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1 Evaluating New Products Prior to Test- Marketing Concept Testing Pre-test market procedures.

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Presentation on theme: "1 Evaluating New Products Prior to Test- Marketing Concept Testing Pre-test market procedures."— Presentation transcript:

1 1 Evaluating New Products Prior to Test- Marketing Concept Testing Pre-test market procedures

2 2 Concept Test l A concept test is a way to assess consumer interest in a new product. l Measures (primary) »Level of interest »Comparison on a battery of attributes –with consumers regular brand. –with competitive brands »Purchase Intention »Purchase Intention at a price point l Measures (secondary) »Open-ended reason why »most important product features.

3 3 Executing a Concept Test Factual presentation »presents the bare product concept l Persuasive presentation »with product positioning statement »Story board is as close as possible to what the consumer will actually see in finished media advertising l Choice of visual or words depends on how a consumer will normally think about the concept. »concept scores must not be compared across options

4 4 Purchase Measures l Trial Intent »Yes-No dichotomous scale often used l Purchase Intent »five/seven point scale (definitely buy to definitely will not buy) l Purchase Frequency or Product Change Frequency. »Use the average inter-purchase time for category as the mid- point. This helps to measure purchase intent by user segments. »Five/seven point scale (for toothbrushes: more than once in two months, about once in two month, about once in 6 months, about once in 8 months, less that once in 8 months.)

5 5 The Use of Purchase Measures l What use will you put the relative value of trial and purchase intent scores to in launch planning? »Allocation to sampling/consumer promotions versus theme ad. »Computing the perceived risk in the category. Why is this useful? »Helps to plan price off to consumer versus trade promotion allocation during launch l What is the primary use of purchase measures? »Sales volume per hh per time period equals %hh who intend to purchase x expected number of purchases per time period x expected number of units per purchase

6 6 Using Purchase Intent Data l There is a strong correlation between intent scores and actual trial in the marketplace for low-ticket consumer product categories such as toothbrushes. l But purchase intention measures typically overstate actual purchase or final adoption and steady-state market share. l Why? What is the problem with this type of concept test? »Shelf-effect, »competitive promotions

7 7 Using Purchase Intent Data l Rules of thumb in package goods categories in the U.S. »Conservative: convert purchase intent to actual purchase by considering only the definitely would purchase group as purchasers - the top box rule. »Use a 5% confidence interval around the top box score. »Less conservative is the top box + 20%of the second box(probably would purchase) l Remember, trial and first purchase are insufficient to ensure the success of a consumer product. l Repeat purchases are required for this. Concept scores do not predict repeat purchases l We need a product test

8 8 Pre-Test Market Analysis l Once a concept becomes an actual product, a set of research tools help managers make go/no-go decisions on full market introduction and the supporting marketing mix. l Costs of test marketing »alerting competition »timing of introduction »representativeness of the test market. l Pre-test market analysis is sometimes used in place of a full test market, or to determine whether test marketing is necessary.

9 9 Basic Structure of Pre-Test Market Models l Use the hierarchy-of-effects model as a good descriptor of customer purchase behavior. l Purchase phenomenon broken up into three behavioral stages: »Stage 1: Awareness of the product given product concept and marketing mix. »Stage 2: Given awareness the trial percentage. »Stage 3: Given trial, repeat purchase propensity. »proportion of future category purchases to the new brand.

10 10 Impact of Marketing Factors on Customer Movement Down the Hierarchy l Unaware to Aware: »Advertising, Sampling, Couponing. l Aware to Trial: »Product concept. »Ad persuasion. »Distribution. »Price. l Trial to Repeat: »Product quality. l P(Become a Regular User): »P(Aware) X P(Trial, given Aware) X P(Regular Use, given Trial)

11 11 Two Popular Estimation Methods: A. Bases II (SAMI-Burke) l Bases II uses information from SAMI-Burkes huge data base of new product introductions to obtain the estimates for the Awareness-Trial-Repeat progression. l Key regularities summarized into three sets of norms: »Category Norms: These estimate the awareness in the target market generated by a given marketing plan. »Concept Tables: Convert buying intention data and awareness data from consumers in the target market to an actual trial estimate. »After-Use Tables (from product tests): Customer data on: (1) stated buying intentions, (2) like/dislike scores, and (3) perceived price/value are converted into an estimate of the repeat purchase rate using these tables.

12 12 B. Assessor (M/A/R/C, Inc.) l Assessor is a simulated test marketing procedure, compressing the time and space of a traditional test market into a laboratory situation. Typically, »Customers from the target population are exposed to advertising for the new brand through the folder method. »Respondents then shop at a mock store set up, where the new brand and its competitors are available. They are given an amount of money to spend on their purchase. »Those buying the new product are called after a typical inter- purchase period period and offered a chance to repeat purchase. »Thus, trial and repeat, and hence long term share, are estimated given 100% awareness and availability. »This estimate is adjusted (down) for the planned awareness and availability.

13 13 How well do they work? l BASES claims that90% of their forecasts are within 20% of actual volume and over half are within 10% l ASSESSOR claims that average error is 21.5%; adjusting for actual introduction conditions, the error falls to 11.6% l Additionally, one of the major values of these procedures is the diagnostics they provide: »these can result in changes in the marketing plan or perhaps the product itself.


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