Author: Mandy Munro
2 min read: Words 620
Once you have your product roadmap planned with new product concepts ready for launch you will want to test the prototypes. Any new product has a chance of success and a chance of failure. New product failure rates are estimated to range from 35% to 95%. However, the failure rate statistic does not matter. You want your new product to be a success and to fulfil a need for consumers that will keep them coming back.
Market Research can help maximise the chance of success
Undertaking market research to test the concept or prototype with the target audience is essential to increase the chance of winning in your market. Whilst gut feel can be enough when knowledge of your consumer, the launch market and the existing gap is clear enough, many new products are created through ideation from an existing brand trying to gain share through new audiences or new markets. The need may be clear but the gap to fill may not be.
There are five key questions that product managers need answers to:
- Which is the best product idea?
- Which product features are most important?
- Which combination of features will have the greatest uptake?
- Do you need different variants of the product?
- How much people are willing to pay?
What type of market research do you need?
Assuming you have crafted your concepts or prototypes for testing you will need market research to help you optimize your concepts (usually qualitative research), or quantitative research to help you assess viability and size the potential market.
Market research agencies offer a range of qualitative and quantitative solutions for testing new products. Qualitative research is usually in the form of Co Creation research. Two of the most common quantitative research approaches are:
- Concept or Prototype Testing
- Discrete Choice Modelling (sometimes called conjoint analysis)
What is Concept or Prototype testing?
Concept testing is the process of using a quantitative survey to evaluate consumer appetite for a new product idea before it is launched in the marketplace. You may have one idea or several different product ideas that you wish to test.
HINT: Concept testing is about testing the core product or service idea, not the variants.
Typically, the quantitative survey is conducted online among a broad sample of the population. This enables you to test the potential uptake of the product or service idea among the assumed target audience and identify new target audiences.
Five questions are usually asked to test the product idea focusing on:
- Purchase probability
This is a straightforward market research test which enables you to select the best performing new product idea and provides confidence in go/no go decision making or optimisation.
What is Discrete Choice Modelling?
Discrete choice modelling (DCM) is the process of using a complex quantitative survey design to model the decision process of an individual.
- Respondents are shown combinations of features which make up the new product idea (versus competitor product combinations) and then choose their preferred product.
- A simulator calculator creates simulations of any combination of products and product features that have been tested.
There are several key outputs from the DCM model
- The Preference share: This is the estimated percentage of people who will buy the product with a particular combination of features
- Attribute importance: This is the score which tells us how influential each product features is in the model
- Price Elasticity. The elasticity of the price is shown through demand curves based on the proportion of people who will buy the product idea at different prices.
HINT: The Preference share tells you whether the new product idea will have traction in the marketplace. Price elasticity tells you how much people are willing to pay for the product.
Concept testing style quantitative research is all about giving you and your business confidence to make decisions.
Whether you are trying to test a new idea or create the ideal combination of product features, good quantitative research requires time and investment.
Beware the traps and biases of conducting research yourself. It is often not as simple as transferring the questions you have top of mind on to paper and into the world of the consumer. It is critical to get expert advice and invest in the right product for your needs.
Want to know more? Please do not hesitate to contact our team of market research experts here at Ruby Cha Cha who are happy to answer your questions and help you make the right market research decisions.