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Mar 24, 2003
How To

How to Conduct Web-Based Surveys for Product & Pricing Development

SUMMARY: No summary available.
There is something about new product concept and screening, about
clicking your mouse and changing a product’s features and price,
that is just cool.

Other people seem to think so too.

“Last year, the Institute for International Research’s annual
survey asked researchers what they were working on. The largest
component of research was product concept and new product
testing,” says Dr. Bill MacElroy, President, Socratic
Technologies, a San Francisco-based research agency focused on
computer-based and interactive marketing research.

MacElroy’s done new product concept and screening for products as
diverse as HP's computers to Bank of America’s financial service

With the feature choices available with some products, surveying
through the mail or describing the product over the phone is
nearly impossible and face-to-face is cost-prohibitive. “So the
Web’s the answer,” MacElroy says.

-> Helping the Design Process

The research or project manager usually heads up these programs
from within the company. According to MacElroy, the survey helps
managers and their teams think about the process, allowing a
period of time to define ideas. “It’s as helpful at focusing as
doing the research itself. It’s best when used to test a
hypothesis and then trying to get a market valuation.”

Biggest mistake: People involved often think that the consumer
will design the product. This is not true. “Consumers are good at
reacting to concepts but bad at coming up with ideas themselves.”

-> The Survey Group

You need a community of like-minded people that are already
interested in the kind of product you’re peddling. “You can’t
just send the survey to anyone because many people will view it
as spam,” MacElroy says. “They could lie and destroy the survey
simply because you spammed them.”

Companies need to put together custom online communities of
decision makers. One way to do this is to build a panel of users.

You put these people in an online community where focused news on
technology issues, insight into specific companies, and detailed
answers on products is available.

This community becomes extremely honest in their appraisal.
“These are the people who are just as happy to kill a bad idea as
contribute to a good one.”

The size of the online groups involved in a survey can vary. It
really depends on how many different kinds of groups you want to
reach. If it is a simple product or service, you might get a clear
picture with only 200-400 participants. If it is more complex, you
might go up to a couple thousand.

-> How the Actual Surveys Work:

The surveys use rich media for product animations. In a lot of
ways, new product concept and screening works a lot like Gateway
and Dell letting consumers configure the computer of their dreams
online. Consumers pick certain computer features over others and
watch the price of the product go up or down.

The surveys are a form of online conjoint research and real-time
ideal product creation.

According to MacElroy, for an HP printer, someone would get an
email invitation to be part of a Web survey and have the
opportunity to build the ideal printer.

The participant is given an approximate price range for a
printer, and then offered additional features such as trays for
different sized paper, double-sided copies, and stapling. For
each feature, a cost is associated.

After the consumer tries different features you ask if the
created printer is their ideal product. If it is not, you ask why.
Perhaps the product is too expensive or too similar to off-the-
shelf products.

At the end of the survey, the product built is illustrated along
with a price description. Then consumers are asked, "How likely
are you to purchase something like this?"

-> Response Rates & Show Me the Money:

For focused and motivated groups, MacElroy says the response rate
to surveys is very good and very fast. For a general panel the
response rate he sees is 45%-50%. For a very targeted panel the
response rate is 70%-80%.

He says it is hard to measure the results as compared to a similar
offline group. In general the cost is less after the fixed start
up costs. For instance, with telephone surveys you reach a point
where the online version is less expensive. “If you survey 500
people over the telephone for 20 minutes each, the Web price
would be half of the price,” he says. The larger the sample size,
the more economic the Web becomes.

Cash incentives are generally the name of the game when it comes
to new product concept and screening, MacElroy says. Most of
these kinds of surveys carry a $10-$50 cash value incentive for
each person taking part.

-> Measuring the Effects:

When you do this kind of analysis you look at “what features are
most important to a person and how much they’re willing to pay,”
MacElroy says.

You also see the demographics behind the choices.

“At the end, the participants are profiled,” MacElroy says.
Participants are asked about the size of their company, their
budget for these kinds of projects, etc. Companies learn which
groups like particular features, and which groups like all the
features and do not care about the price.

The end result is that if you “build this kind of product the
target market is a company with over 5,000 employees and a budget
of xyz.”

“The proof of how the launch worked is quick in coming,” says
MacElroy. “The market will give you feedback. Is the take rate
what you expected? If it’s too expensive or too cheap, you’ll see
a competitive reaction from other companies in the industry.”

“It’s surely better than guessing when it comes to your pricing
strategy,” MacElroy says. “The difference between a successful
product launch and one that’s not is worth millions.”

See Also:

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