis be conducted
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??


Summary of conjoint analysis
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


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