Research Based Marketing - Section 2
Research Based Marketing - Section 2
Section 2
New Product Development
Idea Idea Concept Concept Product Communication Forecasting
Pricing
Generation Screening Screening Testing Testing Testing
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Brain Storming
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Creative Workshops
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Idea/ Concept
Screening
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Concept Testing
• A concept test is the proxy of consumer reaction to any stimuli in the market
place i.e. a concept should be treated as the brand communication to respective
target audience
• Hence consumer acceptance of a concept in terms of Purchase intent is the
heart of concept testing
• At times marketeers think that a concept test can be done quickly and cost
effectively through FGDs !!! This approach is fine but it is just Quick & Dirty
• A Quantitative Study is strongly recommended to conduct a concept test using
face to face interview (FTF or PAPI) through DTD methodology
• Target Audience should remain confined to Bulls-eye and sample should be
spread across key 2-3 markets e.g. Female aged 22 – 35, SEC A&B in KLI for a
liquid dish wash
• An overall sample of 200 to 300 respondents using quota based sampling is
recommended eventually the results should be reviewed on overall basis too
• In case, if we have very diverse market segments (recipe/ tea etc.) then we
might need to increase the sample a bit so that reaction of each market
segment can be ascertained
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Concept Board
• Concept Board should be done in consumer understandable language
• A concept should have 4 Mandatory items
Brand Name
Product Claim
2
3 Product USP
Product RTB
4
Product Specs.
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Action Standard
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Product Testing
Product
New Product Upgrade/
Launch New
Formulation
Competition
New Variant
Benchmarking
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Methodology
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Brand Effect
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Test Design
Monadic Paired
• Two Matched panels • Target respondents evaluate two
• Each panel evaluate one product only products one after the other
• Product placement is rotated to avoid
order bias
Product 1st Product 2nd Product Evaluation based
Product Rating
Placement Placement Placement on Preference
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Action Standard
• Usually marketeers start thinking about the way forward of a product test when the
results are available
• At times this leads to certain compromises or marketeer may be pressured to alter
the criteria of the success to fit the results
• Having a clarity upfront on what to do with the results would even help improve the
test design
• Action Standard is usually set based on Test Product performance scores vs. the
Control Product e.g.
“The product will move forward if found at par or better than the control product on
overall average likert rating”
• Control product is another important aspect of the product which depends on the
test scenario
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
TOT Designs
• Total Offer Test is the combination of a Concept test and a Product test also
knows as Concept & Use Test (C&U)
• First Concept test is conducted with the target audience followed by a
Product test conducted only with concept positives(Top 2 Box on Purchase
intent)
• This design is best suited for the New product Launches where the idea is to
mimic the actual launch scenario
• Concept test serves as the Communication, Positive Purchase intent provides
proxy for trail. Purchase intent after Product test refers to repeat purchase
• Above information becomes an integral input to the Market Forecasting
Model which is discussed in detail in the following slides
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Pricing
• Conjoint Analysis: Most advanced and most widely used for Pricing Research. In
addition to the Price, Conjoint studies are also helpful for product and portfolio
optimization. Market Simulation is another feature that makes it unique vs. other
techniques
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
• Group of products are presented to a customer
• Each product is priced at its lowest level
BPTO
• The consumer is asked to select one product
• The price of the product they select is then increased to the next level, no other prices change
• The consumer is asked to select again
• This process is repeated, until the product reaches its maximum price or the consumer selects
another product
• The study may move through all of the competing products
• Sometimes the process will include the choice “None of the above”, at which time the task ends
BPTO
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
BPTO
Market share of Paris at the lowest price point was 58%, shared
declined to 45% when price was increased to 299 vis-à-vis at
highest price point it will loose all customers
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Price Sensitivity Meter (PSM)
• Originally developed by Dutch economist Peter Van Westendorp in 1976
• PSM is calculated based on four key questions
• Q1: At what price would you consider the product/service to be priced so low that you feel
that the quality can’t be very good? (Too Cheap)
• Q2: At what price would you consider this product/service to be a bargain—a great buy for
the money? (Cheap/Good Value)
• Q3: At what price would you say this product/service is starting to get expensive—it’s not
out of the question, but you’d have to give some thought to buying it? (Expensive/
Premium)
• Q4: At what price would you consider the product/service to be so expensive that you
would not consider buying it? (Too Expensive)
• Usually, PSM is run without any price range or price is not prompted to respondent, however, in
categories where consumers are expected to have low awareness of actual price point all
questions could be done with a price range prompt to make it more realistic.
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Price Sensitivity Meter (PSM)
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Price Sensitivity Meter (PSM)
Point of marginal cheapness (PMC)
• The point of marginal cheapness is the price at which you risk losing the majority of sales
because customers perceive that the product is low in quality. It is found by observing where
the data points relating to Q1 (Too Cheap) intersect with the inverse of Q2 (Cheap/Good Value).
While some customers may still be willing to buy below this price point, the number of sales
that would be gained from those seeking to land a deal will be outweighed by the number of
sales lost.
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
The Birth of Conjoint
Price
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening
Copyright © Markematics 2012 | Confidential and proprietary Testing
Understanding Purchase Behavior
Active
1 Evaluation
2
3
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening
Copyright © Markematics 2012 | Confidential and proprietary Testing
Conjoint Answers
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening
Copyright © Markematics 2012 | Confidential and proprietary Testing
How Conjoint Works
• Estimates psychological tradeoffs that consumers make when evaluating several attributes
together
• Measures preferences at the individual level
• Uncovers real or hidden drivers which may not be apparent to the respondent themselves
• Provide realistic choices or shopping tasks
Choices at Play
Variables Level 1 Level 2 Level 3 Level 4 Level 5
Brand Mobilink Ufone Telenor Warid Zong
On Net Rate (Per 30 Sec) Rs. 0.65 Rs. 0.75 Rs. 0.85 Rs. 0.95 Rs. 0.99
Off Net Rate (Per 30 Sec) Rs. 1.05 Rs. 1.15 Rs. 1.25 Rs. 1.35
Friends & Family Not Available Same as On Net Rs. 0.25 Rs. 0.35 Rs. 0.45
PTCL Rates Not Available Same as On Net Same as Off Net
• What should be the SKU’s lineup? • What is the optimum price point for
• Which variant to keep / discontinue/ my brand/ SKUs?
launch? • At which price I will get maximum
• Which packaging would help to market share / profitability?
increase brand share / image? • What if I increase the price of
• What if competition launches similar brand/SKU?
SKU/ variant? • What if competition follows reactive
pricing strategy?
• What would be the incremental
volume if I reduce the price?
• What should be the SKU’s lineup? • What is the optimum price point for
• Which variant to keep / discontinue/ my brand/ SKUs?
launch? • At which price I will get maximum
• Which packaging would help to market share / profitability?
increase brand share / image? • What if I increase the price of
• What if competition launches similar brand/SKU?
SKU/ variant? • What if competition follows reactive
pricing strategy?
• What would be the incremental
volume if I reduce the price?
26%
25%
Simulation Current 24%
13%
12%
Simulation Current
26%
25%
24%
13%
12%
Ad Concept • Multiple ideas/ concepts are being • 2 Focus Group Discussions are
generated by “Creative” sufficient to understand the
• Consumers appreciation and receptivity of overall consumer reaction
the concept • Cost PKR 100K
Story Board • Creative suggests more than one execution • 4-5 FGDs in 2 key markets
• To avoid production cost on a bad idea • Cost PKR 200K
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Communication Test The New Age
• Eye Ball Tracking is the latest innovation in Ad pre-testing
• Eye Movements accurately reflect visual attention and cognitive thought process.
• You can measure spontaneous reactions and responses without having to filter
respondents’ logical thinking.
• Eye Tracking gives you clearer results and reveals information that is normally
missed with other testing methods.
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Forecasting
• There are several branded tools available for a total offer test mostly based on a C&U
methodology
• Nielsen BASES
• TNS FYI
• RI MICROTEST
• Ipsos Novaction Designor
• Ages Synovate MarketTest
• Almost all of these tools are pretty expensive and lack Pakistani market norming
databases hence the use is very limited
• Usually marketeers work with a guesstimated forecast, however, this guesstimate
could be made a little scientific
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
Forecasting
Units Quantity Source
Total Population 100 % 168,000,000 Demographic Data
Population Aged 10+ 85 % 142,800,000 Demographic Data
Population SEC A to C 45 % 64,260,000 Demographic Data
Incidence of Usage 60 % 38,556,000 U&A Study
Message Reach 60 % 23,133,600 Estimated Number based on the Media Plan
Estimated Number based on Numeric
Availability 80 % 18,506,880
Distribution Target
Concept Test Purchase Intent Top 2 Box result /
Trial 55 % 10,178,784
for Conservative estimate use Top box result
Product Test Purchase Intent Top 2 Box result /
Repeat Purchase 70 % 7,125,149
for Conservative estimate use Top box result
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing
4317 4214
4201
4046 3931
3776 3661
Forecasting 2817
3341
2620
3507
3125
3392
2350 2161
1885 1720
1539 1336
1030 861
668 562
468 678 550 630 656 721
382 384 385 387
0 13
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Trial Period Volume Repeat Volume Total Volume
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Total Population 168 168 169 169 169 170 170 170 171 171 172 172
Population Aged 10+ 143 143 143 144 144 144 145 145 145 145 146 146
Population SEC A to C 64 64 65 65 65 65 65 65 65 65 66 66
Incidence of Usage % 60 63 64 65 66 66 66 66 66 66 66 66
Population 39 41 41 42 43 43 43 43 43 43 43 43
Message Reach % 20 30 40 45 50 55 60 60 60 60 60 60
Population 8 12 17 19 21 24 26 26 26 26 26 26
Availability % 30 35 40 45 50 55 60 65 70 75 80 80
Population 2 4 7 9 11 13 15 17 18 19 21 21
Trial % 55 55 55 55 55 55 55 55 55 55 55 55
Population 1.3 1.1 1.3 1.0 1.2 1.2 1.4 0.7 0.7 0.7 0.7 0.0
Repeat Purchase % 0 70 70 70 70 70 70 70 70 70 70 70
Population 0.0 0.9 1.6 2.5 3.3 4.1 5.0 6.0 6.5 7.0 7.5 8.0
Trial Period Volume 668 562 678 550 630 656 721 382 384 385 387 13
Repeat Volume 0 468 861 1336 1720 2161 2620 3125 3392 3661 3931 4201
Total Volume 668 1030 1539 1885 2350 2817 3341 3507 3776 4046 4317 4214
Idea Generation Idea/ Concept Concept Testing Product Testing Pricing Communication Forecasting
Screening Testing