This document provides an overview of Acentric Marketing Research Consulting's new product development research services. It describes the stages of new product development including market structure analysis, concept generation, concept testing, product testing, simulated test markets, conjoint analysis, and price determination research. Acentric offers various marketing research techniques to gather customer insights and reduce risks at each stage of new product development.

1. New Product Development Research
An introduction
AcentricTM Marketing Research Consulting
South Africa
www.acentric.co.za
Last update 2011
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2. Overview
• An overview of the NPD stages – where are you?
• Before you enter: Determine the market structure
• Idea/concept generation research
• Concept tests
• Product tests
• Simulated Test Markets – moving beyond concept & product testing
• Conjoint analysis
• Price determination research
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3. New product development research
•New product development (NPD) is a multi-stage process from concept
generation to the final launch.
•At each stage your investment of time and money increases.
•Marketing research reduces the risks involved by identifying poor performers
early on and indicating where improvements need to occur to maximise success.
•Acentric offers different marketing research techniques for each stage of the new
product development (NPD) process.
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4. New product development stages
NPD stage Research services
1. Market structure Market structure studies and Virtual Diary
measurement Market dimensions : Penetration in the population, frequency of
purchase and value
Brand performance: Brand penetrations, brand purchase
frequencies and brand market shares
2. Multiple concept •Problem detection studies (PDS).
generation •Focus groups.
•Conjoint analysis.
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5. New product development stages
3 Concept •If you have many concepts concept screening helps to narrow down the
field
•Concept testing provides more detail once you have isolated one or two
concepts.
•Determine how important different features are.
•Determine how your concept performs on these features.
•Determine which segments will be more likely to adopt.
•Understand the current market, in terms of brand awareness and
usage.
•Obtain indications of sales potential under different marketing
scenarios.
•Ceiling estimation is a procedure we use to determine the likely adoption
ceiling for radical new products which create their own new markets.
4. Design and •Trade-off analysis allows you to refine the design of a product in terms of
development features and pricing, It is also useful when revising existing products:
•CVA Conjoint.
•Hybrid conjoint.
• Price research is included with product configuration to assess the impact
on deserved share.
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6. New product development stages
5. Finalisation • Product use tests to identify the strengths and weaknesses of a
prototype product:
•Does it meet expectations.
•Does it deliver on the concept promise.
•What weaknesses does it have in actual use, how does it compare
to competitors.
6. In-service • PDS studies to determine early issues after actual launch in the market,
product support customer satisfaction tracking and loyalty measurement.
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7. New product development research
Market structure
We offer basic market structure measurement. Including:
Market dimensions : Penetration in the population, frequency
of purchase and value
Brand performance: Brand penetrations, brand purchase
frequencies and brand market shares
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8. New product development research
Market structure
In repertoire* type markets, measuring market structure is difficult to do doing a normal survey due to
problems with human memory. Examples include FMCG, supermarket/retail, petrol stations and restaurants.
For example most people can’t remember what brands of fizzy drinks they have bought in the last month and
how often.
As a result diaries are used traditIonally. Survey respondents are asked to record their day to day purchases
each day over a long time period – such as 7 days or a month. Diaries have been validated against actual
factory shipments as a fairly accurate indicator of sales.
Acentric offers a less costly alternative. Acentric Virtual DiaryTM provides a good approximation to an actual
diary using a normal adhoc survey. Answers to questions are transformed using statistical calculations which
provides the following:
1. Market/Category penetration
2. Market/category puchase occasion frequency
3. Brand penetration
4. Brand purchase occasion frequency
5. Brand market shares
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9. New product development research
Preliminary concept development
We can offer a number of products to enhance the process of concept generation.
These include problem detection studies and conjoint analysis (conjoint is also useful at
later stages of the NPD process).
Problem Detection Surveys amongst consumers
regarding old products can lead to new ideas
“Well, I just don’t
New Concept
like the fact that I
Inkless electric printer
have to change ink
cartridges, nor the
costs of ink just for
drafts”
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10. Concept screening
Concept screening
If you have multiple competing concepts it can be a challenge narrowing the field to the best concepts.
Concept screener surveys help to do this by obtaining ratings from the relevant consumers to determine
which concepts are most appealing.
Concept
Concept A
B
Concept
C
Concepts most likely to
succeed
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11. Concept testing
Concept testing surveys
Concept testing involves exposing a representative sample to written descriptions and/or pictures of
your new concept. A series of key questions are asked to:
1. Determine acceptable price ranges.
2. Determine how your concept is perceived to perform relative to competitors on features.
3. Determine how well consumers understand the new concept.
4. Determine how important different features are to consumers.
5. Determine how preference differs across consumer segments (e.g. male versus female)
6. Understand the current competitive landscape, in terms of brand awareness and usage.
7. Obtain indications of sales potential under different marketing scenarios.
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12. Acentric Express TestsTM
Developing a new product or service and bringing it to market are costly endeavours. Knowing in advance
whether your new concept is likely to be successful, and if not, what to do about it saves both time and money.
Express Test provides you with a fast and cost effective indicator of the likely success of a new product - before
you invest in developing an actual product.
Key benefits:
•The Acentric Concept Performance Score gives you a clear indication of whether you will be able to compete
with the proposed features and pricing.
•Unlike most concept tests, you don't need to decide who to target first. Instead Express Test covers everyone
with internet access and lets you see where the demand is.
•Learn what improvements customers most want before you launch.
•Performance on key drivers of success quantified.
•Option for survey respondents to explain in their own words what they think of your product, providing you
with rich insights into how to improve.
•Learn what price range is acceptable to buyers and then learn whether the specific price point you have in
mind will work.
•Provides an indication of whether the brand is right for the new product you want to launch.
•Indicates what distribution channels you should prioritise.
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13. Product-use testing
The investments in tooling for full-scale production and marketing costs can sometimes exceed the initial
investment in prototype development. As a result it is important to weed out potential failures before moving
beyond the prototype stage.
Once a prototype or small production run of products exists, it becomes viable to test the actual product.
Product testing aims to identify :
•Issues encountered during real world use.
•Preference for your product over competitor products.
Packaging
Performance in use
Repeat purchase intentions
•Whether the product lives up to the claims made in the original concept statement.
Oh dear, this new
inkless-thermal
printer has a
tendency to jam.
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14. Product-use testing
Product research identifies product weaknesses and strengths under actual usage conditions. Many problems
cannot be imagined in advance of actual real world use. By testing products alongside competitor products, it
can be established whether planned for attribute differentiators actually manifest in practice. It also allows for
weaknesses to be identified which may lead to product reformulation. The impact of brand in driving attribute
performance perceptions and product preferences can also be established.
Form of product testing Description
Monadic Monadic product tests are the most expensive form of product testing, but tend to be most
accurate. Only one product is tested at a time.
Sequential monadic Two products are used in sequence by respondents, which makes this method more cost
effective.
Comparative In a comparative test, respondents are given two products simultaneously. This method is
used when even the smallest difference matters. Respondents tend to become acutely aware
of differences when products are placed side by side.
Proto-monadic In this test the customer is first introduced to the products in sequence. This is followed by a
comparative test, which is used for verification of the first test.
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15. Simulated Test Market Models (Pre-Test Market Models)
Simulated Test Market models (STMs) go beyond concept & product testing. The risks involved in a new
product launch in the fast Moving Consumer Goods (FMCG) sector can be substantial. Companies that are able
to detect likely failures in advance are able to avoid wasted investments in design, production and marketing.
Simulated test market models offer the following:
•Market share and sales volume forecasts for year 1
•Forecasts of trial
•Forecasts of repeat purchase
•Source of volume
•Diagnostics providing information on feature performance and importance
•Diagnostics on how well the concept as described by the intended advertising is perceived to actually deliver
when the product is used
•The impact of ‘free’ samples on trial
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12,000 units

16. Discontinuous innovations
Estimating potential for discountinuous innovations
In the case of discontinuous innovations (innovations which are so different that they create a new product
type of their own), questions of long run adoption potential and the rate of diffusion can be answered using
diffusion models.
Adoption %
Time
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17. Conjoint Analysis
Deciding on the best development path for a new product can be challenging. Conjoint analysis
is a powerful technique for determining what features to offer and what prices to charge.
Conjoint analysis can simulate the impact of product and price changes on preference share for
your product.
Benefits:
•Determines the relative importance of different product attributes (e.g. Car upholstery type
versus engine size).
•Determines the relative importance of price.
•Quantifies preference for different attribute levels (e.g. Leather upholstery versus cloth).
•Allows for market simulations to be conducted, to test the impact of alternative product
feature/price scenarios. Even scenarios that were not tested during the interview with the
consumer can be tested because of the mathematical model that is built. Hundreds or even
thousands of different scenarios can be explored.
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18. Conjoint Analysis
Conjoint analysis is a powerful analytical tool. Using consumers answers to a special set of
questions, it builds a mathematical models of consumers mental ‘preference structures’. In other
words conjoint analysis measures to what extent different product attributes, brand names and
prices affect preference. Using this model, it is able to predict what choices consumers are likely
to make under alternative scenarios
Conjoint analysis models each individual
consumer
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19. Conjoint Analysis
The importance of each attribute is derived by conjoint analysis. In the example below, price is
most important to consumers. This type of analysis is quite revealing when conducted in different
segments of the market.
Attribute importance (Cars)
45.00% 40.00%
40.00%
35.00%
30.00% 25.00%
25.00% 20.00%
20.00%
15.00% 10.00%
10.00% 5.00%
5.00%
0.00%
Brand name Price Upholstery Engine Climate
type capacity control
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20. Conjoint Analysis
Within each attribute, conjoint analysis calculates something called a ‘part worth’. Part worths
indicate to what extent each attribute level is preferred. In the example below, an engine size of
2.0 litres is most preferred. A 3.0 litre engine is least preferred.
4.5
4 4
3.5
3 3
Part-worth
2.5
2 2
1.5
1 1
0.5
Engine size in litres
0
1.6l 2.0l 2.5l 3.0l
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21. Conjoint Analysis
One of the main attractions of conjoint analysis is that it allows you to test alternative
scenarios to determine the impact on preference share.* In this example, a market
scenario is set-up with specific attribute levels for each competitor. The conjoint
analysis model then predicts preference share for each competitor.
Market Scenario 1
Attributes BMW Mercedes Audi % Share
10
Engine 2.0l 2.0l 2.0l BMW
20 40
Mercedes
Upholstery Vinyl Vinyl Leather 30 Audi
standard
Climate control Optiona Standard Standard
l climate control climate
control
Price R325,00 R350,000 R300,000
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* Preference share is the percentage of of consumers who prefer a brand over
other brands. In scenario 1above, 30% prefer Mercedes.

22. Conjoint Analysis
In scenario 2 below, Mercedes offers leather as standard, rather than vinyl. As can be
seen, Mercedes is predicted to increase its share from 30% to 34%.
Market Scenario 2
Attributes BMW Mercedes Audi
% Share
Engine 2.0l 2.0l 2.0l 10
BMW
20 36
Mercedes
Upholstery Leather Leather Leather 34
standard standard standard Audi
Climate control Optional Standard Standard
climate control climate control
Price R325,000 R350,000 R300,000
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* Preference share is the percentage of of consumers who prefer a brand over
other brands. In scenario 1above, 30% prefer Mercedes.

23. Example of a conjoint analysis tool
Clients are provided with an interactive simulator. This allows you to determine the impact of price
changes and feature changes. It also allows you to understand the impact of potential competitor
actions.
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24. Price determination research
When launching a new product it is often critical to get the entry price correct, as
you may not get a second chance.
Existing products can also benefit from price research.
Price research models on offer include:
•Single direct question approaches
•Van Westendorp to determine acceptable price ranges
•Gabor Granger to estimate the impact of different prices on purchase intent
•Conjoint analysis for the estimation of price-demand curves
•BPTO
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25. Price determination research
Typical outputs include acceptable price ranges or price-demand curves. Price- demand curves
can be estimated using a variety of techniques depending on the accuracy required and the
research budget available.
Price-volume curve
90
80
70
60
50
40
30
20
10
0
R100 R120 R140 R160 R180
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26. THANK YOU FOR YOUR ATTENTION
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