In short…

  • The importance of the concept testing process during a new product launch.
  • The different types of concept tests and how to conduct the most common type of concept test.
  • The Long Tail Effect: How digital technologies are changing new product development.
  • Understand potential and forecast.
  • Estimate the market potential and forecast sales.
  • Apply metrics to evaluate model forecasts and compare models.

Product Concept and Concept Testing

Concept Generation:

  1. Form: The physical product or parts of creation of a service
  2. Technology: source by which form is attained
  3. Benefit: Customer needs addressed by the product

Technology allowed the development of a form that benefits the consumers

One 1/3 is present – Idea

Only 2/3 are present – Concept

All 3 are present: A new product

Types of concept tests: Surverys, Focus Groups, Limited rollout, etc

Conjoint analysis is popular overtime

The objective of Concept Testing:

  1. Forecast
  2. Concept Selection
  3. Diagnostic information about the selected concept

First qualitative methods are used like focus groups, brainstorming

Then more expensive quantitative methods: survey based concept tests, conjoint analysis

Finally, pre-test and test marketing methods are utilized before the product launch

Concept testing fails when the past is not a good predictor of the future.

Concept Testing — The Seven-Step Method

  1. Define the purpose of the concept test
    1. Selection of concept
    2. How to improve the concept
    3. Impact on sales
  2. Choosing a survey population
    1. For example, if we want to improve the post-purchase experience of consumers who have bought motor insurance, first we need to ask screening questions to check if the survey population has motor insurance.
    2. Only after this, we can select a proportion of the population which has motor insurance for our surveys
  3. Choosing a survey format
    1. Face-to-face interviews, telephone interviews, emails, internet
    2. Sample selection bias needs to be considered
  4. Communicating the concept via sketch, photos, texts, storyboard, videos, simulation, etc
    1. Description of the concept should match the information users are likely to consider when making a purchase decision
    2. Include the price only if it is expected to high or low, or ask the respondent how much they are willing to pay for the product

  1. Measuring customer response
    1. Purchase intent,
    2. Uniqueness of the concept
    3. The believability of the concept,
    4. Questions about product attributes
    5. Problems consumers see in using the concept
    6. The reaction of consumers to price
    7. Information about respondents
  2. Interpreting the results
    1. e.g.: Purchase intention
    2. Definitely buy and probably buy options are considered top box score and second box score

Assume Cd = 0.4, Cp = 0.2

  1. Reflecting on concept test results and process
    1. How to increase the potential sales

The Long Tail Effect

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Due to the removal of physical limitations of storing products, long-tail products in niche categories have become profitable in the long run.

Aggregators like online marketplaces, Netflix, Amazon, etc work on long tail effect

Marketing Potential and Forecasting for New Products

Market Potential: Maximum sales attainable under a given set of conditions within a specified period of time

Forecast: The amount of sales expected to be achieved under a given set of conditions within a specified period of time

Overview of Sales Forecasting Methods

Usage of Forecasting Methods

Note: These are notes from the ISB Executive Education – Product Management program for my personal consumption.

In case you are looking for a Product Management course, I would highly recommend joining this cohort-based course.

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Categories: Product Management