Concept Evaluation and Testing

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Many Ideas Are Eliminated Before
Concept Evaluation and Testing
 PIC (or New Product Strategies) eliminates most new
product ideas even before they are developed into
concepts.
 Ideas of the following types are excluded:
1. Ideas requiring technologies the firm does not have.
2. Ideas to be sold to customers about whom the firm has no
close knowledge.
3. Ideas that offer too much (or too little) innovativeness.
4. Ideas wrong on other dimensions: not low cost, too close
to certain competitors, etc.

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Evaluating Concept Potential using
ATAR Model of Innovation Diffusion
Profits = Units Sold x Profit Per Unit

Units Sold = Number of buyers

x % who Aware of product

x % who would Try product if they can get it
x % to whom product is Available
x [1 + (% of triers who become Repeat purchasers x
# of additional units repeaters buy in a year]

Profit Per Unit = Revenue per unit - cost per unit

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ATAR Model: Definitions

 Buying Unit: Purchase point (person or

department/buying center).
 Aware: Has heard about the new product with some
characteristic that differentiates it.
 Available: If the buyer wants to try the product, the effort
to find it will be successful (expressed as a percentage).
 Trial: Usually means a purchase or consumption of the
product.
 Repeat: The product is bought at least once more, or (for
durables) recommended to others.

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A-T-A-R Model Application

10 million Number of owners of video cell phones

x 0.40 (40% Percent awareness after one year)
x 0.20 (20% Percent of aware owners who will try
product)
x 0.70 (70% Percent availability at electronics
retailers
x 1.20 (1+(0.20x1) or 20% Percent of triers who will
buy a second unit)
x $50 (Price per unit minus trade margins and
discounts ($100) minus unit cost at the intended
volume ($50)
= $33,600,000 Profits 8
Points to Note About A-T-A-R Model

1. Each factor is subject to estimation.

Estimates improve with each step in the development phase.
2. Inadequate profit forecast can be improved by changing
factors.
If profit forecast is inadequate, look at each factor and see which can be
improved, and at what cost.

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Getting the Estimates for A-T-A-R
Model

Item Market Concept Test Product Use Component Market Test

Research Test Testing
Market Units XX X X X
Awareness X X X X
Trial XX X X
Availability X XX
Repeat XX X
Consumption X X X XX
Price/Unit X X X X XX
Cost/Unit X XX

xx: Best source for that item.

x: Some knowledge gained.

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What Is a Product Concept
Statement?
 A statement about anticipated product features
(form or technology) that will yield selected
benefits (or needs) relative to other products or
problem solutions already available.
 Example: “A new electric razor whose screen is
so thin it can cut closer than any other electric
razor on the market.”

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Purposes of Concept Testing
1. To identify very poor concepts so that they
can be eliminated.
2. To estimate (at least crudely) the sales or trial
rate the product would enjoy (buying
intentions, early projection of market share).
3. To help develop the idea (e.g. make tradeoffs
among attributes).

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Steps in Concept Testing
1. Clarify specific purposes
2. Prepare concept statement
Concept statement should make the new item’s difference absolutely clear,
claim determinant attributes (those that make a difference in buying decisions),
offer a chord of familiarity by relating in some way to things familiar to the
customer, and be completely credible and realistic.
3. Decide formats (Narrative, Drawing, Model)
4. Select respondents (Target customers, Lead users, Influencers)
Survey samples typically run about from 100 to 400 people. With a 100 sample
size the cost per concept testing is around $3000.
5. Select response situation (Where? How?)
 One to one Interviews (expensive, but good for industrial products with few
buyers)
 Mall Intercepts (good if your target population is shopping at that mall, at that
time)
 Phone Interviews (good if you can describe the concept over the phone)
 Mailed Surveys (Popular, It takes a long time)
 Focus Groups (not quantitative, can be biased, Good for new idea generation)
6. Decide Interviewing sequence (Believable? Important? Interesting? Would it work?
What problems do they see? Would they buy?)
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7. Test procedure, change and implement, study findings
Concept Testing: Questions to Ask

Purchase Intention: “If this product were available, how likely

would you be to buy it?”
 Definitely not buy
 Probably not buy
 Might or might not buy
 Probably buy
 Definitely buy
Uniqueness: “Compared to current products, this one is highly
unique and different.”
 Strongly disagree
 Disagree
 Neutral
 Agree
 Strongly Agree
Need: “I really need this product.” [same scale]
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Mail Concept Test -- Verbal Description

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Mail Concept Test -- Sketch

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 Concept Testing Cautions and
Concerns
 If the prime benefit is a personal sense (aroma,
taste).
 If the concept involves new art and entertainment.
 If the concept embodies a new technology that
users cannot visualize.
 If concept testing is mishandled by management,
then blamed for product failure.
 If customers simply do not know what problems
they have.

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Ideal Brand Ratings (IBR) shows
the ideal brand positions on perceptual maps.

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3
Product Options 5
1 2 3 . . . . (or Brands) . . . . X Ideal 2
4 2
1 3
3
2 4 4
. 2 4
. 2 4
Attributes

. 3 3
. 4 3
. 4 4
. 4 4
. 4 1
4 2
.
4
.
4
15 3
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Benefit Segmentation in Swimsuit Market

x xx x
x xxx x x x x x
x x x x x xx x x
x x x x x
x Segment 2 Segment 3

x
x xx x
Segment 1 x x x x
x x x x
x
x Fashion

Ideal Brand Ratings (IBR) shows the ideal brand

positions on perceptual maps.

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Joint Space Map Showing Ideal Points

Comfort
3
Aqualine 2

Islands Molokai
1
Fashion

Splash Sunflare

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