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Concept Test A concept test is a way to assess consumer interest in a new product. Measures (primary) » Level of interest » Comparison on a battery of attributes – with consumer’s regular brand. – with competitive brands » Purchase Intention » Purchase Intention at a price point Measures (secondary) » Open-ended “reason why” » most important product features. 2 Executing a Concept Test Factual presentation » presents the bare product concept Persuasive presentation » with product positioning statement » Story board is as close as possible to what the consumer will actually see in finished media advertising Choice of visual or words depends on how a consumer will normally think about the concept. » concept scores must not be compared across options Factual Persuasive Words Only Visual Only Words + Visual 3 Purchase Measures Trial Intent » Yes-No dichotomous scale often used Purchase Intent » five/seven point scale (definitely buy to definitely will not buy) Purchase Frequency or Product Change Frequency. » Use the average inter-purchase time for category as the midpoint. This helps to measure purchase intent by user segments. » Five/seven point scale (for toothbrushes: more than once in two months, about once in two month, about once in 6 months, about once in 8 months, less that once in 8 months.) 4 The Use of Purchase Measures What use will you put the relative value of trial and purchase intent scores to in launch planning? » Allocation to sampling/consumer promotions versus theme ad. » Computing the perceived risk in the category. Why is this useful? » Helps to plan price off to consumer versus trade promotion allocation during launch What is the primary use of purchase measures? » Sales volume per hh per time period equals %hh who intend to purchase x expected number of purchases per time period x expected number of units per purchase 5 Using Purchase Intent Data There is a strong correlation between intent scores and “actual trial” in the marketplace for low-ticket consumer product categories such as toothbrushes. But purchase intention measures typically overstate actual purchase or “final adoption” and steady-state market share. Why? What is the problem with this type of concept test? » Shelf-effect, » competitive promotions 6 Using Purchase Intent Data Rules of thumb in package goods categories in the U.S. » Conservative: convert purchase intent to actual purchase by considering only the definitely would purchase group as purchasers - the top box rule. » Use a 5% confidence interval around the top box score. » Less conservative is the top box + 20%of the second box(probably would purchase) Remember, trial and first purchase are insufficient to ensure the success of a consumer product. Repeat purchases are required for this. Concept scores do not predict repeat purchases We need a “product test” 7 Pre-Test Market Analysis Once a concept becomes an actual product, a set of research tools help managers make go/no-go decisions on full market introduction and the supporting marketing mix. Costs of test marketing » alerting competition » timing of introduction » representativeness of the test market. Pre-test market analysis is sometimes used in place of a full test market, or to determine whether test marketing is necessary. 8 Basic Structure of Pre-Test Market Models Use the hierarchy-of-effects model as a good descriptor of customer purchase behavior. Purchase phenomenon broken up into three behavioral stages: » Stage 1: Awareness of the product given product concept and marketing mix. » Stage 2: Given awareness the trial percentage. » Stage 3: Given trial, repeat purchase propensity. » proportion of future category purchases to the new brand. 9 Impact of Marketing Factors on Customer Movement Down the Hierarchy Unaware to Aware: » Advertising, Sampling, Couponing. Aware to Trial: » » » » Product concept. Ad persuasion. Distribution. Price. Trial to Repeat: » Product quality. P(Become a Regular User): » P(Aware) X P(Trial, given Aware) X P(Regular Use, given Trial) 10 Two Popular Estimation Methods: A. Bases II (SAMI-Burke) Bases II uses information from SAMI-Burke’s huge data base of new product introductions to obtain the estimates for the Awareness-Trial-Repeat progression. Key regularities summarized into three sets of norms: » Category Norms: These estimate the awareness in the target market generated by a given marketing plan. » Concept Tables: Convert buying intention data and awareness data from consumers in the target market to an actual trial estimate. » After-Use Tables (from product tests): Customer data on: (1) stated buying intentions, (2) like/dislike scores, and (3) perceived price/value are converted into an estimate of the repeat purchase rate using these tables. 11 B. Assessor (M/A/R/C, Inc.) Assessor is a simulated test marketing procedure, compressing the time and space of a traditional test market into a laboratory situation. Typically, » Customers from the target population are exposed to advertising for the new brand through the “folder” method. » Respondents then “shop” at a mock store set up, where the new brand and its competitors are available. They are given an amount of money to spend on their purchase. » Those buying the new product are called after a typical interpurchase period period and offered a chance to repeat purchase. » Thus, trial and repeat, and hence long term share, are estimated given 100% awareness and availability. » This estimate is adjusted (down) for the planned awareness and availability. 12 How well do they work? BASES claims that”90% of their forecasts are within 20% of actual volume and over half are within 10%” ASSESSOR claims that average error is 21.5%; adjusting for actual introduction conditions, the error falls to 11.6% Additionally, one of the major values of these procedures is the diagnostics they provide: » these can result in changes in the marketing plan or perhaps the product itself. 13