Market analysis tools in npd (final)
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This document discusses various market analysis tools used in new product development (NPD). It describes tools for idea generation, product optimization, marketing mix optimization, and market prediction. Specific tools covered include brainstorming, the Delphi technique, focus groups, user observation, conjoint analysis, concept testing, prototyping, and diffusion models. The document provides details on how each tool is used, its process, advantages, and disadvantages to help product developers select the right tools for analyzing markets and predicting new product success.
![How Conjoint Works
For instance, if the item is a personal computer, we
may 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] and
the value 3 if the size is greater than 120 GO (if we use
figures from recent years).
A parameter related to the memory size. It takes the
value 1 if the size belongs to [256, 512 KO] and 2
otherwise.
A parameter related to the training. It takes the value 2 if
the training is free and 1 otherwise.
A parameter related to after sale service. It takes the
values 1, 2 or 3 depending on the type of service.](https://image.slidesharecdn.com/marketanalysistoolsinnpdfinal-141015193014-conversion-gate02/85/Market-analysis-tools-in-npd-final-27-320.jpg)
Market analysis tools in npd (final)
- 1. Market Analysis Tools in NPD Armin Azizpour Mehdi Ghazvinizadeh Vahid Soltani Shahryar Doosti Instructor: Dr. Sadeghi
- 2. 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
- 3. Usage of tools by NPD
- 4. What product to develop? Brainstorming Synectics Focus group User-observation Delphi method Morphological analysis
- 5. Brainstorming Developing creative solutions New ideas Spark off
- 6. Four basic rules No criticism Welcome unusual ideas Quantity wanted Combine and improve ideas
- 7. 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
- 8. 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
- 9. 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
- 10. 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)
- 11. 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
- 12. Synectics Closely related to brainstorming More formalised and structured Trigger questions Making the strange familiar and familiar strange Emphasis on fantasy
- 13. Trigger questions Subtract ADD transfer Empathize Animate Change scale (time, dimensions, proportion…) Substitute Isolate Fantasize Combine
- 14. User-observation Direct Indirect observation methods personal mechanical audit content analysis trace analysis
- 15. Benefits Direct Focus attention on specific areas Indirect Natural behaviour
- 16. How must the product be designed? QFD Conjoint analysis Concept test Prototype test In-home-use test 2
- 17. 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
- 18. 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)
- 19. Functional fields of QFD Product development Quality management Customer needs analysis Product design Planning Engineering Decision-making Management Teamwork, timing, costing, and others
- 20. 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
- 21. QFD Process
- 22. House of quality
- 23. 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”
- 24. 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
- 25. 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.
- 26. 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.
- 27. How Conjoint Works For instance, if the item is a personal computer, we may 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] and the value 3 if the size is greater than 120 GO (if we use figures from recent years). A parameter related to the memory size. It takes the value 1 if the size belongs to [256, 512 KO] and 2 otherwise. A parameter related to the training. It takes the value 2 if the training is free and 1 otherwise. A parameter related to after sale service. It takes the values 1, 2 or 3 depending on the type of service.
- 28. 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.
- 29. 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:
- 30. 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:
- 33. 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
- 34. B. Decision stage in conjoint analysis
- 35. B. Decision stage in conjoint analysis Determining Relevant Attributes In conjoint, the burden is on the analyst to prespecify the attributes impacting a consumers purchase decision. If an attribute of no real importance is included in the study, the value system will indicate this attributes limited role. However, the conjoint analysis will not indicate the absence of an important attribute. Consequently, one must be confident that the right attributes have been included. In practice, the preliminary attribute list is usually developed in-house via contact with company people from a variety of functions - new product development, advertising, manufacturing, etc.
- 36. 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.
- 37. 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.
- 38. 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
- 39. 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
- 40. 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.
- 41. 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.
- 42. 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.
- 43. 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.
- 44. How to introduce the product? Mini test Test marketing Limited roll-out Scanner market 3
- 45. 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.
- 46. 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
- 47. 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.
- 48. 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.
- 49. 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.
- 50. 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.
- 51. 4 What is the new product’s anticipated success? Diffusion model Market prediction model
- 52. Consumer innovativeness measures of innovativeness: - life innovativeness scales - adoptive innovativeness scales.
- 53. 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 Stremersch 2004). 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.
- 54. 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. P(T) p (q /m)Y(T)
- 55. Diffusion models If the coefficient of imitation is greater than the coefficient of innovation the solution rises to a peak and then declines.
- 56. 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.
- 57. 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
- 58. 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).
- 59. 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
- 60. 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.
- 61. 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).
- 62. 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
Editor's Notes
- #53: measures of innovativeness should identify those consumers most likely to adopt new products so that firms can target marketing efforts and improve forecasts.
- #54: In the early 1960s when I was a professor in the Krannert School at Purdue University I began reading Everett Roger’s book (Rogers 1962) on the diffusion of innovations. In this classic work Rogers classifies adopters of an innovation according to the timing of their adoption. 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. Apart from innovators, then, adopters could be said to be influenced by imitation in varying degrees. I decided to try and put some mathematics to these ideas and I came up with a conditional likelihood of adoption (now called a hazard function) in which the conditional likelihood of adoption at time t was a linear function of the number of previous adoptions. The intercept of the likelihood was called the “coefficient of innovation” because it did not interact with the cumulative adopter function, and the coefficient that was multiplied times the cumulative function was called “the coefficient of imitation” because it reflected the influence of previous adopters on the conditional likelihood of adoption.
- #58: It is well known that changes in prices and other decision variables will influence the diffusion process (demand). From a managerial perspective it is highly desirable to have a model that can provide a basis for assessing the effects of decision variables on the diffusion process. Indeed, one of the early applications of the Bass Model was a study at RCA in which the Bass Model was modified to include price in order to explore optimal pricing policies for new products. This work is described in a paper published in Management Science (Robinson and Lakhani 1975).