Beyond the high-low game
Editor’s note: Kevin Dona is senior vice president and general manager of Ipsos-Vantis, a Parsippany, N.J., research firm.
There is certainly no shortage of new product ideas coming from marketing and marketing research departments. With more new products being launched each year, how can you ensure that you are selecting the right ideas to develop and not missing your next big opportunity?
Concept evaluation can help, but when it comes to concept evaluation, sometimes the science can obscure the art. While research tools in the industry have advanced, interpretation has often regressed.
Norms and databases have become more commonplace in marketing research. Though databases can be powerful, they frequently are used inappropriately for selecting concepts for development. The general practice has become: high scores win, low scores lose. But is this the best interpretation?
An experiment was conducted to attempt to answer this question. Respondent and validation databases were explored to determine success rates for products tested, launched and tracked in-market. The key performance measures examined were: purchase intent (top and top-two box), liking, value, uniqueness, believability and need.
In Figure 1 we can see that concepts which have four key performance measures in the top two quintiles translate to performance at a 70 percent market success rate. Does that mean the “high-low” game works? There are three immediate observations that we can make:
• There is no single key measure (including purchase intent) that determines success. Rather, it’s a combination of measures.
• There is little chance of failure with strong overall performance versus the database - making it exceptional at mitigating risk.
• The high-low game can lead to missed opportunities (successes where overall performance was moderate to low).
Missed opportunities
Roughly two-thirds of missed opportunities fall into the following three categories: overpriced initiatives (i.e., price was holding other scores down); niche- or targeted-appeal initiatives; breakthrough ideas.
Some of the common myths in database interpretation are:
• “Databases miss niche opportunities or cannot adequately assess breakthrough ideas.”
• “Only [insert a certain type of consumer] will get it.”
• “People have to experience it.”
• “It’s too futuristic.”
However, the tool itself is not to blame. The problem resides in the interpretation of the data rather than the presented results. After all, a database is merely a collection of information. Interpreting the information is the job of the marketing researcher.
If playing the high-low game, it is true that these opportunities may be overlooked. However, niche and breakthrough ideas are identifiable prior to launch, if you know how to look for them.
Some classic profiles of niche ideas or ideas before their time in consumer testing research:
• Niche- or targeted-appeal concepts tend to have low broad appeal (top two box) but moderate to strong commitment (top-box appeal). Liking and need also tend to be lower but uniqueness may be high.
• Breakthrough ideas tend to have lower purchase intent and need but strong liking and uniqueness.
While many of the key performance measures are expected to be low for these initiatives, they should not be confused with weak ideas. In other words: poor results should not be dismissed as niche or breakthrough. Many of these profiles or archetypes exist in database interpretation: luxury, me-too and underpriced, to name just a few.
To best put this idea into practical terms, let’s look at Figure 2. As you can see, broad appeal and value are weak for New Product X but the proposition is generally well-liked and very unique. Faced with this information, would your organization pursue this idea?
Would this answer change if you knew that New Product X was a plasma TV, before the technology gained mass appeal and acceptance?
The true power of the database lies in analyzing these archetypes, versus simply looking to see if the idea scores well. While approaching database interpretation in an analytical manner does prove to be more effective when evaluating concepts, it is still not complete in providing a full assessment of a concept’s potential.
Better or worse
Even with proper concept evaluation some propositions may perform better or worse than expected in-market. Why?
The preceding discussion assumes that the concept evaluated represents the in-market execution of that concept. Often, concept evaluation and execution are considered separately. And, other corporate, category or marketing factors are not included in the evaluation of the entire proposition.
Each product is unique and so is each product’s strategy or process. Hence, the stimuli, or how the idea is served to the customer, should be tailored to the specific buy-sell dynamics expected. For example, if a product will lack advertising but face a great deal of cross-comparison at point-of-sale, an 8x11 concept board is inappropriate. Alternatively, if a category is shopped infrequently or if comparison shopping is expected, a competitive set is a must-have.
Furthermore, the awareness process for breakthrough ideas or new-to-the-world categories usually happens in diffused stages and via varied sources. Consumers are not likely to invest without a strong understanding of how the product works. Therefore, the goal of stimuli should be to get individuals to the level of education they will have at the time of purchase. In other words, the concept evaluated should represent its in-market execution.
Considered separately
Often, concept evaluation and execution are considered separately. For example, a typical new product development cycle may follow these steps:
• develop ideas;
• screen for winning concepts;
• develop winning concepts;
• develop strategy/marketing plans;
• launch product/service.
In product development flows such as these, the marketing-plan elements are often not considered until just prior to launch. However, how can the concept evaluated represent the in-market execution of that concept if the execution of the idea has not been considered? Ultimately to the consumer, the concept is what is executed not what was evaluated. This seems fairly straightforward, but far too often the idea is developed and then under-executed in market. After all, is a concept still a concept if no one actually hears it?
Under-executing ideas is not the only problem. For breakthrough ideas, “going mass” too quickly can be just as troublesome. Building consumer acceptance takes time, and high early spending generally results in a low ROI. As a result, companies often cut support prior to the takeoff point (three-to-five-year mark), which ultimately leads to the product never taking off. For niche concepts, issues can arise from pursuing an unreachable target. You can also over-execute against a niche opportunity. The potential size of the business should guide the support.
How well you spend
It is not about how much you spend behind an initiative but how well you spend against the initiative. This starts with having the right strategy and selecting the concept which best meets that objective, which then dictates the right support.
A revised new product development cycle, therefore, might look like this:
• develop strategy;
• develop ideas;
• screen for “right” concepts;
• develop “right” concepts;
• finalize market plans;
• launch product/service.
Successful launches start with the strategy that is right for you. To do this well, it is important to go beyond the search for categorical white space. It is also necessary to think about both corporate and brand objectives. Once the objective is clear and you have your ideas, screen for the right concepts and avoid the high-low game. Then, develop those concepts which fit the overall strategy and finalize marketing plans. Throughout the process, one must keep the overall strategy in mind and consider other factors that may affect the attractiveness of an initiative. This may appear to be a daunting task if you have a large number of concepts.
Developing a scorecard greatly assists in the aforementioned process. This approach encompasses both the database analysis (concept opportunity) and a scorecard analysis (business opportunity), which can be measured with a combination of survey data and market examination.
The scorecard encompasses such things as: audience potential; market structure; annuity or long-term potential; logistics or payback tolerance; competitive advantage; targetability; communications clarity; and sales potential.
Many of these dimensions are informed by research alongside the traditional metrics. Which of the products in Figure 3 would you pursue, Product 1 or Product 2? What if you knew the information presented in Figure 4?
While Product 1 is somewhat limited by its high price, Product 2 calls for consumers to adopt an entirely new behavior. It will likely garner limited awareness without significant support - due to its store location - and is not as attractive long-term.
As you may well know, many of these elements would make it into internal discussions about which product to pursue. However, incorporating appropriate measures in the consumer research and empirically evaluating these measures provides for a more concrete and complete analysis. This process also allows for and encourages early evaluation of these important dimensions before time is wasted pursuing a concept with limited real-world potential. Conversely, it can help to identify potential hits that merely need additional fine-tuning.
Next big hit
Time has seen concept evaluation become more of a science than an art. Unfortunately, the rigidity that has come with it ensures that companies will continue to miss potentially lucrative ideas. However, with the right process in place and strategic (archetypes and scorecards) versus absolute (high-low game) concept evaluation, your odds of finding the next big hit will increase dramatically.