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New Product Research

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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new-product-resesarch-development-inventorA few times a week I get the privilege of talking to an inventor/entrepreneur. The products they call about range from pet toys to sophisticated electronic devices, but they all have one thing in common…they want a proof of concept for their invention. In most cases they want it in order to attract investors or to sell their invention to corporate entities.   
 
Of course, unlike our fortune 500 clients, they also have limited budgets. They’ve often tapped their savings testing prototypes and trying get a patent so they are weary of spending a lot to do consumer research. Even though only about a third of these conversations end up in our doing work for them, I enjoy them all.
 
First off, it is fun educating people on the various tools available for studying concepts. I typically start off telling them about the range of techniques from simple concept evaluations (like our Idea Audit) to more complex conjoint studies. I succinctly outline the additional learning you get as the budget increases. These little five to ten minute symposiums help me become better at talking about what we do.
 
Second, talking to someone as committed to a product as an inventor is infectious. They can articulate exactly how they intend to use the results in a way that some corporate researchers can’t (because they are not always told). While some of their needs are pretty typical (pricing research for example), others are very unique. I enjoy trying to find a range of solutions for them (from various new product research methods) that will answer the question at a budget they can afford. 
 
In many cases, I even steer them away from research. For many inventions something like Kickstarter is all they need.  In essence the market decides if the concept has merit. If that is all they need then why waste money on primary research? My hope is that they succeed and return to us when they have more sophisticated needs down the road.
 
Of course, I particularly enjoy it when the inventor engages us for research. Often the product is different than anything else we’ve researched and there is just something special about helping out a budding entrepreneur. The fact that these engagements make us better researchers for our corporate research clients is just a bonus.   
 
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new-product-research-floating-grilleI recently heard an old John Oliver comedy routine in which he talked about a product he'd stumbled upon...a floating barbeque grille. He hilariously makes the case that it is nearly impossible to find a rationale for such a product and I have to agree with him. Things like that can make one wonder if in fact we've pretty well invented everything that can be invented.

A famous quote attributed to Charles Holland Duell makes the same case: "Everything that can be invented has been invented". He headed up the Patent Office from 1898 to 1901 so it's not hard to see why he might have felt that way. It was an era of incredible invention which took the world that was largely driven by human and animal power into one in which engines and motors completely changed everything.

It is easy for us to laugh at such stupidity, but I suspect marketers of the future might laugh at the notion that we live in a particularly hard era for new product innovation. In fact, we have many advantages over our ancestors 100+ years ago. First, the range of possibilities is far broader. Not only do we have fields that didn't exist then (such as information technology), but we also have new challenges that they couldn't anticipate. For example, coming up with greener ways to deliver the same or better standard of living.

Second, we have tools at our disposal that they didn't have. Vast data streams provide insight into the consumer mind that Edison couldn't dream of. Of course I'd selfishly point out that tools like conjoint analysis or consumer driven innovation (using tools like our own Idea Mill) further make innovation easier.

The key is to use these tools to drive true innovation. Don't just settle for slight improvements to what already exists....great ideas are out there.

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