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New Product Research

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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when not to use conjointAt the beginning of my research career I grew accustomed to clients asking us for proposals using a methodology that they had pre-selected. In many cases, the client would send us the specs of the entire job, (this many completes, that length of survey) and just ask us for pricing. While this is certainly an efficient way for a client to compare bids across vendors, it didn’t allow for any discussion as to the appropriateness of the method being proposed.  
Today most research clients are looking for their research suppliers to be more actively involved in formulating the research plan. That said, we are often asked to bid on a “conjoint study.”  Our clients who’ve commissioned conjoint work in the past are usually knowledgeable about when a conjoint is appropriate, but sometimes there is a better method out there. And sometimes the product simply isn’t at the right place in the development “chain” to warrant conjoint.
Conjoint, for the uninitiated, is a useful research tool in product development. It is a choice-based method that allows participants to make choices between different products based on the product’s make-up. Each product comprises various features and levels within those features. What keeps respondents from choosing only products made up of the “best” features and levels is some type of constraint – usually price.   
We look to conjoint to help determine an optimal or ideal product scenario, to help price a product given its features, or to suggest whether a client could charge a premium or require a discount.  It has a wide range of uses, but it isn’t always a good fit:  

  1.  When the features haven’t been defined yet. One problem product developers face is having to “operationalize” something that the market hasn’t seen yet. You need to be able to describe a feature, what its benefits are, and its associated levels in layman’s terms. We can’t recommend conjoint if the features are still amorphous.   
  2. When there are a multitude of features with many levels or complex relationships between the features. The respondent needs to be able to absorb and understand the make-up of the products in order to choose between them. If the product is so complex that it requires varying levels of a lot of different features, it’s probably too taxing for the respondents (and may tax the design and resulting analysis as well). Conjoint could be the answer – but the task may need to be broken up into pieces.   
  3. When there are a limited number of features with few levels. In this case, Conjoint may be overkill. A simple monadic concept test or price laddering exercise may suffice.   
  4. When pricing is important, but you have absolutely no idea what the price will be. Conjoint works best when the product’s price levels range from slightly below how you want to price it to slightly above how you want to price it.  If your range is huge, respondents will gravitate toward the lower priced product scenarios and you won’t get much data on the higher end. It may also confuse respondents that similar products would be available at such large price differences.
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