Concept Testing

• In a concept test, the development team solicits a response to a description of

the product concept from potential customers in the target market.

• This type of testing may be used to select which of two or more concepts
should be pursued, to gather information from potential customers on how to
improve a concept, and to estimate the sales potential of the product.

• The reason that concept testing generally follows concept selection is that the
team can not feasibly test more than a few concept directly with potential
customers.

• A team may choose not to do any concept testing at all, if the time required to
test the concept is large relative to the product life cycle in the product
category, or if the cost of testing is large relative to the cost of actual launching
of the product. For example Internet software business.
Development of commercial airplane.
 Seven-step method for testing product concepts

1. Define the purpose of the concept test.

2. Choose a survey population.

3. Choose a survey format

4. Communicate the concept

5. Measure customer response.

6. Interpret the results

7. Reflect on the results and the process.

Step 1: Define the purpose of the concept test-

• In the first step of the concept testing, the team should explicitly articulate in
writing the questions that the team wishes to get answered with the test.
• As the concept testing is a kind of prototyping process, this step is closely
analogous to “defining the purpose” in prototyping.
• Typical questions are like:
1. Which of the several alternative concept should be pursued?
2. How can the concept be improved to better meet customer needs?
3. Approximately how many units are likely to be sold?
4. Should development be continued?
 Step 2:Choose a survey population
• The population of potential customers surveyed should reflect the target market of the
product.
• The sample size of the survey should be large enough that the team’s confidence in the
results is high enough to guide decision making.
• Team may structure multiple surveys with different objectives. Each of these surveys may
involve different sample population and a different sample size.

Factors favoring the smaller sample size Factors favoring the large sample size
•Test occurs early in concept Test occurs later in concept development
development process. process.
•Test is primarily intended to gather Test is primarily intended to access
qualitative data. demands quantitatively.
•Surveying potential customers is Surveying customer is relatively fast and
relatively costly in time or money. inexpensive.
•Required investment to develop and The required investment to develop and
launch the product is relatively small. launch the product is relatively high.
•Relatively large fraction of target market Relatively small fraction of target market
is expected to value the product (i.e. is expected to value the product. (i.e.,
many positively inclined respondent can many people have to be sampled to
be found without a large sample) reliably estimate the fraction that value
the product.)
Step 3:Choose a survey format
• Face to face interaction – An interviewer interacts directly with the respondent. Form:
Intercepts, interviews prearranged by telephone, interviews with potential customers
at a trade-show booth, or focus group.

• Telephone – Telephone interviews may be prearranged and targeted at very specific

individuals.

• Postal mail – Concept testing materials are sent and respondents are asked to return
a completed form.

• Electronic mail

• Internet – A team may create a virtual concept testing site in which survey
participants can observe concepts and provide responses.

• If the questions are very focused, the team can hire a market research firm to
implement the concept test.
Step 4:Communicate the concept
• Verbal description – A short paragraph or a collection of bullet points summarizing the
product concept.

• Sketch – Line drawings showing the product in perspective, perhaps with annotations of
key features.

• Photos and rendering – Photographs can be used to communicate the concept when
appearance model exist for the product concept. Renderings are nearly photo-realistic
illustrations of the concept. Renderings can be created with pens and markers or using
CAD tools.

• Storyboard – A series of images that communicates a temporal sequence of actions

involving the product.

• Video – Video images allow even more dynamism than the storyboard. The form of the
product can be clearly communicated the way in which it may be used. Animation can be
shown.

• Simulation- Simulation is generally implemented as software that mimics the function or

interactive features of the product.

• Interactive multimedia – Interactive multimedia combines the visual richness of video with
interactivity of simulation.

• Physical appearance models – looks like models display the form and appearance of a
product. Made of wood or polymer foams and are painted to look like real products.
Sometimes limited functionality may be included in the model.

• Working prototypes- works like model.

 Matching the survey format with the means of
communicating the concept
Telephone Electronic Postal mail Internet Face-to-
mail face
Verbal description

Sketch

Photo or rendering

Storyboard

Video
Simulation
Interactive
multimedia
Physical
appearance model

Working prototype
Issues in communicating the concept

• The team must decide how aggressively to promote the product and its benefits.

• The description of concept should closely mirror the information that the user is
likely to consider when making a purchase decision.

• If highly promotional information is used it can be labeled as a “sample

advertisement”, perhaps supplemented by mock-ups of “magazine articles” or
“comments by current owners” providing additional description of product.

• It is recommended that price be omitted from the concept description unless the
price of product is expected to be usually high or low.

• Instead of showing a single concept, the team may choose to ask a respondent to
select from the several alternatives.
Step 5:Measure customer response.

In the concept testing, the customer response is usually measured by asking

respondents to choose from two or more alternative concepts. It is
focused on why the respondents react the way they do and how the
product concept could be improved.
The most commonly used purchase-intent scale has five response categories:
1. Definitely would buy.
2. Probably would buy.
3. Might or might not buy.
4. Probably would not buy.
5. Definitely would not buy.
Step 6:Interpret the results
• If while comparing two or more concepts, the interpretation of the results is
straightforward then one concept can be easily preferred over the others but if
the results are not conclusive, the team may decide to choose a concept based
on cost or other considerations.
• The judgment is made carefully for cases in which the manufacturing costs are
dramatically different among the concepts under consideration.
• The team is also interested in estimating the demand for a product in the certain
period, usually one year.
A model for estimating the sales potential of durables-
The quantity of the product expected to be sold during a time period
Q=N*A*P
Where
N is the number of potential customers expected to make purchases
during the time period.
A is the fraction of these potential customers or purchasers for which
product is available and the customer is available for product.
P is the probability that the product is purchased if available and if the
customer is aware of it.
P = Cdefinately* Fdefinately + C probably* F probably

Fdefinately is the fraction of survey respondents indicating in the concept test survey
that they would definitely purchase.
Fprobably is the fraction of survey respondents indicating in the concept test survey
that they would probably purchase.
Cdefinately and C probably are the calibrated constants.
• Some of the factors that can cause actual purchase pattern to differ from
purchase intentions expressed in surveys include:
1. Importance of word of mouth
2. Fidelity of concept description
3. Pricing
4. Level of promotion
Step 7:Reflect on the results and the process.
• The quantitative insights gathered through open ended discussions with
respondent about the proposed concepts may be the most important result
of concept testing.
• The team should reflect on the qualitative insights as well as the numerical
outcomes of its forecast.
• The team benefits from thinking about the impact of three key variables in
forecasting models:
1. The overall size of market
2. The availability and awareness of the product
3. The fraction of customer who are likely to purchase

• A sensitivity analysis can yield useful insights and aids in decision making.
• In reflecting on results of concept test, the team should ask two key
diagnostic questions
1. Was the concept communicated in the way that is likely to elicit customer
response that reflects true intent?
2. Is the resulting forecast consistent with observed sales rates of similar
products?