Chapter 5:
Marketing Research In
High-Tech Markets

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Aligning Market Research with Innovation Type
High-Tech Marketing Research Tools
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Concept Testing
Conjoint Analysis
Customer Visit Programs
Lead Users
Empathic Design
Quality Function Deployment
Prototypes and Beta Testing
Gathering Competitive Intelligence
Forecasting Demand
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Delphi method
Analogous Products
Information Acceleration
© Mohr, Sengupta, Slater 2005

Activity Based Planning Wish Lines
Analysis and User Needs Definition
Specification Development
Product Prototyping
Calls Data
Usability Lab Testing
Additional Product Development
Internal Alpha Release
Feedback Analysis and Product Refinements
Beta Site Testing
Feedback Analysis & Product Refinements
External Product Release
Surveys
© Mohr, Sengupta, Slater 2005
Studies

Survey Research
Concept Testing
Conjoint Studies
Incremental
Innovation
(need known)
Market Intuition
Customer Visits
Empathic Design
Lead Users
Quality Function Deployment
Prototype Testing
Breakthrough Innovation
(technical solution precedes customer need)
© Mohr, Sengupta, Slater 2005

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Generate multiple product concepts
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Observation
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Focus groups
Brainstorming
Judgmentally reduce number of concepts
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Describe their key attributes and benefits in paragraph form
Potential customers as rate each concept on dimensions such trial interest and perceived value
Further reduce number of concepts based on results from previous stage
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Representative sample of potential customers complete a battery of questions and diagnostic ratings on each finalist
© Mohr, Sengupta, Slater 2005

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To determine how respondents value various attributes , and levels of attributes, in the product
If we learn how buyers value the components of a product, we are in a better position to design those that improve profitability
© Mohr, Sengupta, Slater 2005

If you were in the market to buy a new PC today and these were your only options, which would you choose?
IBM Dell Compaq
2.4 GHz
Processor
3.2 GHz
Processor
2.8 GHz
Processor
512
Meg
RAM
21-Inch
Monitor
$1,200
256
Meg
RAM
21-Inch
Monitor
$2,000
256
Meg
RAM
17-Inch
Monitor
$1,550
None: I
Wouldn't
Choose
Any of
These
© Mohr, Sengupta, Slater 2005

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Use cross-functional teams
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Engineering, marketing, sales account manager
Supportive corporate culture
Visit different kinds of customers:
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Competitor’s customers, lost customers, lead users, channel intermediaries, internal personnel
Customer councils
© Mohr, Sengupta, Slater 2005

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Go to the customer’s site and get out of the conference room
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(versus bringing them on-premise for a “dog and pony” show)
Ask probing questions
Ensure customer visits are programmatic/ systematic for a deep reviewing of all profiles of product
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(not ad hoc)
© Mohr, Sengupta, Slater 2005

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Because users may be needs, this technique focuses on customer behavior and unable to articulate workarounds their observations of to develop a deep understanding the user’s environment.
Types of insights
(unexpected success and failure)
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Triggers of Use (what? why? )
Coping strategies with unarticulated user needs (how?)
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New usage situations (what’s new?)
Customization (when, where, who?)
Intangible Attributes
© Mohr, Sengupta, Slater 2005

1. Observation
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Who should be observed?
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Who should do the observing?
What behavior should be observed?
2. Capture the Data
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Less focus on words/text; more on visual, auditory, and other sensory cues
Via photos, etc.
© Mohr, Sengupta, Slater 2005

3. Reflection and Analysis
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Identify all customers’ possible problems and solutions
4. Brainstorm for Solutions
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Transform observations into ideas
5. Develop prototypes of solutions
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Tangible representation or role play/simulation of ideas
© Mohr, Sengupta, Slater 2005

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Success rate based on engineers’ ideas: only 20%
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Example: video-phone
Team of 8 design ethnographers to find how technology can help solve user problems
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Salmon industry in the Alaska (video monitoring)
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Business owners (handwriting recognition)
Teenagers (exchanging pictures with others)
The lesson: What a user does with a product is more important than what the product can do.
© Mohr, Sengupta, Slater 2005

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Some customers face needs before a majority of the market place;
Their needs may be more extreme than typical customers
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Ex: auto racers and military’s combat fighters need for better brakes
They stand to benefit substantially by obtaining solutions to their needs sooner rather than later
They struggle with the inadequacies of existing products tend to innovate their own solutions to their needs (see Table 5-1)
© Mohr, Sengupta, Slater 2005

"LEAD USERS" of later commercialized modifications and enhancements
Time
"LEAD USERS" of novel products
Some Users Begin To
Experience/ Respond To Need
First Responsive Commercial
Product Introduced
Market
Growth
© Mohr, Sengupta, Slater 2005

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The lead user process can create breakthrough products by systematically identifying lead users and learning from them.
© Mohr, Sengupta, Slater 2005

1. Identify important trend
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Via standard environmental scanning
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3M identified trend of detecting small features via medical imaging, which required higher-quality, and high-resolution images
© Mohr, Sengupta, Slater 2005

2. Identify and question lead users
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Personal contacts with customers, surveys, networking with experts, empathic design
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Respect possible sensitivity of information
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Ex:
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3M identified radiologists working on most challenging medical problems, who had developed imaging innovations to meet their needs
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Networking to other fields in pattern recognition (the military) and semiconductors
© Mohr, Sengupta, Slater 2005

3. Develop the breakthrough product(s)
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Host a workshop for experts and lead users to brainstorm
Ex: medical imaging, experts in high-resolution imaging, and pattern recognition developed ideas
4. Assess how well lead user data and experiences apply to more typical users
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Gather market research from typical users
The possibility of extrapolation
© Mohr, Sengupta, Slater 2005

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New insights from gathering and using information in new ways
Cross-functional in nature
Identifying and capturing the innovation sources earlier than competitors
(appropriability)
Collaboration with innovative customers
Requires corporate support, skilled teams, time.
© Mohr, Sengupta, Slater 2005

1. Identify important trends in infection control
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Travel to extreme situation: surgical environments in developing countries
2. Identify lead users
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Veterinary hospitals, make-up artists in
Hollywood
(a surprising findings: substantial benefit to Vet and artist)
© Mohr, Sengupta, Slater 2005

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Develop the breakthrough ideas at a workshop with experts and lead users
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Economy line of surgical drapes, hand-held devices to apply anti-microbial substances to skin, “ armor ” line to coat catheters and tubes with anti-microbial protection, and upstream containment of infection prior to surgery for high-risk patients.
© Mohr, Sengupta, Slater 2005

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What: A tool that provides a bridge between the voice of the customer and product design
Purpose: Ensure tight correlation between customer needs and product
specifications.
Requirement: Close/intensive collaboration between marketing, engineers, and customers
© Mohr, Sengupta, Slater 2005

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Reduce product development time by 50%
Cut start-up and engineering costs by 30%
Reduce time-to-market
Reduce number of design changes
Reduce rework
Lower facility’s maintenance and operation costs
Improve quality (meeting the requirements)
Increase customer satisfaction
© Mohr, Sengupta, Slater 2005

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Collect the “voice of the customer”
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Identify customer needs regarding desired product benefits via customer visits or empathic design
Weight or prioritize desired benefits/attributes
Collect customer perceptions of competitive products
Transform data into design requirements :
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“Customer requirements deployment”: identify product attributes that will meet customer needs
“House of quality”: a planning approach that links customer requirements, design parameters and competitive data.
© Mohr, Sengupta, Slater 2005

3.
4.
5.
1.
2.
6.
7.
Determine what , specifically, is important to customers.
Rank customer requirements in terms of importance.
Translate customer requirements into design specifications .
Rate the design attributes by organizational difficulty.
Assess the current marketplace . How effective are you at meeting customer requirements? How effective are competitors? Why is one product perceived to be better than another?
Conduct research to determine the design requirements. (try-out) target values for the
Complete and evaluate new design.
© Mohr, Sengupta, Slater 2005

Kano
Satisfaction
One-dimensional
Attractive
Dysfunctional Functional
Must-be
Known vs. Unknown
Spoken vs. Unspoken
Dissatisfaction
「狩野紀昭」 (Noriaki Kano) 品質概念圖
© Mohr, Sengupta, Slater 2005

1. “One-dimensional quality”:
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Increases in level of attribute linearly related to customer satisfaction
Typically “known” attributes identified by customer
EX: battery life in lap tops
© Mohr, Sengupta, Slater 2005

2. “Must-be quality”:
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Increases in level of attribute has negligible effect on customer satisfaction;
However, decreases in attribute has strong negative effect on customer satisfaction.
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Because they are so basic to product functionality, they are typically unspoken attributes: customer expects product to deliver these.
EX: ability of laptop to handle bumps and rough handling.
© Mohr, Sengupta, Slater 2005

3. “Attractive Quality”:
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Increases in level of attribute associated with exponential increase in customer satisfaction
But, because attribute is one that “delights” the customer, its absence does not necessarily lead to dissatisfaction
Typically unknown to customer at conscious level
Ex: de-compressible/expandable laptop
© Mohr, Sengupta, Slater 2005

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Firmly grounds product design in customer needs
Allows product development team to develop common understanding of design issues and trade-offs
Reveals friction points and enhances collaboration
© Mohr, Sengupta, Slater 2005

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TQM grounded in customer knowledge and ability to deliver customer value, which is enhanced by:
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Customer excellence
Cycle-time excellence
Cost excellence
Cultural excellence
© Mohr, Sengupta, Slater 2005

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Tied to being customer-focused and market-oriented
Knowledge of customer environment and product usage
© Mohr, Sengupta, Slater 2005

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Products late to the market suffer negative impacts to profitability from two reasons:
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Long time-to-market cycles typically experience cost overruns
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More importantly, products late to the market suffer loss of market share
Lesson: Being fast to market is important, but only when combined with ability to accurately deliver customer requirements
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Therefore, link QFD with TQM
© Mohr, Sengupta, Slater 2005

Attractive Quality
Model 3
ONE-DIMENSIONAL
QUALITY
Model 2
Model 1
Development
Overall Revenue
Incr. Revenue
New Models
Must be quality
Time
© Mohr, Sengupta, Slater 2005

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Bring higher levels of product functionality to the market incrementally over time with successive product iterations.
Yes!
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Striving for complicated set of features with initial offering can lead to delays
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Delays mean that customer needs may have changed or a competitor beats firm to the market
Purchasers of first generation of new product become installed base for later generations
(compatibility consideration)
© Mohr, Sengupta, Slater 2005

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Cost Excellence
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Provide necessary customer value with lowest possible cost
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Use supply partnerships
Use downsizing cautiously, lest negative impact on customer value
Cultural Excellence:
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Align goals of the organization and of personnel to be able to capitalize on market opportunities
Ex: culture of innovation, effective marketing/R&D interaction
© Mohr, Sengupta, Slater 2005

Objectives
Approach
Customer satisfaction
•Quality
Circle,…
•QFD,…
PDCA, …
Motivation
Incentive mechanism
Base technology & IT infrastructure
© Mohr, Sengupta, Slater 2005

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Prototype: an experimental design of the whole or part of a product that is used for illustration or testing purposes.
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Rapid prototyping: a process for producing fully functional prototypes in reduced time.
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Made possible by shorter design cycle time or the decoupling of design and manufacturing.
Enables the designer to experiment before deciding on a final design.
© Mohr, Sengupta, Slater 2005

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Beta version: A pre-release (potentially unreliable) version of a piece of software or hardware made available to a small number of trusted customers.
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An item "in beta test" is mostly working but still under test.
In practice, systems (hardware or software) often go through two stages of release testing:
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Alpha (internal) and
Beta (external).
To become a Beta tester, go to Intuit
© Mohr, Sengupta, Slater 2005

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What: Information about competitors
Why: Provides information for better decision making and improved strategies
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An early warning system
A strategy is the firm’s best response to its competitors’ response and vice versus.
© Mohr, Sengupta, Slater 2005

Competitor’s goals and objectives
Competitor’s strategy
Competitor’s assumptions about the industry
What strategic changes will the competitor initiate?
How will the competitor respond to our initiatives?
Competitor’s key strengths and weaknesses
How can you develop this information?
© Mohr, Sengupta, Slater 2005

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Affect decisions of top managers
Are proactive in reading the market
Look beyond existing market boundaries
Utilize the Web
Gauge/measure potential for misleading signals
© Mohr, Sengupta, Slater 2005

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“ Who the hell wants to hear actors talk?”
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Failed!
Harry M. Warner (1927) reacting to addition of audio technology to silent movies
“Television won’t be able to hold on to any market it captures after the first six months. People will soon get tired of staring at night.” a plywood box every
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Darryl Zanuck, 20 th Century Fox Films, 1946
“There is little reason for any individual to have a computer in their home.”
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Ken Olsen, president and founder of the DEC
Corporation,1977
© Mohr, Sengupta, Slater 2005

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Delphi method
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Rely on a panel of experts
Analogous data
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Rely on similar products
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Risk of commensurability
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Internet dialed up to 90M users by 3 years, while Radio took 13 years to 60 and TV 15 years.
Information Acceleration
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Use “virtual” prototypes to obtain customer feedback
© Mohr, Sengupta, Slater 2005

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Lack of historical data
Difficult for customers to preferences articulate
Inflated projects from over-enthusiasm
Competition from incumbent technologies (deterrence)
Don’t confuse confidence in the forecast with reality (quality of the information)
© Mohr, Sengupta, Slater 2005

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Brand + Microprocessor Speed + RAM + CD
Speed + HD Size + Price
© Mohr, Sengupta, Slater 2005

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Ask Direct Questions about preference:
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What brand do you prefer?
What hard drive size would you like?
What processor speed would you like?
How much do you want to pay?
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Answers often trivial and unenlightening (e.g. respondents prefer low price to high price, faster speeds to lower speeds)
© Mohr, Sengupta, Slater 2005

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Ask Direct Questions about importances
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How important is it that you get the <<brand, hard drive size, processor speed, price >> that you want?
Importance Ratings often have low discrimination:
Average Importance Ratings
Brand
Hard Drive
Speed
Price
0
6.7
7.2
7.5
8.1
5 10
© Mohr, Sengupta, Slater 2005

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Research technique developed in early 1970s
Measures how buyers value components of a product/service bundle
Dictionary definition-- “Conjoint: Joined together, combined.”
Marketer’s catch-phrase-- “Features CONsidered
JOINTly”
© Mohr, Sengupta, Slater 2005

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We vary the product features (independent variables) to build many (usually 12 or more) product concepts.
We ask respondents to rate/rank those product concepts
(dependent variable).
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Based on the respondents’ evaluations of the product concepts, we figure out how much unique value (utility) each of the features added.
(Regress dependent variable on independent variables; betas equal part worth utilities.)
© Mohr, Sengupta, Slater 2005

Would you prefer . . .
210 Horsepower or 140 Horsepower
17 MPG 28 MPG
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If choose left, you prefer power. If choose right, you prefer fuel economy.
Rather than ask directly whether you prefer power over fuel economy, we present realistic tradeoff scenarios and infer preferences from your product choices.
When respondents are forced to make difficult tradeoffs , we learn what they truly value .
For application examples, go to Sawtooth Software .
© Mohr, Sengupta, Slater 2005

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Attributes assumed to be independent (Brand,
Speed, Color, Price, etc.)
Each attribute has varying degrees, or “levels”
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Brand: Dell, Gateway, Compaq, IBM
Speed: 3.2 Ghz, 2.8 Ghz, 2.4 Ghz
Price: $500, $1200, $2000
Each level is assumed to be mutually exclusive of the others (a product has one and only one level level of that attribute).
© Mohr, Sengupta, Slater 2005

If you were in the market to buy a new PC today and these were your only options, which would you choose?
IBM Dell Compaq
2.4 GHz
Processor
3.2 GHz
Processor
2.8 GHz
Processor
512 Meg
RAM
21-Inch
Monitor
$1,200
256 Meg
RAM
21-Inch
Monitor
$2,000
256 Meg
RAM
17-Inch
Monitor
$1,550
None: I
Wouldn't
Choose
Any of
These
© Mohr, Sengupta, Slater 2005

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Numeric values that reflect how desirable different features are:
Feature
Dell
Compaq
3.2 Ghz P4 Processor
2.8 Ghz P4 Processor
2.4 Ghz Celeron Processor
Utility
2.5
1.8
4.8
3.2
1.2
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The higher the utility, the better
© Mohr, Sengupta, Slater 2005

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Measure of how much influence each attribute has on people’s choices
Best minus worst level of each attribute, percentaged:
Dell - Compaq (2.5 - 1.8) = 0.7
16.3%
3.2 – 2.4 Ghz Processor (4.8 - 1.2) = 3.6
83.7%
----- --------
Totals:4.3
100.0%
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Importances are directly affected by the range of levels you choose for each attribute
© Mohr, Sengupta, Slater 2005