Product Research

Why Conduct Market Research in

New Product Development?

The product must appeal to the customer

(however widely defined)
Timely market research can help you mould the
product to the consumer’s need/wants
Market research tend to point out successes and
failures before products are launched “for real”
As a result, it can save you money and time
 WARNING!

Market Research is about understanding consumer

reactions to the product. Marketing may understand the
consumer best but R&D may well (early on) understand
the product best

Don’t simply
hand M.R.
over to
marketing!
 Challenges in NPD
• Idea Shortage
• Fragmented Markets
• Social & Governmental Constraints
• Cost
• Capital Shortage
• Need for Speed
• Shorter Product Life Cycles
 New Product Development
Process
Marketing
Strategy Business
Development Analysis

Concept Product
Development Development
and Testing

Idea Market
Screening Testing

Idea
Generation Commercialization
 Idea Generation
• Focus groups and direct observation provide
insights for product development.
• Secondary data, Group discussion,
Brainstorming [ on a given problem]
• Problem Inventory Analysis -->Examining
Customer complaints
• Attribute based customer surveys
– Involves listing all the product attributes and
then systematically modify one or more of
them to see what would improve the product.
• Morphological Analysis
– Involves identification of the relevant
dimensions of the product under study and
enumeration of relevant variables with
each dimension identified.

• Mind- Mapping
 Systematic Search for New Product
Ideas

• Internal sources
• Customers
• Competitors
• Distributors
• Suppliers
 Idea Screening
• Poor, unsuitable or otherwise unattractive
ideas are weeded out from further actions.
• Many companies use new product screening
checklist for preliminary evaluation.
• Firm list new product attributes considered
important and compare each idea with those
attributes.
• The checklist is standardised and allows ideas
to be compared.
 Probability of Success

Probability of Probability of
Overall Probability
probability
of success = of technical
completion X given technical
completion
X
commercialization economic
success given
commercialization
Concept Development and Testing

1.
1. Develop
DevelopProduct
ProductIdeas
Ideasinto
into
Alternative
Alternative
Product
ProductConcepts
Concepts

2.
2. Concept
ConceptTesting
Testing--Test
Testthe
the
Product
ProductConcepts
Conceptswith
withGroups
Groups
of
ofTarget
TargetCustomers
Customers

3.
3. Choose
Choosethe
theBest
BestOne
One
 Concept Testing
• Determine customer attitude towards the
product concept or idea.
• Measure customers’ reaction towards the
product’s attributes, e.g.. packaging, color, size,
etc..
• Determine whether the product concept
warrants further development and provide
guidance on how the concept might be
improved or re-defined.
 Data collection methods include:
• Focus group discussion

• Survey Research
– Not very easy
– Questions are to be formulated carefully to
capture and effectively communicate the
spark of an idea.

• Demonstration
 Typical Questions in Concept Testing
QUESTION ITEMS TYPICAL QUESTIONS
Uniqueness of the In your opinion, how different is this product compared to
concept other existing products in the market?
Product attribute What do you particularly like about the shape of this
product?
User Would you be more likely to buy this product for yourself
or as a gift for someone else?
Price/Value Which of the statements shown in this card best describes
Reaction how you feel about the product?
Place of Purchase Where would you shop for the product?
Frequency of How often would you buy this product?
purchase
Overall impression From what you have learnt about the product, which
word/phrases [show some words/phrases]best describes
your reaction to this product
 Business Analysis
Business
BusinessAnalysis
Analysis

Review
Reviewofof Product
ProductSales,
Sales,Costs,
Costs,
and
andProfits
ProfitsProjections
Projectionsto
toSee
Seeifif
They
They Meet
MeetCompany
CompanyObjectives
Objectives

IfIfNo,
No,Eliminate
Eliminate
Product
ProductConcept
Concept

IfIf Yes,
Yes,Move
Moveto
to
Product
ProductDevelopment
Development
 Market Testing
Standard
Standard Controlled
Controlled
Test
Test Market
Market Test
Test Market
Market
Full
Fullmarketing
marketingcampaign AAfew
in
campaign fewstores
storesthat
thathave
have
in a small numberof
a small number of agreed
agreedto
tocarry
carrynew
new
representative cities. products
representative cities. productsfor
foraafee.
fee.

Simulated
Simulated
Test
Test Market
Market
Test
Testin
inaasimulated
simulated
shopping
shoppingenvironment
environment
to
toaasample
sampleofof
consumers.
consumers.
 Test Marketing
• Objective:
– To obtain reasonable prediction for performance of
a new product;
– To understand the contributing factors underlying
a particular performance;
– To provide management with the opportunity to
pre-test alternative marketing strategies.
• Only those products, which have shown a good
chance of success in the earlier concept and
product development test, are subjected to
test marketing.
 Typical information gathered
and major design issues in test marketing
• Awareness level; Design Issues:
• Purchase and repurchase • The number of test
rate; markets to be chosen;
• Users’ experience with the
– at least three
product;
• Users’ perception of the – involves cost-benefit
product; analysis
• Users’ profile and • The criteria used for
lifestyles; selecting test markets;
• Reasons for not using • The length of the test.
products;
– 6 to 12 months
• Market share.
 Commercialization
• Implementing Marketing Plan
• Full Production Plan
 Commercialization

Whom

When
Product
Where Price
Place
Promotion