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Etm551 lecture07

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Alex Chuê
Alex Chuê

This document outlines the concept testing process, which involves directly gathering customer feedback on product concepts to help guide development decisions. It recommends a 7-step approach: 1) defining the test purpose, 2) choosing respondents, 3) choosing a survey format, 4) communicating the concept, 5) measuring response, 6) interpreting results, and 7) reflecting on lessons. Concept testing can be used to select concepts, identify needed improvements, and forecast demand and sales. Communicating concepts effectively and choosing the right audience are emphasized as important to obtaining useful feedback.

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ETM 551 Product Design and Development - Concept Testing 1 Product Design & Development Concept Testing
ETM 551 Product Design and Development - Concept Testing 2 Concept Development Process Perform Economic Analysis Benchmark Competitive Products Build and Test Models and Prototypes Identify Customer Needs Establish Target Specifications Generate Product Concepts Select Product Concept(s) Set Final Specifications Plan Downstream Development Mission Statement Test Product Concept(s) Development Plan
ETM 551 Product Design and Development - Concept Testing 3 Concepts • Define the purpose of the concept test • Choose a survey population • Choose a survey format • Communicate the concept • Measure customer response • Interpret the results • Reflect on the results and the process
ETM 551 Product Design and Development - Concept Testing 4 Concept Testing: What is it? Concept testing is: • closely related to concept selection • different from concept selection in that it is based on data gathered directly from potential customers and relies to a lesser degree on judgments made by the development team. concept generation concept screening concept scoring concept testin
ETM 551 Product Design and Development - Concept Testing 5 Concept Testing: What for? • Go/no-go decisions • What market to be in? • Selecting among alternative concepts • Confirming concept selection decision • Benchmarking • Soliciting improvement ideas • Forecasting demand • Ready to launch?
ETM 551 Product Design and Development - Concept Testing 6 A seven-step method Step 1: Define purpose Step 2: Choose a survey population Step 3: Choose a survey format Step 4: Communicate the concept Step 5: Measure customer response Step 6: Interpret results Step 7: Reflect on results and process
ETM 551 Product Design and Development - Concept Testing 7 Define purpose of concept test • Write down the questions the team wishes to answer with the test: – Which of several alternative concepts should be pursued? – How can the concept be improved to better meet customer needs? – Approximately how many units are likely to be sold? – Should development be continued? – …..
ETM 551 Product Design and Development - Concept Testing 8 Choose a survey population • The underlying assumption is that the survey population reflects the target market. – Ex.: emPower scooter has two main markets: • urban consumer • college students
ETM 551 Product Design and Development - Concept Testing 9 Choose a survey format • Face-to-face interaction – Stopping people at the street • Telephone – May be targeted to specific individuals • Postal mail – Somewhat slower than other methods, often poor response
ETM 551 Product Design and Development - Concept Testing 10 Choose a survey format • E-mail: – Similar to postal mail except respondents seem slightly more likely to reply than via postal mail • Internet – A team may create a Web site for virtual concept testing
ETM 551 Product Design and Development - Concept Testing 11 Communicate the concept • Written or verbal description • Sketch • Photos and renderings • Storyboards • Video • Simulation • Interactive multimedia • Physical appearance models • Working prototypes
ETM 551 Product Design and Development - Concept Testing 12 Verbal description • The product is a lightweight electric scooter that can be easily folded and taken with you inside a building or on public transportation. • The scooter weighs about 12 kg. It travels at speeds of up to 25 kilometers per hour and can go about 20 kilometers on a single charge. • The scooter can be recharged in about two hours from a standard electric outlet. • The scooter is easy to ride and has simple controls — just an accelerator button and a brake.
ETM 551 Product Design and Development - Concept Testing 13 Price • Include price in concept description?
ETM 551 Product Design and Development - Concept Testing 14 Measure customer response • Definitely would buy • Probably would buy • Might or might not buy • Probably would not buy • Definitely would not buy
ETM 551 Product Design and Development - Concept Testing 15 Concept Testing Example: Electric Scooter
ETM 551 Product Design and Development - Concept Testing 16 Sketch
ETM 551 Product Design and Development - Concept Testing 17 Rendering
ETM 551 Product Design and Development - Concept Testing 18 3D Solid CAD model
ETM 551 Product Design and Development - Concept Testing 19 Appearance model
ETM 551 Product Design and Development - Concept Testing 20 Storyboard
ETM 551 Product Design and Development - Concept Testing 21 Resemblance to marketing...
ETM 551 Product Design and Development - Concept Testing 22 Working Prototype
ETM 551 Product Design and Development - Concept Testing 23 Beta Prototype
ETM 551 Product Design and Development - Concept Testing 24 Production Product
25 emPower’s Market Decision: Factory Transportation
ETM 551 Product Design and Development - Concept Testing 26 Survey Format • PART 1, Qualification – How far do you live from campus? • <If not 2-4 kilometers, thank the customer and end interview.> – How do you currently get to campus from home? – How do you currently get around campus? • PART 2, Product Description – <Present the concept description>
ETM 551 Product Design and Development - Concept Testing 27 Survey Format • PART 3, Purchase Intent – If the product were priced according to your expectations, how likely would you be to purchase the scooter within the next year? I would definitely not purchase the scooter. I might or might not purchase the scooter. I would definitely purchase the scooter. I would probably not purchase the scooter. I would probably purchase the scooter. “top box”“second box”
ETM 551 Product Design and Development - Concept Testing 28 Survey Format • PART 4, Comments – What would you expect the price of the scooter to be? – What concerns do you have about the product concept? – Can you make any suggestions for improving the product concept? • Thank you.
29 Interpreting the Results: Forecasting Sales Q = N x A x P • Q = sales (annual) • N = number of (annual) purchases • A = awareness x availability (fractions) • P = probability of purchase (surveyed) = Cdef x Fdef + Cprob x Fprob “second box”“top box”
ETM 551 Product Design and Development - Concept Testing 30 Forecasting Example: College Student Market • N = off-campus grad students (200,000) • A = 0.2 (realistic) to 0.8 (every bike shop) • P = 0.4 x top-box + 0.2 x second-box • Q =
ETM 551 Product Design and Development - Concept Testing 31 Forecasting Example: Factory Transport Market • N = current bicycle and scooter sales to factories (150,000) • A = 0.25 (single distributor’s share) • P = 0.4 x top-box + 0.2 x second-box • Q = 150,000 x 0.25 x [0.4 x 0.3 + 0.2 x 0.2] = 6000 units/yr • Price point $1500
ETM 551 Product Design and Development - Concept Testing 32 Sources of Forecast Error • Word-of-Mouth Effects • Fidelity of Concept Description • Pricing • Level of Promotion • Competition
ETM 551 Product Design and Development - Concept Testing 33 Discussion • Why do respondents typically overestimate purchase intent? – Might they ever underestimate intent? • How to use price in surveys? • How much does the way the concept is communicated matter? – When shouldn’t a prototype model be shown? • How do you increase sales? • Price: to include or not to include? • What is the importance of quality of the description?
ETM 551 Product Design and Development - Concept Testing 34 Discussion (cont) • Is there a situation where the team should just “go for it” without any formal concept test?
35 Population of the world Population of Europe Population of Asia Population of North America Population of South America Population of Africa Population of Oceania Population of the United States Annual births in the United States Adults in the United States age 18-24 Higher-education students in the US Househols in the US US households with income >US$ 50 m US households with income >US$ 75 m US households with income >US$ 100 m
36 Comercial airplane Electronic manufacturing equipment Medical imaging equipment Cut-and-sew fabric product like a backpack Mountain bike Gadgets sold through specialty retailers Luxury sedan Hand tool Cordless drill Sport utility vehicle Toys Desktop computers Cofeemaker Inkjet printer Single-use medical device Flu vaccine Videocassette Inexpensive ballpoint pens Razor blade cartridge
ETM 551 Product Design and Development - Concept Testing 37 Summary • Concept testing can verify that customer needs have been adequately met by the product concept, asses the sales potential of a product concept, and/or gather customer information for refining the product concept. • Concept testing is appropriate at several points in the development process.
ETM 551 Product Design and Development - Concept Testing 38 Summary • Seven step method of testing is recommended: – Define the purpose of the concept test – Choose a survey problem – Choose a survey format – Communicate the concept – Measure customer response – Interpret the results – Reflect on the results and the process

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Etm551 lecture07

  • 1. ETM 551 Product Design and Development - Concept Testing 1 Product Design & Development Concept Testing
  • 2. ETM 551 Product Design and Development - Concept Testing 2 Concept Development Process Perform Economic Analysis Benchmark Competitive Products Build and Test Models and Prototypes Identify Customer Needs Establish Target Specifications Generate Product Concepts Select Product Concept(s) Set Final Specifications Plan Downstream Development Mission Statement Test Product Concept(s) Development Plan
  • 3. ETM 551 Product Design and Development - Concept Testing 3 Concepts • Define the purpose of the concept test • Choose a survey population • Choose a survey format • Communicate the concept • Measure customer response • Interpret the results • Reflect on the results and the process
  • 4. ETM 551 Product Design and Development - Concept Testing 4 Concept Testing: What is it? Concept testing is: • closely related to concept selection • different from concept selection in that it is based on data gathered directly from potential customers and relies to a lesser degree on judgments made by the development team. concept generation concept screening concept scoring concept testin
  • 5. ETM 551 Product Design and Development - Concept Testing 5 Concept Testing: What for? • Go/no-go decisions • What market to be in? • Selecting among alternative concepts • Confirming concept selection decision • Benchmarking • Soliciting improvement ideas • Forecasting demand • Ready to launch?
  • 6. ETM 551 Product Design and Development - Concept Testing 6 A seven-step method Step 1: Define purpose Step 2: Choose a survey population Step 3: Choose a survey format Step 4: Communicate the concept Step 5: Measure customer response Step 6: Interpret results Step 7: Reflect on results and process
  • 7. ETM 551 Product Design and Development - Concept Testing 7 Define purpose of concept test • Write down the questions the team wishes to answer with the test: – Which of several alternative concepts should be pursued? – How can the concept be improved to better meet customer needs? – Approximately how many units are likely to be sold? – Should development be continued? – …..
  • 8. ETM 551 Product Design and Development - Concept Testing 8 Choose a survey population • The underlying assumption is that the survey population reflects the target market. – Ex.: emPower scooter has two main markets: • urban consumer • college students
  • 9. ETM 551 Product Design and Development - Concept Testing 9 Choose a survey format • Face-to-face interaction – Stopping people at the street • Telephone – May be targeted to specific individuals • Postal mail – Somewhat slower than other methods, often poor response
  • 10. ETM 551 Product Design and Development - Concept Testing 10 Choose a survey format • E-mail: – Similar to postal mail except respondents seem slightly more likely to reply than via postal mail • Internet – A team may create a Web site for virtual concept testing
  • 11. ETM 551 Product Design and Development - Concept Testing 11 Communicate the concept • Written or verbal description • Sketch • Photos and renderings • Storyboards • Video • Simulation • Interactive multimedia • Physical appearance models • Working prototypes
  • 12. ETM 551 Product Design and Development - Concept Testing 12 Verbal description • The product is a lightweight electric scooter that can be easily folded and taken with you inside a building or on public transportation. • The scooter weighs about 12 kg. It travels at speeds of up to 25 kilometers per hour and can go about 20 kilometers on a single charge. • The scooter can be recharged in about two hours from a standard electric outlet. • The scooter is easy to ride and has simple controls — just an accelerator button and a brake.
  • 13. ETM 551 Product Design and Development - Concept Testing 13 Price • Include price in concept description?
  • 14. ETM 551 Product Design and Development - Concept Testing 14 Measure customer response • Definitely would buy • Probably would buy • Might or might not buy • Probably would not buy • Definitely would not buy
  • 15. ETM 551 Product Design and Development - Concept Testing 15 Concept Testing Example: Electric Scooter
  • 16. ETM 551 Product Design and Development - Concept Testing 16 Sketch
  • 17. ETM 551 Product Design and Development - Concept Testing 17 Rendering
  • 18. ETM 551 Product Design and Development - Concept Testing 18 3D Solid CAD model
  • 19. ETM 551 Product Design and Development - Concept Testing 19 Appearance model
  • 20. ETM 551 Product Design and Development - Concept Testing 20 Storyboard
  • 21. ETM 551 Product Design and Development - Concept Testing 21 Resemblance to marketing...
  • 22. ETM 551 Product Design and Development - Concept Testing 22 Working Prototype
  • 23. ETM 551 Product Design and Development - Concept Testing 23 Beta Prototype
  • 24. ETM 551 Product Design and Development - Concept Testing 24 Production Product
  • 25. 25 emPower’s Market Decision: Factory Transportation
  • 26. ETM 551 Product Design and Development - Concept Testing 26 Survey Format • PART 1, Qualification – How far do you live from campus? • <If not 2-4 kilometers, thank the customer and end interview.> – How do you currently get to campus from home? – How do you currently get around campus? • PART 2, Product Description – <Present the concept description>
  • 27. ETM 551 Product Design and Development - Concept Testing 27 Survey Format • PART 3, Purchase Intent – If the product were priced according to your expectations, how likely would you be to purchase the scooter within the next year? I would definitely not purchase the scooter. I might or might not purchase the scooter. I would definitely purchase the scooter. I would probably not purchase the scooter. I would probably purchase the scooter. “top box”“second box”
  • 28. ETM 551 Product Design and Development - Concept Testing 28 Survey Format • PART 4, Comments – What would you expect the price of the scooter to be? – What concerns do you have about the product concept? – Can you make any suggestions for improving the product concept? • Thank you.
  • 29. 29 Interpreting the Results: Forecasting Sales Q = N x A x P • Q = sales (annual) • N = number of (annual) purchases • A = awareness x availability (fractions) • P = probability of purchase (surveyed) = Cdef x Fdef + Cprob x Fprob “second box”“top box”
  • 30. ETM 551 Product Design and Development - Concept Testing 30 Forecasting Example: College Student Market • N = off-campus grad students (200,000) • A = 0.2 (realistic) to 0.8 (every bike shop) • P = 0.4 x top-box + 0.2 x second-box • Q =
  • 31. ETM 551 Product Design and Development - Concept Testing 31 Forecasting Example: Factory Transport Market • N = current bicycle and scooter sales to factories (150,000) • A = 0.25 (single distributor’s share) • P = 0.4 x top-box + 0.2 x second-box • Q = 150,000 x 0.25 x [0.4 x 0.3 + 0.2 x 0.2] = 6000 units/yr • Price point $1500
  • 32. ETM 551 Product Design and Development - Concept Testing 32 Sources of Forecast Error • Word-of-Mouth Effects • Fidelity of Concept Description • Pricing • Level of Promotion • Competition
  • 33. ETM 551 Product Design and Development - Concept Testing 33 Discussion • Why do respondents typically overestimate purchase intent? – Might they ever underestimate intent? • How to use price in surveys? • How much does the way the concept is communicated matter? – When shouldn’t a prototype model be shown? • How do you increase sales? • Price: to include or not to include? • What is the importance of quality of the description?
  • 34. ETM 551 Product Design and Development - Concept Testing 34 Discussion (cont) • Is there a situation where the team should just “go for it” without any formal concept test?
  • 35. 35 Population of the world Population of Europe Population of Asia Population of North America Population of South America Population of Africa Population of Oceania Population of the United States Annual births in the United States Adults in the United States age 18-24 Higher-education students in the US Househols in the US US households with income >US$ 50 m US households with income >US$ 75 m US households with income >US$ 100 m
  • 36. 36 Comercial airplane Electronic manufacturing equipment Medical imaging equipment Cut-and-sew fabric product like a backpack Mountain bike Gadgets sold through specialty retailers Luxury sedan Hand tool Cordless drill Sport utility vehicle Toys Desktop computers Cofeemaker Inkjet printer Single-use medical device Flu vaccine Videocassette Inexpensive ballpoint pens Razor blade cartridge
  • 37. ETM 551 Product Design and Development - Concept Testing 37 Summary • Concept testing can verify that customer needs have been adequately met by the product concept, asses the sales potential of a product concept, and/or gather customer information for refining the product concept. • Concept testing is appropriate at several points in the development process.
  • 38. ETM 551 Product Design and Development - Concept Testing 38 Summary • Seven step method of testing is recommended: – Define the purpose of the concept test – Choose a survey problem – Choose a survey format – Communicate the concept – Measure customer response – Interpret the results – Reflect on the results and the process