The essence of any firm’s new product policy is the identification of those product opportunities that will generate, over a stated time period, the greatest return on the funds invested in relation to the risk involved, and that are compatible with the firm’s resources. To attain the above objectives it is necessary to take the following steps:
1. Develop an overall product strategy based on market needs, industry structure and corporate resources.
2. Develop a flow of new product ideas from a variety of sources.
3. Develop preliminary procedures for screening new products ideas
4. Develop procedures for final screening
5. Develop product specifications with regard to optimum product attributes.
6. Test the product
7. Test market the product
8. Commercialize and supervise the product through its life cycle and its termination or phase out.
Although the contribution that can be made by marketing research in each of the above steps is significant, the reminder of this articles places emphasis on the role of marketing research in steps 5, 6, and 7.
Developing Product Specifications:
It is necessary to determine that set of product attributes that are optimum for the market segment(s) to which the product will appeal. Since the number of forms that a product can assume is almost unlimited, the determination of the best combination is a difficult undertaking.
As a result of the research conducted in connection with steps 1 – 4 above, much information should be available concerning those attributes that consumers believe should be incorporated in the product, both in terms of the level wanted and the relative importance of each. But it is one thing to obtain verbal expressions about product attributes and quite another to translate them into a specific physical entity. Many consumers provide conflicting views with respect to product attributes. For example, most want high quality and low price.
The task of developing product specifications can be facilitated by linking the proposed new product to a group of prospective customers who have similar attribute preferences. Such targeting narrows the range within which the technical staff will work when defining what constitutes a viable product design. At the very minimum, marketing research should provide information pertaining to what features must be included in the product and the level and relative importance of each (the deal brand). It should also report on how consumers arte products or brands now on the market and different versions of the new products against the ideal brand.
Saliency measures of product attributes – both individually and in combinations are critical to the design of the product, to the need to position it properly in the marketplace, and to the estimate of demand. Most of the research on this subject is based on the Fishbone model, which explains attitude or preferences toward a given brand as being a function of the importance of its various attributes and the way the brand is perceived in terms of these attributes compared to alternative brands.
Data Gathering Techniques:
Useful data relating to product attribute preferences can be obtained by using paired comparison test, rank orders, rating scales, or statements concerned with likes and dislikes. The latter usually involve using a semantic differential test. Regardless of method employed, the objective is to obtain consumer preference measures for each salient product characteristics as well as for the overall product.
Paired comparison tests are typically used when the number of objects involved is small. When the number of possible pairs is large, rating scales are usually used. Paired comparisons are simple to administer and easily understood by respondents.
Samples of the product with differing characteristics can be made up and tested using either rating scales or paired comparisons. From such tests the percentage of consumers who prefer each ‘level’ of the product attribute is estimated. These preference ratings can be compared with consumer preferences for the company’s and competitors’ existing products. Thus, such an approach enables management to gain insights as to what extent new products may outperform existing products, as well as to define relevant market segments.
It is not necessary to use product samples to obtain preference data. Measures can be obtained on a variety of new product proposals using pictures or drawings, models or prototypes or advertisements that describe the benefits provided by the product’s features. Such research is often referred to a concept research and is useful in determining how prospective customers evaluate a proposed new products attributes in light of the benefits claimed.