December 4, 2014
New Market Research Techniques to Improve
Product Acceptance
Jonathan Honiball ● Senior Director, Customer Research
Introduction
 Speaker Introduction
 Agenda
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Why Invest Early in Research?
Learning from Within the Industry
Learning from Outside the Industry
Speed to Market
New Market Research Techniques
Case Story
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Why Invest Early in Research?
 Helps avoid costly, distracting and time-consuming missteps
 Aligns and engages customers early
 Makes sure that attributes are those that matter to buyers and
influencers
 Better aligns your engineering and sales teams
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The Problem
 Many companies lack sufficient information early enough to
properly define “successful” new products/services where…
“successful” =
– correct mix of product and service features, benefits, price points and
distribution channels
– which provides a “total solution” to meet/exceed customer
expectations
– to meet/exceed company’s product financial targets
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Research Questions For Your New Products
What price to
charge?
What features
and
functionality to
offer?
How big is the
market?
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How to
position vs.
competition?
Product
Acceptance
How to
promote?
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A Starting Point: Who is the Customer?
 The User?
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Physician
Patient
Consumer
Institution
 The Buyer?
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Single person
Family
Committee
Health insurance
 Subgroups/Segments?
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Learning from Within the Medical Device Industry
 Over the past year, we have interviewed investors involved in funding
medical devices
 While we did hear about many successes, most of what we heard were
horror stories
 Many products fail because of technical issues – however, even if the
product is exactly as intended, it can still be a commercial failure.
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Charging the wrong price
Targeting the wrong specialty
Not understanding laggard behavior
A better product is not enough to cause a switch
Engineers, Sales and Marketers not being on the same page
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Learning from Outside the Industry
 In September of 2011, Netflix
announced the creation of
Qwikster
 In January of 2012, CEO Ron
Johnson (ex- Sr VP, Apple)
launched a new retailing strategy
 Netflix lost 800k subscribers. The
Qwikster launch was cancelled.
 JC Penney shoppers rejected the
new model
 Over three months in 2011 Netflix
stock fell from $221.89 to $66.37
(Δ Mkt Cap = -$ 11 B)
 JCP stock fell from $42.44 to
$14.62 in 2012/13 and the CEO
was fired (Δ Mkt Cap > -$ 5 B)
What do these two have in common?
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Why? “Speed to Market Strategies” are Risky
Lean Process
 Get prototype product in front of customers as fast as
possible, solicit feedback, and incorporate feedback in
next prototype for customer evaluation
Pilot Testing
 Introduce new product to a sample set of all customers
(e.g., of the company’s customers in a region) and
evaluate customer response
 Launch and refine is risky for medical devices given FDA approval
requirements and product reputation
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A Solution
 “Sell” the product before you build it.
 Gain customer feedback to understand their actual needs
rather than focusing on pushing out a product
– How to use market research to get this customer feedback
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…But Market Research has Changed
Cheaper, Faster, AND Better Information
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Ethnography
Mobile
Ethnography
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• Invited customers
perform tasks,
recording and
detailing as directed
by a researcher
leveraging mobile
technology
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Focus Groups
Discussion
Boards
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• Invited customers respond to topics
and questions presented by a
moderator in an asynchronous online
discussion boards
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Consumer Choice Model
Consumer Choice  CCM techniques to determine the most
Model (CCM)
successful mix
1. Determine the product-brand-price mix that will appeal to the greatest
proportion of the target market
2. Understand product expectations and purchase drivers across
customer segments
3. Reduce the risk of over or under investing due to mismatch between
product and customers’ needs
4. Limited number of questions create a forecast of future behavior
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Consumer Choice Modeling Has Changed
2000s
More powerful, lower
cost computers, more
complex simulations
using advanced
analytical techniques
1960s
1970s
1980s
1990s
2000s
1970s
1990s
Done using manual
methods, regression
analysis, mainframe
computers
More powerful
computers, more
sophisticated
analytical techniques
(e.g., advanced
statistical methods)
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 Due to historically
high costs, use was
limited
 With technology, the
costs are 10% of
what they were
 Timelines are now
weeks instead of
months
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What Attributes Define Product Acceptance?
Product
Features
Aesthetics
Performance
Brand
Service
Access to service
Customer care
Warranty
Purchase
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Price
Product
Acceptance
Financing
Comparative
Residual Value
Switching cost
Access
Experience
Channels
Regulation
Location
Timeliness
Expectations
Function
Emotion
Social proof
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CCM: Example Attribute Table
Brand
Effectiveness
Market Usage
Size
Run Time
Price
Level 1
Company 1
99%
Used by 50%
2 cubic feet
30 minutes
$200
Level 2
Company 2
97%
Used by 35%
4 cubic feet
25 minutes
$300
Level 3
Company 3
95%
Used by 25%
8 cubic feet
20 minutes
$400
Level 4
Level 5
Company 4
90%
85%
Used by 10% New to market
12 cubic feet 20 cubic feet
15 minutes
10 minutes
$500
$600
Level 6
80%
5 minutes
$700
 This matrix represents 21,600 possible combinations
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CCM: Question Example
 Divides a product into key attributes/product features and
then combines these attributes/product features into a
selection of “hypothetical products”
Which of the following medical devices would you be most likely to purchase?
Company 1
Company 2
Company 3
90% effective
95% effective
80% effective
Product is new to
market
Product is used by
10% of consumers
Product is used by 35%
of consumers
4 cubic feet
2 cubic feet
8 cubic feet
10 minutes
15 minutes
20 minutes
$500
$600
$200
m
m
m
 Testing the boundaries and not just focusing on current
features
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Market Simulator Sample
Market Configuration
Company 1
Company 2
90% effective
95% effective
Product is used by 10%
of consumers
Product is new to
market
2 cubic feet
4 cubic feet
10 minutes
15 minutes
$600
$600
Preference Share
Simulations
• Add products to the
marketplace
• Change product
attributes
• “What if” scenarios
for any possible
market changes
• External metrics
can be calculated
35%
65%
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Market Simulator Sample
Market Configuration
Company 1
Company 2
90% effective
95% effective
Product is used by 10%
of consumers
Product is new to
market
2 cubic feet
4 cubic feet
10 minutes
15 minutes
$300
$600
Preference Share
45%
Simulations
• Add products to the
marketplace
• Change product
attributes
• “What if” scenarios
for any possible
market changes
• External metrics
can be calculated
55%
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Case Story: Competitive positioning and timing
Challenge:
 A life science company launched its brand in the US two
years earlier as the first and only product indicated for two
different conditions.
 Competitor launched in select overseas with plans for a US
rollout.
Research objectives:
 Determine the sales impact on existing markets from
competitive launch, as well he likely impact in yet
undeveloped markets.
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Case Story: Competitive positioning and timing
Methodology:
 Choice Modeling was used to evaluate current and future
competitive situations
 Market Simulator calculated a "preference share” enabling
comparison of current and future market share.
Results:
 Simulator gave the client dozens of scenarios to plan
investment. Client accelerated R&D efforts in order to launch
1st in other markets.
 Actual market share in all markets measured are in line with
model predicted preference shares.
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Simulator Demo
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For more information or a demonstration, please contact:
Jonathan Honiball
Senior Director, Customer Research
jhoniball@pcgfirm.com
Direct: 650-223-8228 | Office: 650-327-8108 | Mobile: 267-992-6730
Pacific Consulting Group | 643 Bair Island Road, Suite 212 |
Redwood City, CA 94063
www.pcgfirm.com
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