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 products.
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.” http://www.iir-usa.com/research
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