Strategic new product development

Table of Contents

1. Introduction
   1. Objectives
   2. Learning goals
   3. Teacher page
2. Company strategy
   1. Corporate mission
   2. Business example: Mission
   3. Corporate strategy
   4. Strategic planning process within business units
   5. Business example: strategy
   6. Four examples of new strategies
   7. Exercise: What is your company's strategy?
   8. Summary
3. Introducing the NPD process
   1. Innovation and innovativeness
4. Idea stage: discovery
   1. About ideas and creativity
   2. Sources for new ideas
   3. Four examples of idea generation
   4. Stimulating ideas
   5. Summary
5. Gate 1: Idea screening
6. Stage 1: Scoping
7. Gate 2: Second screening
8. Stage 2: Build the business case
   1. Concept development
   2. Concept testing
   3. Four examples of concepts
9. Gate 3: Go-no go development
10. Stage 3: Development
11. Gate 4: Go-no go testing
12. Stage 4: Testing and validation
13. Gate 5: Go-no go launch
14. Stage 5: Launch
15. Gate 6: Post-launch review
16. Completion
    1. Comments
    2. Self-assessment
    3. Key messages
    4. Further reading
    5. Evaluation

Concept testing

An idea is finally developed to a point where its benefits can be communicated to target consumers in order to assess their reactions.

Concept testing is a quality check between the description of an idea and actual product development. A variety of approaches are available for concept testing. All methods involve a group of potential consumers rating one or more concept statements in which each concept is presented with specific focus on consumer needs or benefits.

The method of testing is based on the purpose of concept testing and should therefore provide all elements of interest where feedback is expected. Peng and Finn (2008) report the following purposes of practical concept testing:

• to develop the original idea further
• to estimate the concept's market potential
• to eliminate poor concept(s)
• to identify the value of concept features
• to help identify the highest potential customer segment(s)
• to generate an estimate of sales or trial rate
• to provide diagnostic information.

What is concept testing about?

In more technical terms, consumers are presented with a stimulus (the concept) and measures of reaction are taken which the researcher believes are predictive of the behavioural response, such as eventual purchase (Tauber, 1981, p.169).

Definition: Concept testing

Concept stimuli design

Concepts can be presented in many forms, from a simple factual statement with minimum description of the product's attributes, to a commercialized concept making persuasive claims, or even to a full mock advertisement (Peng & Finn, 2004; Lees & Wright, 2004). Many concept tests use 'stripped' descriptions, with or without visual representations. Stripped descriptions provide a list of product characteristics in a short and concise manner. Additionally, images or sketch drawings of how the product may look can be used.

'Embellished' descriptions are another popular format. In contrast to stripped descriptions, they apply commercial language, words and phrases that are familiar from typical advertisements. Such statements can improve understanding about the product as many of them focus on problem solving; in other words, embellished descriptions often point out the core benefits offered by the product to overcome the consumer's problems.

Whatever the final result of the design looks like, the concept statement should be clear and realistic and should not oversell the concept (Crawford & Di Benedetto, 2008). Although the statement can be worded in a commercial or non-commercial format, the difference between the concept and existing alternatives in the marketplace should be unambiguous and credible. Other presentation formats are rough mock-up advertisements or even fully finished advertisements.

The following is a suggested template for a concept, comprising the above considerations.

Survey format selection

You must decide on how you can address your target market best. Table 3 matches the survey format with commonly available methods of communication. It shows that not every format suits every contact method. Whereas all formats are applicable for personal (face-to-face, F2F) communication, modern information and communication technologies differ in their compatibility, as the interactive content or format increases. Physical samples, which could also be sent by a conventional mail service, are a special case. This usually involves substantial financial costs and the potential gains do not justify such investment. The alternative is to allow product trials at the point of purchase.

Table 3. Match between survey format and ways of communicating the product concept (adapted from Ulrich & Eppinger, 2008).

Concept stimuli design and choice of survey format need to be considered simultaneously. You need to know what has to be communicated about the concept and how to communicate the concept best to the right people.

Measuring customer response

Up-to-date and constant contact with customers and participants provides an excellent source of information and can act as a check to see if your ideas are working in the way they are supposed to. One way to do this is to use a questionnaire.

You can ask the potential consumer group to fill it out or you can ask the questions yourself and write down the customer's replies. If you have the chance to ask a group of customers you can use the questions as a basis for discussion; perhaps the group can agree on their replies.