market analysis tools in npd (final)
TRANSCRIPT
Market Analysis Tools
in NPD
Armin Azizpour
Mehdi Ghazvinizadeh
Vahid Soltani
Shahryar Doosti
Instructor: Dr. Sadeghi
Market analysis areas
Idea Generation
What product to develop?
Product Optimization
How must the product be designed?
Marketing Mix Optimization
How to introduce the product?
Market Prediction
What is the new product’s anticipated success
Usage of tools by NPD
What product to develop?
Brainstorming
Synectics
Focus group
User-observation
Delphi method
Morphological analysis
Brainstorming
Developing creative solutions
New ideas
Spark off
Four basic rules
No criticism
Welcome unusual ideas
Quantity wanted
Combine and improve ideas
Brainstorming steps
Gather the principles from a wide range of
disciplines
Write down a brief description of the problem
Encourage an enthusiastic uncritical attitude
Write down all the solutions
DO NOT evaluate or censor
The leader should keep it on subject
Evaluation
Delphi technique
Does not require face to face communication
it is used to: Forecasting future strategic, economic,….
Explore underlying assumption or background
information leading to different judgments
Seek out information on which agreements may later
be generated
Advantages
Allows participants to remain anonymous
Inexpensive
Free of social pressure, personality influence and
individual dominance
A reliable judgement or forecast results
Allow sharing of information and reasoning among
participants
Conducive to independent thinking and gradual
formulation
Can be used to reach consensus among groups
hostile to each other
Disadvantages
Judgements are those of a selected group of people
and may not be representative
Tendency to eliminate extreme positions and force a
middle-of-the–road consensus
Time-consuming
Require skill in written communication
Require adequate time and participants commitment
(about 30-45 days)
Focus group
What is a focus group? Evaluating services
Testing new ideas
Managing a focus group Preparing for a focus group
Identify and define the issue
No more than 5 or 6 questions
Selecting the participants
Preparing ice-breakers
Synectics
Closely related to brainstorming
More formalised and structured
Trigger questions
Making the strange familiar and familiar strange
Emphasis on fantasy
Trigger questions
Subtract
ADD
transfer
Empathize
Animate
Change scale (time, dimensions, proportion…)
Substitute
Isolate
Fantasize
Combine
User-observation
Direct
Indirect
observation methods
personal mechanical auditcontent analysis
trace analysis
Benefits
Direct
Focus attention on specific areas
Indirect
Natural behaviour
How must the product be designed?
QFD
Conjoint analysis
Concept test
Prototype test
In-home-use test
2
QFD
A method designed to help the NPD-project team to
identify and interpret the needs and wants of
customers. The aim is to establish the importance of
product attributes and transform them into technical
requirements.
Originated in Japan in 1966 by Yoji Akaro
QFD
QFD helps transform the VOC (voice of the
customer) into engineering characteristics.
Maximizes positive quality that adds value.
A key practice of DFSS (design for six sigma)
Tasks in QFD:
Acquiring market needs by listening to the Voice of
Customer (VOC)
sorting the needs
numerically prioritizing them (using techniques such as
the AHP)
Functional fields of QFD
Product development
Quality management
Customer needs analysis
Product design
Planning
Engineering
Decision-making
Management
Teamwork, timing, costing, and others
QFD Process
Product Planning (House of Quality) Translate customer requirement into product technical
requirements to meet them
Product Design
Translate technical requirements to key part characteristics or systems
Process Planning Identify key process operations necessary to achieve key
part characteristics
Production Planning (Process Control) Establish process control plans, maintenance plans,
training plans to control operations
QFD Process
House of quality
Example
Customer need:
“the headlamp is bright enough to see well”
Customer requirement:
“I can see distant objects well”
“I can see close objects well”
“I can see well even under adverse conditions”
Demanded quality:
“I can see distant objects well”
“broad beam”
“light does not scatter”
Example
Quality characteristics:
flux distribution
flux distribution value
headlamp life
Safety
Secondary quality characteristics:
flux distribution value
flux of light
lens size
low beam and high beam
Transmissivity
voltage
Conjoint Analysis
The early 1970s, market researcher developed
conjoint analysis to overcome some key
shortcomings of a standard concept test.
Conjoint has been widely used in the new product
development process for selecting among alternative
product designs, targeting, and pricing.
How Conjoint Works
Defining a Product
A fundamental idea in conjoint analysis is that a product
can be broken down into a set of relevant attributes
By defining products as collections of attributes and
having the individual consumer react to a number of
alternatives, one can infer each attributes (i) importance
and (ii) most desired level.
How Conjoint Works
For instance, if the item is a personal computer, wemay have: A parameter related to the hard disk size. For example, it
takes the value 1 if the size belongs to [50 GO, 80 GO],the value 2 if the size belongs to (80 GO, 120 GO] andthe value 3 if the size is greater than 120 GO (if we usefigures from recent years).
A parameter related to the memory size. It takes thevalue 1 if the size belongs to [256, 512 KO] and 2otherwise.
A parameter related to the training. It takes the value 2 ifthe training is free and 1 otherwise.
A parameter related to after sale service. It takes thevalues 1, 2 or 3 depending on the type of service.
How Conjoint Works
Conjoint estimates an individuals value system, which
specifies how much value a consumer puts on each level
of each of the attributes.
If we know an individuals value system, we can predict
which of a set of available alternatives he will buy.
Individuals usually do not find it easy to state their value
system reliably. Rather than forcing consumers to think
separately about individual attributes, conjoint asks the
consumer to make judgments about products overall and
then uses mathematical analysis to uncover the value
system which must be behind the preference judgments.
How Conjoint Works
As an example, consider a fitness facility, interested
in optimal design of its locker rooms.
Two attributes are potentially important to users: (i)
whether or not there is a sauna and (ii) the size of
available lockers. There are two alternative .levels.
for the sauna (.yes. and .no.) and three levels for
lockers:
How Conjoint Works
There are thus 2 x 3 = 6 different sauna/locker
combinations or products.
One might in practice ask individuals how important
these alternative attributes are. Alternatively, one can
simply ask the respondent to rank order the six
possible combinations from most to least preferred.
The individual might respond as follows:
How Conjoint Works
How Conjoint Works
How Conjoint Works
Note that the value of a parameter does not reflect an
assessment, but a choice. This point is important.
Splitting the broad evaluation of an item among the
values of its parameters implies that the overall
evaluation of an item is the sum of the evaluations
assigned to the values of the parameters.
In other words, the utility function is assumed to be
additive.
This assumption is strong since it implies that
parameters are disjoined (i.e., independent from each
other from the point of view of customers’ perception of
the item value).
The evaluation of a parameter value is called part-worth.
We obtain a set of partworths from each tester
B. Decision stage in conjoint analysis
B. Decision stage in conjoint analysis
Determining Relevant Attributes In conjoint, the burden is on the analyst to prespecify
the attributes impacting a consumers purchasedecision.
If an attribute of no real importance is included in thestudy, the value system will indicate this attributeslimited role.
However, the conjoint analysis will not indicate theabsence of an important attribute. Consequently, onemust be confident that the right attributes have beenincluded.
In practice, the preliminary attribute list is usuallydeveloped in-house via contact with company peoplefrom a variety of functions - new productdevelopment, advertising, manufacturing, etc.
B. Decision stage in conjoint analysis
Stimulus Representation
The second design question is how to present products to
the respondent: partial or full profile method.
In the full profile approach, each product is described on
all the relevant attributes.
B. Decision stage in conjoint analysis
Response Type
Design decision three is the manner in which respondents
express their judgments, viz. as ratings or ranks.
The made-in-the-U.S.A. study noted above is a ratings
scale application, i.e., without explicitly considering other
options, consumers were asked to state how likely they
would be to purchase an item.
B. Decision stage in conjoint analysis
Criterion
Whatever the stage 3 decision, there is still the related but
distinct issue of the standard to be used in the judgments.
The two major types of standards are:
preference
likelihood or intention to purchase
B. Decision stage in conjoint analysis
Methods of Data Analysis
The data analysis depends on the previous decisions
made with respect to the input data collected.
Most commonly, the following are used:
Form of Judgment About Alternatives Data Analysis
Rating Scores Simple
Regression
Probability of Purchase Logit Model
Rankings MONANOVA
Concept test
Stage in product development process where a
detailed description of a product (and of its attributes
and benefits) is presented to prospective customers
or users, to assess their attitudes and intentions
toward the product. See also concept optimization.
another approach to new product development,
helps you minimize risk and maximize revenue when
entering service, consumer product, and high-tech
markets.
Prototype test
While CAD/CAE simulation and analysis clearly
reduces the required number of physical prototypes
necessary to validate a new product or component,
physical prototype testing remains an important and
necessary step in the product development process.
So what is it about prototypes that make them so
critical to product development? Since prototypes
are by definition the first of their kind, they are used
in product design for testing, testing and more
testing. Let's take a minute to find out how testing a
prototype generally works and the benefits of taking
the time to do this.
Prototype test
The biggest benefit is probably to the bottom line.
Prototypes can be tested for aspects like design flaws and ease of use, two things that are critical if your product is going to be a success.
You need to make sure everything works the way it should -- and that your customers can figure out how to make it work, too.
One of the reasons for this is that time is a huge factor in product development. One designer's great idea could also be cooking in the head of a competitor the very same moment. Having the first product to hit the market has a number of benefits -- as long as it's a good product.
they can also be useful if you want to start pitching your idea to investors, upper level management and other interested parties before you have a finished product.
In home use test
An approach that has a number of potential
customers/users test a new product (“at home”) for a
certain period of time. Afterwards
experiences/problems encountered are discussed.
How to introduce the product?
Mini test
Test marketing
Limited roll-out
Scanner market
3
Test marketing
Test marketing is about trying something out before
making a big commitment to it. It gives the firm
producing and marketing the product or service
some idea of what is likely to happen should it
decide to go ahead with a broader expansion on a
regional or national basis.
Aims of Test marketing
To provide estimations of sales volume and market
share for a new product, a product extension or a
new marketing device.
Traditional test marketing
Controlled test marketing
Simulated test marketing
Traditional test marketing
Traditional test marketing is marketing under ‘normal’
conditions and the company’s own salesforce gets
retailers to stock the product, give it good shelf
position and provide in-store promotion and
cooperative advertising. The sales staff also make
sure that the shelves remain stocked.
Conditional test marketing
This is a test where sales are measured within a
controlled store environment.
The research firm stocks the product in the stores,
handling both warehousing and distribution. It
maintains retail inventory levels, handles pricing,
shelf conditions and the building and placement of
displays.
Simulated market test
A method that confronts customers with a product
and its marketing mix using an interview and virtual
store-environment.
The objectives is to simulate the "awareness-trail-
repeat purchase" process.
It applies only to a situation where the product and
its packaging, pricing, and advertising and promotion
have been developed in finished form.
Limited roll out
An approach for introducing a new product to the
market. The new product is first introduced on a
small scale, with the objective to expand slowly in
order to limit market risk. During the introduction the
content of the market strategy may be modified.
Diffusion model
Market prediction model
4What is the new product’s anticipated
success?
Consumer innovativeness
measures of innovativeness:
- life innovativeness scales
- adoptive innovativeness scales.
Diffusion models
The aggregate growth of new products has enjoyed intensive study in marketing over the last 35 years, beginning with Bass (1969) and now totaling over 700 estimates of the parameters of diffusion or applications of the model (Bass 2004, Van den Bulte and Stremersch2004).
Everett Roger’s book (Rogers 1962); A normal distribution is specified for the timing of adoption, and five classes of adopters are specified:
(1) Innovators; (2) Early Adopters; (3) Early Majority; (4) Late Majority; and (5) Laggards.
According to the theory, apart from innovators (defined as the first two and one-half percent of the adopters), adopters are influenced in the timing of adoption by the pressures of the social system, the pressure increasing for later adopters with the number of previous adopters.
Diffusion models
The probability that an initial purchase will be made
at T given that no purchase has yet been made is a
linear function of the number of previous buyers.
)()/()( TYmqpTP
Diffusion models
If the coefficient of imitation is greater than the
coefficient of innovation the solution rises to a peak
and then declines.
Diffusion models
M, p, q
The coefficient of innovation is
relatively stable and averages about 0.03.
The coefficient of imitation varies
substantially across contexts, with
an average of about 0.4.
Diffusion models
The Bass model has had great appeal and
widespread use because:
1. simple
2. generally fits data well
3. enables intuitive interpretations of the three
parameters
4. and performs better than many more complex
models.
It is well known that changes in prices and other
decision variables will influence the diffusion process
(demand).
Some exceptions
Market prediction models
Different methods/models (often computer
models) that try to estimate the market share of
the new product (over time) calculating for
factors like customer preference, the market mix
of the new product and competition (level of
competition an competitive reactions).
Marketing strategy and NPD
4P:
1. Pricing
2. Promotion
3. Place
4. Product
STP
1. Segmentation
2. Targeting
3. positioning
• Brand/branding
• Multi national
marketing
strategy
• Market entry
1. How
2. when
• Growth
strategies
5
Positioning
Position differ from image in that it implies a frame of
reference, the reference point is usually being the
competition. Thus when the bank of California
positions itself as being small and friendly it is
explicitly or perhaps implicitly positioning itself with
respect to bank of America.
The positioning decision is often the crucial strategic
decision for company or brand because the position
can be central to customer’s perception and choice.
A clear positioning strategy can insure that the
elements of the marketing program are consistent
and supportive.
Six approach for positioning Attributes (most frequent, Toyota: economy and reliability,
Volkswagen: value for money, Volvo: durability and safety, BMW: handling and engineering efficiently), ignored points.
Price/ quality. It is an important attribute. Service, features, or performance (department stores – stores like Sears- discount stores like Kmart).
Use or application, associating product with use or application(Campbell’s soup for many years was positioned for use at lunch time).
Product users. Many cosmetics companies have used this ( Johnson & Johnson saw market share moved from 3 percent to 14 when they repositioned their shampoo form a baby shampoo to one used by people who wash their hair frequently and need mild shampoo)
The product class ( the hand soap “Caress” by Lever Brothers positioned itself as a bath oil product rather than a soap).
The competitors. In most positioning strategies an explicit or implicit frame of reference is competition. 1. established competitor’s image 2. you are better than a given competitor (Avis we’re number two, so we try harder).
The process of developing a positioning
strategy
1. Identify the competitors (it is not as simple as it seems). Primary group and secondary group.( 1.asking 2.use context)
2. Determine how the competitors are perceived and evaluated( associations).
3. Determine competitor’s position. 1.Product association based 2.similarities based multidimensional scaling.
4. Analyze the customers, Segmentation.
5. Select the position, segmentation commitment, economic analysis, don’t try to be something you are not
6. Monitor the position
