Concept Testing

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Concept Testing

• Concept Testing Approaches
• Conjoint Analysis

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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

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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).

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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

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Concept Testing

• A concept is composed of attributes and benefits
  for a particular usage 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
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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.

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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
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The Concept Statement

• Format

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The Concept Statement

• Format Narrative

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Mail Concept Test -- 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

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The Concept Statement

• Format
• Narrative
• Drawing / Diagram

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Mail Concept Test Drawing / Diagram
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The Concept Statement

• Format
• Narrative
• Drawing / Diagram
• Model / Prototype
• Information Acceleration

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Information Acceleration

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

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Developing Concepts to Test
Number of items tested
1
More
Most Preferred
Least Preferred
Time to prepare test materials
e.g., www.acupoll.com
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What is generally tested?
Can measure potential customer reactions using
(1) 5-pt definitely not - definitely
scales (2) sorting tasks
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Considerations in the Concept Test

• Core Idea vs. Positioning/Commercial Statement
• New Brand vs. Old Brand vs. No Brand
• Price
• Picture
• Category
• Purchase Measure Decisions
• Buyer Intent
• Frequency
• Price
• Product Diagnostics
• Attribute Diagnostics

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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
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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
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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
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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
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Sales Potential Estimation

• Translating concept test results into sales
  estimates
• Assumes awareness and availability
• Translating Intent into sales potential
• Develop the norms carefully for a specific
  market and for specific launch practices
• Examples
• Services 45 chance that the definitely would
  buys actually will buy 15 for the probably
  wills
• Consumer Packaged Goods 70-80 chance that the
  definites will buy 33 chance for the
  probably wills

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Sales Potential Estimation
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Sales Potential Estimation

• Translating Intent into Sales Potential
• Example Aerosol Hand CleanerAfter examining
  norms for comparable existing products, you
  determine that
• 90 of the definites
• 40 of the probables
• 10 of the mights
• 0 of the probably nots and definitely
  notswill actually purchase the product
• Apply those age to Concept Test results

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Sales Potential Estimation

• Translating Intent into Sales Potential
• Apply those age to Concept Test results
• 90 of the definites (5 of sample) .045
• 40 of the probables (36) .144
• 10 of the mights (33) .033
• 0 of the last 2 categories .000
• Sum them to determine the age who would actually
  buy .045.144.033 .22
• Thus, 22 of sample population would
  buy(remember this is conditioned on
  awareness availability)

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From Potential to Forecast

• With Sales Potential Estimates
• To remove the conditions of awareness and
  availability, multiply by the appropriate
  percentages
• If 60 of the sample will be aware (via
  advertising, etc.) and the product will be
  available in 80 of the outlets, then
• (.22) X (.60) X (.80) .11
• 11 of the sample is likely to buy

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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

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Conjoint Analysis
Primary benefit in addition to (or in lieu of)
concept tests forces a trade-off
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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
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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 offerings
  feature levels.
• Customers prefer the offering with the highest
  utility value.

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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

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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

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Conjoint Step 3

• Choose a Sample
• Considerations
• Consumer Involvement
• Typicality
• Diversity (if multiple segments)
• Expertise (if complex or discontinuous)

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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

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Conjoint Analysis Input Salsa Example
Figure 7.2
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Conjoint Step 5

• Compute Individual Value Systems
• Use MONANOVA for rank order data
• Output in the form of standardized
  utilities

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Conjoint Analysis Graphical Output
Thickness Spiciness Color
2 1 0 -1 -2
UTILITY
Regular Thick Ex-Thick
Mild Medium-Hot Ex-Hot
Red Green
0.161 0.913 -1.074 1.667 0.105 -1.774
-0.161 0.161
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Conjoint AnalysisRelative Importance of
Attributes
0 20 40 60 80
100
Spiciness Thickness Color
59.8
34.6
5.6
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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

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Lets consider golf balls...
distance and durability durability and
price distance and control
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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

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Your Optimal Product Design
Driving Distance of 200 yards
Average Ball Life of 54 holes
5/sleeve
See also Titleists Ball-Fitting and
Wilsons Custom Fit
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How can conjoint analysis be conducted?

• One-on-One Personal Interviews
• written or verbal concept descriptions
• multimedia presentation of concepts
• RTIs TradeOff VR Sawtooths Sensus TradeOff
  MITs Information Acceleration
• networked computer facilities
• Moskowitz Jacobs
• Mail
• written concept descriptions
• disk by mail
• Internet
• the future??

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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