Market Research lesson 5
Market research, Customer insights
What you need to make innovation successful…
NPD for MRIU 2011-2012
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7 times research
Secondary Research
Concept Testing
Phase
Focus Groups
Customer Visits
Product Use Testing
Research method
Surveys
Market Testing
Purpose or Rationale
Opportunity Identification
Secondary Research
Customer visits
Identify market opportunities
Concept Generation
Customer visits
Surveys
•Understanding customer
needs
•Generate product platforms or
concepts
Concept evaluation
Focus Groups
Concept Testing
•Select projects for funding
Development
Product Use Testing
•Focus Groups
•Customer Visits / Beta Test
•Test designs / prototypes
•Validate new product designs
Launch
Market Testing
•Test launch plan
•Measure new product success
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Secondary Research
Concept Testing
Focus Groups
Customer Visits
Product Use Testing
Surveys
Market Testing
Market Testing
The product development is the stage when the new product and its marketing plan
are tested together. A market test simulates the eventual marketing mix and
takes many different forms, only one of which bears the name test market.
Pseudo sale and mini-markets are popular market testing techniques.
“Market testing” is not the same as “test marketing”
Market testing is a general term covering a wide variety of methods used to
evaluate the probability of product success before the actual launch of the
product.
Test marketing is a type of market testing. A representative piece of the total market
is chosen for a dress rehearsal of the product and its marketing plan.
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Secondary Research
Concept Testing
Advantages
Focus Groups
Customer Visits
Product Use Testing
Disadvantages
Surveys
Market Testing
Considerations
 Leads to solid forecasts of Euros and unit sales volume.
 Provides diagnostic information to help improve launch components.
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Secondary Research
Concept Testing
Advantages
Focus Groups
Customer Visits
Product Use Testing
Disadvantages
Surveys
Market Testing
Considerations
 Can take more time than some may want to allow in fast launch
situations.
 Sometimes doesn’t provide value proportional to investment needed to
conduct test.
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Secondary Research
Concept Testing
Advantages
Focus Groups
Customer Visits
Product Use Testing
Disadvantages
Market Testing
Considerations
Determine whether to conduct market testing by considering:
•Special launch situations
•Whether information needed dictates testing
•Cost of test
•Nature of marketplace
•Capability of testing methodologies
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Surveys
Secondary Research
Concept Testing
Focus Groups
Customer Visits
Product Use Testing
Surveys
Market Testing
What Is and Is Not Market Testing?
Market testing is not concept testing, prototype testing, product use testing--or test
marketing!
Test marketing is one of many forms of market testing – including simulated test
markets, informal sale, minimarket tests, and rollouts.
Test marketing is also a much less common form now due to cost and time
commitments and other perceived drawbacks.
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Decision Matrix on When to Market Test
High
Low
Cost and Time
Scope of Learning
Savings
and Accuracy
Low
NPD for MRIU 2011-2012
High
Stages of the product development cycle
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Secondary Research
Concept Testing
Focus Groups
Customer Visits
Product Use Testing
Surveys
Market Testing
How Market Testing Relates to the Other Testing Steps
NPD for MRIU 2011-2012
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Secondary Research
Concept Testing
Focus Groups
Customer Visits
Product Use Testing
Surveys
Market Testing
Types of Information That May Be Lacking
•
Manufacturing process: can we ramp-up from pilot production to full scale
easily?
•
Vendors and resellers: will they do as they have promised in supporting the
launch?
•
Servicing infrastructure: adequate?
•
Customers: will they buy and use the product as expected?
•
Cannibalization: what will be the extent?
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Secondary Research
Concept Testing
Focus Groups Customer Visits Surveys
Product Use Testing Market Testing
Methods of Market Testing and Where Used
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Secondary Research
Concept Testing
Focus Groups
Customer Visits
Product Use Testing
Surveys
Market Testing
Speculative Sale
•
Often used in business-to-business and consumer durables, similar to
concept and product use tests
•
Give full pitch on product, answer questions, discuss pricing, and ask:
 “If we make this product available as I have described it, would you
buy it?”
•
Often conducted by regular salespeople calling on real target customers
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Secondary Research
Concept Testing
Focus Groups
Customer Visits
Product Use Testing
Surveys
Market Testing
Conditions for Speculative Sale
•
•
•
•
Where industrial firms have very close downstream relationships with key
buyers.
Where new product work is technical, entrenched within a firm's expertise, and
only little reaction is needed from the marketplace.
Where the adventure has very little risk, and thus a costlier method is not
defendable.
Where the item is new (say, a new material or a completely new product type)
and key diagnostics are needed. For example, what set of alternatives does the
potential buyer see, or what possible applications come to mind first.
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Secondary Research
Concept Testing
Focus Groups
Customer Visits
Product Use Testing
Surveys
Market Testing
Simulated Test Market (STM)
•
Create a false buying situation and observe what the customer does
(purchase intentions
or actual choices)
•
Follow-up with customer later after product usage to assess likely repeat
sales
•
Often used for consumer nondurable's
•
Does not measure all parts of ATAR model
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Secondary Research
Concept Testing
Focus Groups
Customer Visits
Product Use Testing
Market Testing
Simulated Test Market Procedure
•
Mall /store intercept (typically)
•
Self-administered questionnaire
•
Advertising stimuli (usually)
•
Mini-store shopping experience (usually)
•
Post-exposure questionnaire
•
Receive trial package to take home
•
Phone follow up--and maybe offer to buy more
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Surveys
Secondary Research
Concept Testing
Focus Groups
Customer Visits
Product Use Testing
Surveys
Market Testing
Possible Drawbacks to STMs
•
•
•
•
•
Mathematical complexity
False conditions
Possibly faulty assumptions on data, such as advertising budget or
number of stores that will make the product available
May not be applicable to totally new-to-the-market products, since no
prior data available.
Does not test channel member response to the new product, only the
final consumer’s
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Secondary Research
Concept Testing
Focus Groups
Customer Visits
Product Use Testing
Market Testing
A-T-A-R and the Market Testing Methods
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Surveys
Market Research end of lesson 5
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