PRODUCT DEVELOPMENT

(Conjoint analysis - concept testing - test marketing - launch)

Soumyajyoti Halder
Shubham Yadav
Kaushal
Saurabh Pathak
Antriksh Agarwal
18th August, 2010 Ganesh Chetty
 AGENDA

 Introduction

 Conjoint Analysis

 Concept Testing

 Test Marketing

 Product Launch
Introduction
Metric/non-metric input (preferences)
converted to interval scaled output
(utility)
I like IBM more than Toshiba, which I
like more than Fujistu.
What does it mean to say about my liking
for Laptops?
An interval level scale for preference is
needed.
Objectives
 Todetermine the contributions of predictor variables
and their respective values to the determination of
consumer preferences.

 Toestablish a valid model of consumer judgments

useful in predicting the consumer acceptance of any
combination of attributes, even those not originally
evaluated by consumers.
 A Simple Example
To develop a new Golf Ball.
3 important product features were
identified from Experience and talking
with Golfers
◦ Average driving distance
◦ Average Ball Life
◦ Price
Feasible alternatives from each of this Features

Average Driving Average Ball

Distance life Price

275 yards 54 holes Rs. 125

250 yards 36 holes Rs. 150

225 yards 18 holes Rs. 175

Obviously the ‘Ideal Product would be :

Average Driving Average Ball life Price

Distance

275 yards 54 holes Rs. 125

the ‘ideal ball’ from the cost of Manufacturing perspective

would be

Average Driving Average Ball life Price

Distance

225 yards 18 holes Rs. 175

Traditional research Project might start by considering the ranking for distance
and ball life.

Rank Average Rank Average Ball

Driving life
Distance
1 275 yards 1 54 holes
2 250 yards 2 36 holes
3 225 yards 3 18 holes

This type of Information doesn’t tell us anything that we didn’t already know
about which ball to produce.(product development)
Now considering the same features conjointly
(Ranking given from 1 to 9 scale)

Group 1 Average Ball Life

54 holes 36 holes 18 holes
275 yards 1 2 4
Average
Driving 250 yards 3 5 6
Distance 225 yards 7 8 9

Group 2 Average Ball Life

54 holes 36 holes 18 holes
275 yards 1 3 6
Average
250 yards 2 5 8
Driving
Distance 225 yards 4 7 9
Figure out a set of values for Driving Distance & a second for Ball life for Group
1, so that when we add these values together for each ball they reproduce Group 1
rank orders

Group 1 Average Ball Life

54 holes 36 holes 18 holes
50 25 0
275 yards (1) (2) (4)
100 150 125 100
Average
250 yards (3) (5) (6)
Driving
60 110 85 60
Distance
225 yards (7) (8) (9)
0 50 25 0

Note – We could have picked many other sets of numbers, that would have worked,
so there is some arbitrariness in the magnitudes of this numbers, even though their
relationships to each other are fixed.
Now, Suppose Group 1 is willing to make trade-off between ball life and Price.
The following figures shows a set of values for price that when added to those
ball life reproduce the ranking for group 1.

Group 1 Average Ball Life

54 holes 36 holes 18 holes
Rs. 125 1 4 7
Price Rs. 150 2 5 8
Rs. 175 3 6 9

Group 1 Average Ball Life

54 holes 36 holes 18 holes
50 25 0
Rs. 125 (1) (4) (7)
20 70 45 20
Rs. 150 (2) (5) (8)
Price
5 55 30 5
Rs. 175 (3) (6) (9)
0 50 25 0
We now have a complete set of values(referred to as Utilities or Part-Worth) that
capture group 1’s Trade-off

Average Driving
Average Ball Life Price
Distance

275 yards 100 54 holes 50 Rs. 125 20

250 yards 60 36 holes 25 Rs. 150 5
225 yards 0 18 holes 0 Rs. 175 0

We would use this information to produce which ball to produce.

Suppose we were considering one of two golf balls shown in the
following figure
Distace ball Long-Life Ball
Distance 275 250
Life 18 50
Price Rs. 150 Rs. 175

The values when added gives an estimate of the preferences of

the cluster
Group 1 Distance ball Long-Life Ball
Distance 275 100 250 60
Life 18 0 54 50
Price Rs. 150 5 Rs. 175 0
Total Utility 105 110
 Research Problem
Define Stimuli (factors and levels)
Basic model form
Data collection
Conjoint Analysis Full profile Trade off Pairwise

Decision Process Data Collection (Create stimuli)

Factorial design Fractional factorial
Select preference measure
Form of Survey Administration
This technique requires a lot of
upfront work to think through the Assumptions
design, data collection, and Select estimation technique
analysis options. Evaluate results
Interpret results
Validate
Apply results
Managerial Uses of Conjoint Analysis

1. Find the product with the optimum set of

features
2. Determine the relative importance of
each feature in consumer choices
3. Estimate market share among products
4. Identify market segments
5. Evaluate the impact of price changes or
other marketing mix decisions.
CONCEPT TESTING
CONCEPT TESTING

Concept testing  is the process of using 
quantitative methods  and qualitative methods 
to evaluate consumer  response to a product 
idea prior  to  the introduction of a product
 to the  market
QUALTATIVE METHOD OF CONCEPT
TESTING

Concept testing  has been performed
 using field surveys,  personal interviews
 and focus groups, in  combination with 
various quantitative methods, 
to generate and evaluate product concepts.
 QUANTATIVE METHOD OF CONCEPT
TESTING
The quantitative  portions of concept testing
 procedures have 
generally been placed in three categories :-
1. Concept evaluations,where concepts
representing product ideas are presented to
consumers in verbal or visual
form and then quantitatively evaluated by
consumers by indicating
degrees of purchase intent, likelihood of
trail,etc., 
QUANTATIVE METHOD OF CONCEPT
TESTING

2) positioning, which is concept evaluation

wherein concepts positioned in the same
functional product class are evaluated together,
and
(3) product/concept tests, where consumers first
evaluate a concept, then the corresponding
product, and the results are compared.
TEST MARKETING
 Test marketing is the phrase commonly used to
indicate an experiment, study, or test that is
conducted in a field setting.
 Test marketing is a technique used in development
of new product to determine people’s response
towards the product.

 Test marketing main purpose:

• To test the sales potential for a new product or
service
• To test variations in the marketing mix for a
product or service
 Pros:
• Allows most accurate method of forecasting
future sales
• Allows firms the opportunity to pretest
marketing mix variables

 Cons:
• Does not yield infallible results
• Are expensive
• Exposes the new product or service to
competitors
• Takes time to conduct
PRODUCT LAUNCH
Two sides of same coin:
Innovation and New product development

Innovation New product development

•Innovation is the foundation for •The idea means nothing if the

growth through NPD: a new product company isn’t quick (or disciplined)
starts with a breakthrough idea. enough to get into the hands of the
customers.
•An innovative culture is the key for •A process for fairly examining
any organization seeking long term ideas’ potential discourages
growth through NPD organizational biases.
New product launch
 It is unusual for a new product to gain success
on its own- regardless of how innovative or
breakthrough it may be- to deliver revenue for
the company if the launch fails to:
 Communicate the product’s promise
 Convert buzz into revenue

A product launch is therefore the most sensitive

step in achieving growth through innovation and
NPD.
The risks of new product launch
On average 40 to 70 % of all new products
failed.
47 % of the companies that pioneer new product
categories later pull out of those businesses.
Customers are averse to change.
Companies go to the market before they are
ready with the stocks.
What do smart companies do?

Replicate a precisely executed launch

each time they introduce a new product.
Follow a specific process for positioning
products, training the sales force, working
with channel partners, and communicating
with customers.
Prepare themselves for slow adoption.
• Evaluation of product, sales representatives and channel Launch
partner performance; product feedback collection from monitoring
customers and sales teams.
• Introduction of products to market with awareness and demand Launch
generating campaigns , sales force and channel partner execution
training.
Launch
• Determination of appropriate product positioning , volume planning
forecasting, distribution channels and budget allocation.
Three phases of new product launch
Product placement worksheet
Target customer Customer behavior
-Demographics -How will product’s functionality
-Life stage and income appeal to customers or entice them to
-Psychographics buy?
-How might product engage customers
from an emotional perspective?
Context within brand Product’s role in portfolio
-How does product support our core -What does product offer that is
brand values? currently missing from our present
-How do our core brand values support product portfolio?
product? - How does product support our long
term brand strategy?

Pricing Competitor outlook

-What is the client’s willingness to -Who will be the primary competitors
pay? with the product?
-What are the highest and lowest price - Which of our competitors products
points we should consider? will directly compete with product?
-What do we want to achieve in How should we address our go-to-
volume and profitability? market strategy?
Sales support readiness checklist
Sales and Marketing Performance Dashboard
Latest tool: Supporting Product launch through unconventional channels
and use of multimedia

Adding multimedia to product release increases engagement by 55 %.

THANK YOU