Concept Development

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Concept Development Testing/Detailed
Investigation
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Purpose of Concept Tests

• Ascertain if concept meets customer needs
• Determine concepts strengths and weaknesses
• Provide an indication about the target market for
  the concept
• Assess market potential

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Marketing Research Methods

• Personal interviews
• Mail survey
• Phone survey
• Focus groups
• Conjoint Analysis
• Virtual prototypes

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Questions to Ask

• Current Practice
• current products they use
• satisfaction with current product
• choice criteria used to make purchase
• rating of various brands on choice criteria
• good and bad points of competing products
• identify benefits/features of ideal product

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Questions to Ask

• New Concept
• understand the concept
• uniqueness
• believability
• key benefits
• importance of key benefits
• likes/dislikes

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Questions to Ask(contd)

• purchase intent
• reaction to proposed price
• problems in using the product
• overall rating
• rating of concept on attributes
• changes they would make in the concept
• extent to which it solves a problem

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Concept Card

• The purpose of the concept card is to focus on
• the potential products benefits/features.
• The concept description may be objective or
• persuasive/promotional. The concept card
• needs to communicate how the product might
• look and function, who might use it, and
• when.

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Types of Devices Used in Concept Testing

• Drawings, illustrations
• Photographs
• Slides
• Video-cassette tape
• Mock-up models
• Prototype

Cost Less Short time to develop Test more
concepts
Cost More Longer time to develop Test fewer
concepts
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Benefits of Concept Testing

• Usually can be done quickly and easily
• Gives valuable information for Go/No Go
• Reasonably confidential
• Truly bad ideas are usually detected
• Can help in identifying market segments and
  product positioning

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Problems with Concept Testing

• Interpreting the results
• Purchase intent vs. actual behavior
• People can find it difficult to react to new
  concepts in a short time
• Testing procedure is usually unreal

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Other Notes on Concept Testing

• Non-probability, small samples used
• The more remote the product idea is from
  customers experience, the more difficult it is
  to get a valid response to the concept
• Use top box or top two boxes of purchase intent
  scores to determine acceptance (Rule 80-90
  favorable)

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Deliverables of Concept Stage

• Product Definition
• Business Case

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Product Definition

• Delineation of customer requirements to be met by
  this particular product project
• The product definition may also include
• Delineation of product specifications based on
  customer requirements

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Example of Business Case Outline

• Executive Overview (1-2 pages)
• Project Description ( 1 page or less)
• Business Assessment
• 1) Market Analysis - market size, market share,
  target segments, demand, pricing, risk
• 2) Competitive Environment - understand the
  environment in which the new product will be
  implemented

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Example of Business Case Outline (contd)

• 3) Scenarios Considered - reasonable
  alternatives should be analyzed
• 4) Regulatory/Legal Considerations
• 5) Implementation Considerations and Schedule
  - resources and timeline
• Financial Assessment
• 1) Revenue - brief description of cash inflows
• 2) Expenses - brief description of expense
  items

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Example of Business Case Outline (contd)

• 3) Capital Investments - brief description of
  each major capital item
• 4) Financial Results - NPV, IRR, ROI for each
  scenario, Net Cash Flow, Income Statement
• 5) Sensitivity and Risk Analysis
• Appendix List
• 1) Financial Summaries
• 2) Detailed Assumptions