Concept Test

1. 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

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 mid-point. 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 inter-purchase 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.