Presentation Transcript

1. Top Ten Future Research Topics &The CHANCE®-Criterion: ForecastingSuccessof New Luxury Products

   2014 Luxury Conference, Monaco Oliver Heil (*) Armin Münch (**) www.luxury-research.org www.markenwechsel.org (*) Univ.-Prof. Dr. Oliver Heil (Ph.D.) (**) Armin Münch Johannes Gutenberg Universität Mainz CEO, Target Group Chaired Professor of Marketing Frankfurt, Germany
2. A „Top Ten“ ofLuxury-Research Challenges & Opportunities Whenareluxurybrandstosuccessfulfortheirowngood (e.g. Porsche, LV, USM andwhy not Rolex(?)), i.e. resistingthetemptationtoexpand. Brick & mortarvsinternet: The previousenemybecame a friendandcollaborateur. Consumption-experience in theluxurysegment: Whatisunique, specialandluxurious? Luxuryfailures: Howtopreventthem, to manage themandwhatistheirimpact on thebrand (e.g. was isrighttocut Maybach, isthe Bentley GT a failure?) Socialacceptanceofluxury—evolutionofbrands (LV usedtobe „old“, Rolex „is“ old, exoticskinsare out again, footprintsofluxoriousbrands matter more & more)
3. A „Top Ten“ ofLuxury-Research Challenges & Opportunities The power ofless: Limited Editions everywhereandno end in sight (enormouswtp but muchbranddamageifnumberof LE iswrong) Global luxurynolonger European luxury: Threats due totheadventof Asian luxurybrands. Evolution ofluxury: futuremeaningsbeyondp,q,x, etc.—e.g. enhance quality of lifeinstead of „luxury is when price does not matter“ (Lagerfeld) Luxuryas front-runner, e.g. newretailformats, newsynergeticproduct-forms & designs e.g. Porsche/Burmester, Hermes/Bugatti, Chopard/Aghilior Wally yacht (design). Down to business: Predicting the successin and size and growth of luxury segments.
4. I IntroductionI High FMCG Flop Rates • Europe: according to GfK, flop rate of all new brands about 70% • USA: only 10-20% of new products and services succeed • Subset of luxury products: seemingly slightly fewer failures but * definition of luxury (e.g. vs. premium) tricky * “missing” data as producers destroy failures • Prediction of Luxury-Failures more important than, e.g. FMCGs * producers feel forced to destroy failures (see above) * brand images more vulnerable (e.g. broken Rolls more delicate than with a broken FIAT)
5. I The CHANCE CRITERION®I Insight * measure market potential for a product (or service) * criterion to predict for each and every single test person * selection: whether or not he/she would switch to a new product for regular use. The CHANCE CRITERION®: switching occurs iff “the new product is viewed to be better along at least one attribute and at least of equal appeal in all, other (n-1) attributes.” Note: no trade-offs, current product as reference, status-quo as driver.
6. Premium andluxuryproducts ProductPrediction Reality A 600.000 625.000 B 96.000 105.000 C 540.000 545.000 D 760.000 825.000 E 450.000 460.000 F 240.000 280.000 G 540.000 580.000 Note: CC typicallyunderpredictsand, thus, whichleadsto a lesscostlyerror. Precisoin CHANCE®-Criterium in Reality
7. Conceptual Assessment Challenge in luxurymarkets: PredictingPurchase/Switch or Not –sincemanyluxuryconsumersalreadyhave a Rolex, Bentley, Hermes,… Luxury consumption correlates with cognitive and emotional involvement, (e.g. Luce et al. 1999, Kapferer 2006, 2009, Langer and Heil 2013) making new product sales difficult to predict Loss aversion Prospect Theory (e.g. losses more important than gains (Kahneman und Tversky 1979, Hardie 1993)), endowment Effect (subjective price exceeds market price, e.g. Thaler 1980), Regret theory (regret for negative descision/purchase, e.g. Landman 1987, Sudgen 1985) Norm-Theory (preference for maintaining status quo, esp. as status quo is viewed as normal (Kahneman & Miller 1986)) , Trade-Off avoidance (Kahneman & Tversky 1983, 1990, Payne et al 1993), value fct sketchy
8. PERSON 1 PERSON 2 PERSON 3 … PERSON n Q 1: e.g. Disposition to buy Q 2: e.g. Likes Q3: e.g. Dislikes Q 4: … Q5: … CHANCE Criterion Fulfilled Not fulfilled Fulfilled Fulfilled Not fulfilled I The CHANCE-CRITERION® Model of Brand ChoiceI With the CHANCE method: Always individually, checking on fulfillment of the CHANCE-CRITERION®
9. Ask simple questions 1. Whatbrand(s) do youownorusemostoften? 2. Presentationofnewproductand, also, namingof a possible/probablyprice, followedbythenextquestion: Howwouldyoudescribethisproductto a friendofyour, whodoes not reallyknowthisnewproduct? 3. What do youlikebetteraboutthenewproduct? 4. What do youlikeless? 5. Whatwouldbe a pricethatyoudeemappropirateandatwhichyouwouldbelikelytopurchasetheproduct? Note 1: Simple questions robust and reliable data. Note2: Promising new development Neuro Chance to measure electrical activity in brain (electroencephalogram, EEG) for different luxury products. UsingtheCHANCE®-Criterionis Surprisingly easy, fast andcost-efficient
10. I The CHANCE CRITERION®andStatisticsI Statistical Significance Visual
11. I CHANCE CRITERION®-- Consistency Check I A few examples of responses to a new product an ad campaign .
12. In Short Extremely High Precision of Forecast Nice Error Structure Sound Theory Surprisingly Small Sample Sizes Needed VeryGoodEfficiencies Time Cost NicelySuited Research-Instrument forLuxury Research