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market-research-without-biasThe Economist Magazine did an analysis of political book sales on Amazon to see if there were any patterns. Anyone who uses social media will not be surprised that readers tended to buy books from either the left or the right...not both. This follows an increasing pattern of people looking for validation rather than education and of course it adds to the growing divide in our country. A few books managed a good mix of readers from both sides, though often these were books where the author found fault with his or her own side (meaning a conservative trashing conservatives or a liberal trashing liberals).

I love this use of big data and hopefully it will lead some to seek out facts and opinions that differ from their own. These facts and opinions need not completely change an individual's own thinking, but at the very least they should give one a deeper understanding of the issue, including an understanding of what drives others' thinking.

In other words, hopefully the public will start thinking more like effective market researchers.

We could easily design research that validates the conventional wisdom of our clients.

• We can frame opinions by the way we ask questions or by the questions we asked before.
• We can omit ideas from a max-diff exercise simply because our "gut" tells us they are not viable.
• We can design a discrete choice study with features and levels that play to our client's strengths.
• We can focus exclusively on results that validate our hypothesis.

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how-to-green-marketingDo people buy green products? Yes, of course. The real question for green marketers is whether they buy enough. In other words, are green sales in line with pro-green attitudes? Not really, as huge majorities of consumers show at least some green tendencies while purchases lag far behind. Why is that? Economics tells us that consumers buy based on value (trading off cost and benefits). Since eco-friendly products are seen as being more expensive, higher prices can lower the value of a green product enough to make a conventional alternative more attractive.

While the cost trade-off is clear, it is not the only one. The benefit side has at least two major components. One is the environmental benefit, which may or may not seem tangible enough to make a difference. For instance, a dozen eggs at Acme goes for less than a dollar, while some cage-free varieties can run north of $4 at Whole Foods. So, an environmentally conscious consumer has to make a trade-off at the time of purchase – is the product worth the additional cost? For items like food, the benefits may seem small enough, and far enough out, that many may decide the value proposition does not work for them. In other product categories (say, green laundry detergent), the benefits may seem both long term and impersonal, making the trade-off even harder.

The second major component is the effectiveness of the product in performing its basic function. If consumers perceive green products as inherently inferior (in terms of conventional attributes like performance), they are less likely to buy them. So a green laundry detergent (that uses less harsh chemicals) could be seen as more expensive and less effective in cleaning clothes, further dropping its overall value. (A complicating issue is that the lack of effectiveness itself could be a perceptual rather than real problem). Unless the company is able to offset these disadvantages, the product is unlikely to succeed.

A direct way to increase demand is to offer higher performance on a compensatory attribute. In the case of LED TVs, for example, newer technology consumes less power and provides better picture quality. (Paradoxically, this can sometimes lead to the Rebound Effect, whereby greener technologies encourage higher use, thus clawing back some of the benefits). But in reality, most products are not in a position where green attributes offer performance boosts.

And of course, as it is with every other market, there are segments in this market as well. Consumers who are highly committed (dark green) are willing to buy, as the value they place on the longer term environmental benefits is high enough. And, often they are affluent enough to afford the price. But a product looking for mainstream success cannot succeed only with dark green consumers (who rarely account for more than 20% of the market). Other shades of green will also need to buy. Short of government subsidies and mandates, green marketers have to find ways to balance out the components of the value proposition for the bulk of the market.

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3 mistakes-conjoint-in-new-product-research-pricing
Discrete Choice Conjoint is a powerful tool for among other things conducting pricing and product development research. It is flexible and can handle even the most complex of products. With that said, it requires thoughtful design with an understanding of how design will impact results. Here are three mistakes that often lead to flawed design:

 

Making the exercise too complex

The flexibility of conjoint means you can include large numbers of features and levels. The argument for doing so is a strong one…including everything will ensure the choices being made are as accurate as possible. In reality, however, respondents are consumers and consumers don’t like complexity. Walk down the isle of any store and note that the front of the package doesn’t tell you everything about a product…just the most important things.   Retailers know that too much complexity actually lowers sales. Our own research shows that as you add complexity, the importance of the easiest to evaluate feature (normally price) rises…in other words, respondents ignore the wealth of information and focus more on price. 
 

What to do:

Limit the conjoint to the most critical features needed to meet the objectives of the research. If you can’t predict those in advance, then do research to figure it out. A custom Max-Diff to prioritize features or a product like our Idea Magnet (which uses Bracket) will tell you what to include. Other features can be asked about outside the conjoint.  

 

Having unbalanced numbers of levels

Some features only have two levels (for example, on a car conjoint we might have a feature for “Cruise Control” that is either present or not present). Others, however have many levels (again on a car conjoint we might offer 15 different color choices). Not only can including too many levels increase complexity (see point 1), but it can actually skew results. If one feature has many more levels than the rest, the importance of that feature will almost certainly be overstated.  
 

What to do:

As with point one, try to limit the levels to those most critical to the research.  For example, if you are using conjoint to determine brand value you don’t need to include 15 colors…five or six will do the job.  If you can’t limit things, then at least understand that the importance of the feature is being overstated and consider that as you make decisions.  
 

Not focusing on what the respondent sees

Conjoint requires a level of engagement that most questions do not. The respondent has to consider multiple products, each with multiple features and make a reasoned choice. Ultimately they will make choices, but without engagement we can’t be sure those choices represent anything more than random button pushing. Limiting complexity (point 1 again) helps, but it isn’t always enough.   
 

What to do:

Bring out your creative side…make the exercise look attractive. Include graphics (logos for example). If you can make the choice exercise look more like the real world then do so. For example, if the conjoint is about apparel, present the choices on simulated “hang tags”, so consumers see something like they would see in a store. As long as your presentation is not biasing results (for example, making one product look nicer than another) then anything goes. 
 
These are three of the most common design errors, but there are of course many more. I’m tempted to offer a fourth, “Not working with an experienced conjoint firm”, but that of course would be too self-serving!
 
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3-tips-for-30-in-new-product-research

TRC is celebrating 30 years in business…a milestone to be sure.  

Being a numbers guy, I did a quick search to see how likely it is for a business to survive 30 years. Only about 1 in 5 make it to 15 years, but there isn’t much data beyond that. Extrapolation beyond the available data range is dangerous, but it seems likely that less than 10% of businesses ever get to where we are. To what do I owe this success then?  

It goes without saying that building strong client relationships and having great employees are critical. But I think there are three things that are key to having both those things:

Remaining Curious

I’ve always felt that researchers need to be curious and I’d say the same for Entrepreneurs. Obviously being curious about your industry will bring value, but even curiosity about subjects that have no obvious tie in can lead to innovation. For example, by learning more about telemarketing I discovered digital recording technology and applied it to our business to improve quality.

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new-product-research-and-conjoint

So much has been written about conducting research for new product development. Not surprisingly, as this is an area of research almost every organization, new or old, has to face day in and day out. As market research consultants, we deal with it all the time and thought it would be beneficial to provide our audience with our own recommendations for some useful sources that explain conjoint analysis – a method most often used when researching new products and conducting pricing research.

Recommendation #1: In 15 Minutes

Understanding Conjoint Analysis in 15 Minutes

This is a relatively brief article from Sawtooth Software, the makers of software used for conjoint, that provides an explanation of the basics of conjoint. The paper uses a specific example of golf balls to make it easy to understand.

Recommendation #2: For Managers

Managerial Overview of Conjoint Analysis 

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