New Product Development Research               An introduction     AcentricTM Marketing Research Consulting               ...
Overview•   An overview of the NPD stages – where are you?•   Before you enter: Determine the market structure•   Idea/con...
New product development research•New product development (NPD) is a multi-stage process from conceptgeneration to the fina...
New product development stagesNPD stage             Research services1. Market structure Market structure studies and Vir...
New product development stages3 Concept        •If you have many concepts concept screening helps to narrow down the      ...
New product development stages5. Finalisation   • Product use tests to identify the strengths and weaknesses of a         ...
New product development researchMarket structureWe offer basic market structure measurement. Including:    Market dimensi...
New product development researchMarket structureIn repertoire* type markets, measuring market structure is difficult to do...
New product development researchPreliminary concept developmentWe can offer a number of products to enhance the process of...
Concept screeningConcept screeningIf you have multiple competing concepts it can be a challenge narrowing the field to the...
Concept testingConcept testing surveysConcept testing involves exposing a representative sample to written descriptions an...
Acentric Express TestsTMDeveloping a new product or service and bringing it to market are costly endeavours. Knowing in ad...
Product-use testingThe investments in tooling for full-scale production and marketing costs can sometimes exceed the initi...
Product-use testingProduct research identifies product weaknesses and strengths under actual usage conditions. Many proble...
Simulated Test Market Models (Pre-Test Market Models)Simulated Test Market models (STMs) go beyond concept & product testi...
Discontinuous innovations             Estimating potential for discountinuous innovations             In the case of disco...
Conjoint AnalysisDeciding on the best development path for a new product can be challenging. Conjoint analysisis a powerfu...
Conjoint AnalysisConjoint analysis is a powerful analytical tool. Using consumers answers to a special set ofquestions, it...
Conjoint AnalysisThe importance of each attribute is derived by conjoint analysis. In the example below, price ismost impo...
Conjoint AnalysisWithin each attribute, conjoint analysis calculates something called a ‘part worth’. Part worthsindicate ...
Conjoint AnalysisOne of the main attractions of conjoint analysis is that it allows you to test alternativescenarios to de...
Conjoint AnalysisIn scenario 2 below, Mercedes offers leather as standard, rather than vinyl. As can beseen, Mercedes is p...
Example of a conjoint analysis toolClients are provided with an interactive simulator. This allows you to determine the im...
Price determination researchWhen launching a new product it is often critical to get the entry price correct, asyou may no...
Price determination researchTypical outputs include acceptable price ranges or price-demand curves. Price- demand curvesca...
THANK YOU FOR YOUR ATTENTION           Copyright, Acentric, 2011
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Acentric new product development research

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An overview of the different marketing research techniques used during the new product development process.

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Acentric new product development research

  1. 1. New Product Development Research An introduction AcentricTM Marketing Research Consulting South Africa www.acentric.co.za Last update 2011 Copyright, Acentric, 2011
  2. 2. Overview• An overview of the NPD stages – where are you?• Before you enter: Determine the market structure• Idea/concept generation research• Concept tests• Product tests• Simulated Test Markets – moving beyond concept & product testing• Conjoint analysis• Price determination research Copyright, Acentric, 2011
  3. 3. New product development research•New product development (NPD) is a multi-stage process from conceptgeneration to the final launch.•At each stage your investment of time and money increases.•Marketing research reduces the risks involved by identifying poor performersearly on and indicating where improvements need to occur to maximise success.•Acentric offers different marketing research techniques for each stage of the newproduct development (NPD) process. Copyright, Acentric, 2011
  4. 4. New product development stagesNPD stage Research services1. Market structure Market structure studies and Virtual Diarymeasurement Market dimensions : Penetration in the population, frequency of purchase and value Brand performance: Brand penetrations, brand purchase frequencies and brand market shares2. Multiple concept •Problem detection studies (PDS).generation •Focus groups. •Conjoint analysis. Copyright, Acentric, 2011
  5. 5. New product development stages3 Concept •If you have many concepts concept screening helps to narrow down the field •Concept testing provides more detail once you have isolated one or two concepts. •Determine how important different features are. •Determine how your concept performs on these features. •Determine which segments will be more likely to adopt. •Understand the current market, in terms of brand awareness and usage. •Obtain indications of sales potential under different marketing scenarios. •Ceiling estimation is a procedure we use to determine the likely adoption ceiling for radical new products which create their own new markets.4. Design and •Trade-off analysis allows you to refine the design of a product in terms of development features and pricing, It is also useful when revising existing products: •CVA Conjoint. •Hybrid conjoint. • Price research is included with product configuration to assess the impact on deserved share. Copyright, Acentric, 2011
  6. 6. New product development stages5. Finalisation • Product use tests to identify the strengths and weaknesses of a prototype product: •Does it meet expectations. •Does it deliver on the concept promise. •What weaknesses does it have in actual use, how does it compare to competitors.6. In-service • PDS studies to determine early issues after actual launch in the market,product support customer satisfaction tracking and loyalty measurement. Copyright, Acentric, 2011
  7. 7. New product development researchMarket structureWe offer basic market structure measurement. Including: Market dimensions : Penetration in the population, frequency of purchase and value Brand performance: Brand penetrations, brand purchase frequencies and brand market shares Copyright, Acentric, 2011
  8. 8. New product development researchMarket structureIn repertoire* type markets, measuring market structure is difficult to do doing a normal survey due toproblems with human memory. Examples include FMCG, supermarket/retail, petrol stations and restaurants.For example most people can’t remember what brands of fizzy drinks they have bought in the last month andhow often.As a result diaries are used traditIonally. Survey respondents are asked to record their day to day purchaseseach day over a long time period – such as 7 days or a month. Diaries have been validated against actualfactory shipments as a fairly accurate indicator of sales.Acentric offers a less costly alternative. Acentric Virtual DiaryTM provides a good approximation to an actualdiary using a normal adhoc survey. Answers to questions are transformed using statistical calculations whichprovides the following:1. Market/Category penetration2. Market/category puchase occasion frequency3. Brand penetration4. Brand purchase occasion frequency5. Brand market shares Copyright, Acentric, 2011
  9. 9. New product development researchPreliminary concept developmentWe can offer a number of products to enhance the process of concept generation.These include problem detection studies and conjoint analysis (conjoint is also useful atlater stages of the NPD process). Problem Detection Surveys amongst consumers regarding old products can lead to new ideas “Well, I just don’t New Concept like the fact that I Inkless electric printer have to change ink cartridges, nor the costs of ink just for drafts” Copyright, Acentric, 2011
  10. 10. Concept screeningConcept screeningIf you have multiple competing concepts it can be a challenge narrowing the field to the best concepts.Concept screener surveys help to do this by obtaining ratings from the relevant consumers to determinewhich concepts are most appealing. Concept Concept A B Concept C Concepts most likely to succeed Copyright, Acentric, 2011
  11. 11. Concept testingConcept testing surveysConcept testing involves exposing a representative sample to written descriptions and/or pictures ofyour new concept. A series of key questions are asked to:1. Determine acceptable price ranges.2. Determine how your concept is perceived to perform relative to competitors on features.3. Determine how well consumers understand the new concept.4. Determine how important different features are to consumers.5. Determine how preference differs across consumer segments (e.g. male versus female)6. Understand the current competitive landscape, in terms of brand awareness and usage.7. Obtain indications of sales potential under different marketing scenarios. Copyright, Acentric, 2011
  12. 12. Acentric Express TestsTMDeveloping a new product or service and bringing it to market are costly endeavours. Knowing in advancewhether your new concept is likely to be successful, and if not, what to do about it saves both time and money.Express Test provides you with a fast and cost effective indicator of the likely success of a new product - beforeyou invest in developing an actual product.Key benefits:•The Acentric Concept Performance Score gives you a clear indication of whether you will be able to competewith the proposed features and pricing.•Unlike most concept tests, you dont need to decide who to target first. Instead Express Test covers everyonewith internet access and lets you see where the demand is.•Learn what improvements customers most want before you launch.•Performance on key drivers of success quantified.•Option for survey respondents to explain in their own words what they think of your product, providing youwith rich insights into how to improve.•Learn what price range is acceptable to buyers and then learn whether the specific price point you have inmind will work.•Provides an indication of whether the brand is right for the new product you want to launch.•Indicates what distribution channels you should prioritise. Copyright, Acentric, 2011
  13. 13. Product-use testingThe investments in tooling for full-scale production and marketing costs can sometimes exceed the initialinvestment in prototype development. As a result it is important to weed out potential failures before movingbeyond the prototype stage.Once a prototype or small production run of products exists, it becomes viable to test the actual product.Product testing aims to identify :•Issues encountered during real world use.•Preference for your product over competitor products. Packaging Performance in use Repeat purchase intentions•Whether the product lives up to the claims made in the original concept statement. Oh dear, this new inkless-thermal printer has a tendency to jam. Copyright, Acentric, 2011
  14. 14. Product-use testingProduct research identifies product weaknesses and strengths under actual usage conditions. Many problemscannot be imagined in advance of actual real world use. By testing products alongside competitor products, itcan be established whether planned for attribute differentiators actually manifest in practice. It also allows forweaknesses to be identified which may lead to product reformulation. The impact of brand in driving attributeperformance perceptions and product preferences can also be established. Form of product testing Description Monadic Monadic product tests are the most expensive form of product testing, but tend to be most accurate. Only one product is tested at a time. Sequential monadic Two products are used in sequence by respondents, which makes this method more cost effective. Comparative In a comparative test, respondents are given two products simultaneously. This method is used when even the smallest difference matters. Respondents tend to become acutely aware of differences when products are placed side by side. Proto-monadic In this test the customer is first introduced to the products in sequence. This is followed by a comparative test, which is used for verification of the first test. Copyright, Acentric, 2011
  15. 15. Simulated Test Market Models (Pre-Test Market Models)Simulated Test Market models (STMs) go beyond concept & product testing. The risks involved in a newproduct launch in the fast Moving Consumer Goods (FMCG) sector can be substantial. Companies that are ableto detect likely failures in advance are able to avoid wasted investments in design, production and marketing.Simulated test market models offer the following:•Market share and sales volume forecasts for year 1•Forecasts of trial•Forecasts of repeat purchase•Source of volume•Diagnostics providing information on feature performance and importance•Diagnostics on how well the concept as described by the intended advertising is perceived to actually deliverwhen the product is used•The impact of ‘free’ samples on trial Copyright, Acentric, 2011 12,000 units
  16. 16. Discontinuous innovations Estimating potential for discountinuous innovations In the case of discontinuous innovations (innovations which are so different that they create a new product type of their own), questions of long run adoption potential and the rate of diffusion can be answered using diffusion models.Adoption % Time Copyright, Acentric, 2011
  17. 17. Conjoint AnalysisDeciding on the best development path for a new product can be challenging. Conjoint analysisis a powerful technique for determining what features to offer and what prices to charge.Conjoint analysis can simulate the impact of product and price changes on preference share foryour product.Benefits:•Determines the relative importance of different product attributes (e.g. Car upholstery typeversus engine size).•Determines the relative importance of price.•Quantifies preference for different attribute levels (e.g. Leather upholstery versus cloth).•Allows for market simulations to be conducted, to test the impact of alternative productfeature/price scenarios. Even scenarios that were not tested during the interview with theconsumer can be tested because of the mathematical model that is built. Hundreds or eventhousands of different scenarios can be explored. Copyright, Acentric, 2011
  18. 18. Conjoint AnalysisConjoint analysis is a powerful analytical tool. Using consumers answers to a special set ofquestions, it builds a mathematical models of consumers mental ‘preference structures’. In otherwords conjoint analysis measures to what extent different product attributes, brand names andprices affect preference. Using this model, it is able to predict what choices consumers are likelyto make under alternative scenarios Conjoint analysis models each individual consumer Copyright, Acentric, 2011
  19. 19. Conjoint AnalysisThe importance of each attribute is derived by conjoint analysis. In the example below, price ismost important to consumers. This type of analysis is quite revealing when conducted in differentsegments of the market. Attribute importance (Cars) 45.00% 40.00% 40.00% 35.00% 30.00% 25.00% 25.00% 20.00% 20.00% 15.00% 10.00% 10.00% 5.00% 5.00% 0.00% Brand name Price Upholstery Engine Climate type capacity control Copyright, Acentric, 2011
  20. 20. Conjoint AnalysisWithin each attribute, conjoint analysis calculates something called a ‘part worth’. Part worthsindicate to what extent each attribute level is preferred. In the example below, an engine size of2.0 litres is most preferred. A 3.0 litre engine is least preferred. 4.5 4 4 3.5 3 3 Part-worth 2.5 2 2 1.5 1 1 0.5 Engine size in litres 0 1.6l 2.0l 2.5l 3.0l Copyright, Acentric, 2011
  21. 21. Conjoint AnalysisOne of the main attractions of conjoint analysis is that it allows you to test alternativescenarios to determine the impact on preference share.* In this example, a marketscenario is set-up with specific attribute levels for each competitor. The conjointanalysis model then predicts preference share for each competitor.Market Scenario 1 Attributes BMW Mercedes Audi % Share 10 Engine 2.0l 2.0l 2.0l BMW 20 40 Mercedes Upholstery Vinyl Vinyl Leather 30 Audi standard Climate control Optiona Standard Standard l climate control climate control Price R325,00 R350,000 R300,000 0 Copyright, Acentric, 2011 * Preference share is the percentage of of consumers who prefer a brand over other brands. In scenario 1above, 30% prefer Mercedes.
  22. 22. Conjoint AnalysisIn scenario 2 below, Mercedes offers leather as standard, rather than vinyl. As can beseen, Mercedes is predicted to increase its share from 30% to 34%.Market Scenario 2Attributes BMW Mercedes Audi % ShareEngine 2.0l 2.0l 2.0l 10 BMW 20 36 MercedesUpholstery Leather Leather Leather 34 standard standard standard AudiClimate control Optional Standard Standard climate control climate controlPrice R325,000 R350,000 R300,000 Copyright, Acentric, 2011 * Preference share is the percentage of of consumers who prefer a brand over other brands. In scenario 1above, 30% prefer Mercedes.
  23. 23. Example of a conjoint analysis toolClients are provided with an interactive simulator. This allows you to determine the impact of pricechanges and feature changes. It also allows you to understand the impact of potential competitoractions. Copyright, Acentric, 2011
  24. 24. Price determination researchWhen launching a new product it is often critical to get the entry price correct, asyou may not get a second chance.Existing products can also benefit from price research.Price research models on offer include:•Single direct question approaches•Van Westendorp to determine acceptable price ranges•Gabor Granger to estimate the impact of different prices on purchase intent•Conjoint analysis for the estimation of price-demand curves•BPTO Copyright, Acentric, 2011
  25. 25. Price determination researchTypical outputs include acceptable price ranges or price-demand curves. Price- demand curvescan be estimated using a variety of techniques depending on the accuracy required and theresearch budget available. Price-volume curve 90 80 70 60 50 40 30 20 10 0 R100 R120 R140 R160 R180 Copyright, Acentric, 2011
  26. 26. THANK YOU FOR YOUR ATTENTION Copyright, Acentric, 2011

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