1

Question for the Class:Question for the Class:

When do you use When do you use marketing research?marketing research?

Marketing Research & Marketing Research & Technology Product/Service Technology Product/Service

DevelopmentDevelopment

Dr. Alan L. CarsrudDr. Alan L. CarsrudClinical Professor of ManagementClinical Professor of Management

Professor of Industrial & Systems EngineeringProfessor of Industrial & Systems EngineeringProfessor of Hospitality Management Professor of Hospitality Management

Executive DirectorExecutive DirectorEugenio Eugenio PinoPino & Family Global Entrepreneurship Center & Family Global Entrepreneurship Center

at at Florida International UniversityFlorida International University

&&Docent in EntrepreneurshipDocent in Entrepreneurship

ÅÅbo Akademi Universitybo Akademi University

2

Marketing Research Marketing Research and Detailed Investigationand Detailed Investigation

Adapted from the Stage Gate processby Robert J. Cooper

Stag

e II

: Det

aile

d In

vest

igat

ion

Stag

e I:

Pre

limin

ary

Inve

stig

atio

n

Idea

Gen

erat

ion

Key Activities in Product Key Activities in Product DevelopmentDevelopment

Market Analysis

Competitive Analysis

User Needs & Wants

Study

Customer Wish List:

Product Rqmts

Technical Assessment: Translation

Technically Feasible

Concept(s)

Mfg Costs/ Production

NeedsProject Plan: Development, Test, Marketing & Production

Financial Justification: Financial, Risk, Business Justification

Product Definition: Target Market, Concept, Position & Benefits Requirements & Specs

Expected Sales

Financial Analysis

Concept Test:

Purchase Intent

3

IdentifyIdentify User Needs & Wants User Needs & Wants Gather raw dataGather raw data

InterviewsInterviewsFocus GroupsFocus GroupsObservationObservation

Interpret raw dataInterpret raw dataAffinity DiagramAffinity DiagramNeeds StatementsNeeds Statements

Organize needs & establish importanceOrganize needs & establish importanceSurveysSurveysConjoint AnalysisConjoint Analysis

Karl T. Ulrich and Steven D. Eppinger2nd Edition, Irwin McGraw-Hill, 2000.

Unhappy Customers

Happy Customers

Never Tried Product

Prefer Competitors

Lead Users

Male

Female

Children

Trad

ition

al D

emog

raph

ic

Segm

enta

tion

Non-Traditional Segmentation

Gather Raw DataGather Raw Data--Interview SegmentationInterview Segmentation

Mark Martin,Acting Assistant ProfessorStanford University, 2000

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Which Marketing Data Which Marketing Data Collection Method To Use?Collection Method To Use?

SurveysSurveys

InterviewsInterviews

Focus GroupsFocus Groups

Interviews vs. Focus GroupsInterviews vs. Focus Groups

From: Griffin, Abbie and John R. Hauser. “The Voice of the Customer”, Marketing Science. vol. 12, no. 1, Winter 1993.

One-on-One Interviews (1 hour)

Focus Groups (2 hours)

0 1 2 3 4 5 6 7 8 9 10

0

20

40

60

80

100

Per

cen

t o

f N

eed

s Id

enti

fied

Number of Respondents or Groups

5

Surveys come later and are Surveys come later and are actually somewhat easier.actually somewhat easier.

Interpret Raw Data :Interpret Raw Data :Screwdrivers ExampleScrewdrivers Example

6

Affinity DiagramAffinity Diagram(a.k.a. KJ diagram) (a.k.a. KJ diagram)

Organizes subjective information Organizes subjective information

Example: Group the following Example: Group the following CRCR’’ss““ease of handlingease of handling”” ““portabilityportability””““number readabilitynumber readability”” ““dose meteringdose metering””““load handlingload handling”” ““ease of useease of use””

Five Guidelines for Five Guidelines for Writing Needs StatementsWriting Needs Statements

G u id e lin e C u s to m e r S ta tem e n t N eed S ta te m en t-W ro n g N eed S ta tem en t-R ig h t

W h at N o tH o w

S p ecific ity

P o s itiveN o t

N eg ative

A ttrib u teo f th e

P ro d u c t

A vo id“M u st”

an d“S h o u ld

“W hy d on ’t yo u pu tp ro te c tive sh ie lds a roundthe b a tte ry con tac ts? ”

“I d ro p m y sc re w drive r a llthe tim e .”

“It do esn ’t m a tte r if it’sra in in g , I s till ne ed tow ork ou ts ide onS a tu rdays .”

“I’d like to cha rge m yba tte ry from m y c iga re tteligh te r.”

“I h a te it w h en I don ’tknow h ow m uch ju ice isle ft in the b a tte ries o f m ycord less too ls .”

T he screw d rive r ba tte rycon tac ts a re cove red bya p las tic s lid in g doo r.

T he screw d rive r ba tte ryis p ro tec ted fromacc iden ta l sho rting .

T he screw d rive r isrugged .

T he screw d rive rope ra tes no rm a lly a fte rrepea ted d ropp ing .

T he screw d rive r is no td isab led by the ra in .

T he screw d rive rope ra tes no rm a lly inth e ra in .

A n au tom ob ile c iga re tteligh te r adap te r cancha rg e th e sc re w drive rba tte ry .

T he screw d rive r ba tte rycan be charged from anau tom ob ile c iga re tteligh te r.

T he screw d rive r shou ldp rov ide an ind ica tion o fth e ene rg y leve l o f theba tte ry .

T he screw d rive rp rov ides an ind ica tiono f the energy leve l o fthe ba tte ry .

7

Things to RememberThings to Remember

Capture Capture ““What, Not HowWhat, Not How””Collect visual, verbal, and textual dataCollect visual, verbal, and textual dataProps will stimulate customer responsesProps will stimulate customer responsesInterviews are more efficient than focus groupsInterviews are more efficient than focus groupsInterview all stakeholders and lead usersInterview all stakeholders and lead usersDevelop an organized list of need statementsDevelop an organized list of need statementsLook for latent needsLook for latent needsSurvey to quantify tradeoffsSurvey to quantify tradeoffs

Translating Translating CRCR’’ss into Technical Specsinto Technical Specs

PHASE I QFD -- Portable Slide ProjectorEngineering Metrics

Customer Requirements Cu

stom

er W

eigh

ts

Brig

htne

ss

Wei

ght

Dim

ensio

ns (g

irth

+ w

idth

)

Tim

e/Ta

sks r

equi

red

to st

art p

rese

ntat

ion

Dist

ortio

n

Dist

ance

from

pre

sent

er (w

ith 3

' x 3

' pro

ject

ion)

Tim

e to

inse

rt/pu

ll-ou

t slid

e

Attr

activ

e pr

oduc

t

Good image 9 9 9Easy to transport 9 9 9Device sets up quickly 9 3 1 9 3 3Works well for short present. 9 1 3 3 3Keeps present. flowing 1 3 3 9Image visible in bad conditions 3 9 3Minimizes unplanned interruptions 1 3 1 9Design makes the product attractive 3 3 3 9

Raw score

108

117

108

114

90 58 72 27

Relative Weight 16

%

17%

16%

16%

13%

8% 10%

4%

Customer Needs •Good image•Easy to transport•Keeps present. flowing•Image visible in bad conditions•Minimizes unplanned interruptions•Design makes the product attractive•Device sets up quickly•Works well for short present.

Engineering Metrics•Brightness•Weight•Dimensions (girth + width)•Time/Tasks required to start present.•Distortion•Distance from presenter •Time to insert/pull-out slide•Attractive product

Example:

Portable Slide Projector

Mark Martin, 2000

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QFD Matrix ExampleEngineering Metrics

Customer Requirements Cu

stom

er W

eig

hts

Brig

htne

ss

Wei

ght

Dim

ensio

ns (g

irth

+ w

idth

)

Tim

e/Ta

sks r

equi

red

to st

art p

rese

ntat

ion

Dist

ortio

n

Dist

ance

from

pre

sent

er (w

ith 3

' x 3

' pro

ject

ion)

Tim

e to

inse

rt/pu

ll-ou

t slid

e

Attr

activ

e pr

oduc

t

Good image 9 9 9Easy to transport 9 9 9Device sets up quickly 9 3 1 9 3 3Works well for short present. 9 1 3 3 3Keeps present. flowing 1 3 3 9Image visible in bad conditions 3 9Minimizes unplanned interruptions 1 3 1 9Design makes the product attractive 3 3 3 9

Raw score

108

117

108

114

81 58 72 27

Relative Weight 16

%

17%

16%

17%

12%

8% 11%

4%

Phase I -Portable Slide Projector

Part Characteristics

Engineering Metrics Ph

ase

I R

elat

ive

Wei

gh

ts

Top

case

Botto

m c

ase

Lens

Cond

ense

rSt

and

Hea

t sin

kLa

mp

Brightness 16% 9 9 1 9Weight 17% 9 9 1 1 3Dimensions (girth + width) 16% 9 9 3 9 1 3 3Time/Tasks required to start presentation 16% 3 3Distortion 13% 9 9 1 1Distance from presenter (with 3' x 3' projection) 8% 9 9 9Time to insert/pull-out slide 10% 3 1Attractive product 4% 9 9 9

Raw score 3.

6

3.3

4.4

4.9

1.1

1.3

2.7

Rel. Weight 17

%15

%21

%23

%5% 6% 13

%

Rank 3 4 2 1 7 6 5

Phase II -Portable Slide Projector

% Worth of components

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Clarify the Problem

Generate Product ConceptsGenerate Product Concepts

Select Product Concept

• Concept Screening• Concept Scoring

Search Externally

Search Internally

• Existing Concepts • New Concepts

Reflect on the Process

• Continuous Improvement

Karl T. Ulrich and Steven D. Eppinger2nd Edition, Irwin McGraw-Hill, 2000.

Concept Development FunnelConcept Development Funnel

concept generation

concept screening

concept scoring

concept testing

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Concept Generation Exercise:Concept Generation Exercise:Vegetable PeelersVegetable Peelers

Vegetable Peeler Exercise:Vegetable Peeler Exercise:Voice of the CustomerVoice of the Customer

"Carrots and potatoes are very different.""Carrots and potatoes are very different.""I cut myself with this one.""I cut myself with this one.""I just leave the skin on.""I just leave the skin on.""I'm left"I'm left--handed. I use a knife."handed. I use a knife.""This one is fast, but it takes a lot off.""This one is fast, but it takes a lot off.""How do you peel a squash?""How do you peel a squash?""Here's a rusty one.""Here's a rusty one."

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Clarify the Problem:Clarify the Problem:Key Customer NeedsKey Customer Needs

1.1. The peeler can be used for a variety of produce.The peeler can be used for a variety of produce.2.2. The peeler can be used ambidextrously.The peeler can be used ambidextrously.3.3. The peeler creates minimal waste.The peeler creates minimal waste.4.4. The peeler saves time.The peeler saves time.5.5. The peeler is durable.The peeler is durable.6.6. The peeler is easy to clean.The peeler is easy to clean.7.7. The peeler is safe to use and store.The peeler is safe to use and store.8.8. The peeler is comfortable to use.The peeler is comfortable to use.9.9. The peeler stays sharp or can be easily sharpened.The peeler stays sharp or can be easily sharpened.

External SearchExternal SearchLead UsersLead Users

Benefit from improvementBenefit from improvementInnovation sourceInnovation source

BenchmarkingBenchmarkingCompetitive productsCompetitive products

ExpertsExpertsTechnical expertsTechnical expertsExperienced customersExperienced customers

PatentsPatentsSearch related inventionsSearch related inventions

LiteratureLiteratureTechnical journalsTechnical journalsTrade literatureTrade literature

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Internal SearchInternal SearchSuspend judgmentSuspend judgmentGenerate a lot of ideasGenerate a lot of ideasInfeasible ideas are welcomeInfeasible ideas are welcomeUse graphical and physical mediaUse graphical and physical mediaMake analogiesMake analogiesUse related stimuliUse related stimuliUse unrelated stimuliUse unrelated stimuliSet quantitative goalsSet quantitative goalsTrade ideas in a groupTrade ideas in a group

Concept Selection ProcessConcept Selection ProcessPrepare the MatrixPrepare the Matrix

CriteriaCriteriaReference ConceptReference ConceptWeightingsWeightings

Rate ConceptsRate ConceptsScale (+ Scale (+ –– 0) or (10) or (1––5)5)Compare to Reference Concept or ValuesCompare to Reference Concept or Values

Rank ConceptsRank ConceptsSum Weighted ScoresSum Weighted Scores

Combine and ImproveCombine and ImproveRemove Bad FeaturesRemove Bad FeaturesCombine Good QualitiesCombine Good Qualities

Select Best ConceptSelect Best ConceptMay Be More than One or NoneMay Be More than One or NoneBeware of Average ConceptsBeware of Average Concepts

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Example: Concept ScreeningExample: Concept Screening

CONCEPT VARIANTS

SELECTIONCRITERIA A B C D E F G REF.

Ease of Handling 0 0 – 0 0 – – 0Ease of Use 0 – – 0 0 + 0 0Number Readability 0 0 + 0 + 0 + 0Dose Metering + + + + + 0 + 0Load Handling 0 0 0 0 0 + 0 0Manufacturing Ease + – – 0 0 – 0 0Portability + + – – 0 – – 0

PLUSES 3 2 2 1 2 2 2SAMES 4 3 1 5 5 2 3

MINUSES 0 2 4 1 0 3 2NET 3 0 –2 0 2 –1 0

RANK 1 3 7 5 2 6 4CONTINUE? Yes Yes No No Yes No Yes

Example: Concept ScoringExample: Concept Scoring

ConceptsA DF E G+

Master Cylinder Lever Stop Swash Ring Dial Screw+

Selection Criteria Weight RatingWeighted

Score RatingWeighted

Score RatingWeighted

Score RatingWeighted

Score

Ease of Handling 5% 3 0.15 3 0.15 4 0.2 4 0.2

Ease of Use 15% 3 0.45 4 0.6 4 0.6 3 0.45

Readability of Settings 10% 2 0.2 3 0.3 5 0.5 5 0.5

Dose Metering Accuracy 25% 3 0.75 3 0.75 2 0.5 3 0.75

Durability 15% 2 0.3 5 0.75 4 0.6 3 0.45

Ease of Manufacture 20% 3 0.6 3 0.6 2 0.4 2 0.4

Portability 10% 3 0.3 3 0.3 3 0.3 3 0.3

Total Score

Rank

Continue? No Develop No No

(reference)

2.75

4

3.45

1

3.10

2

3.05

3

14

Things to RememberThings to Remember

The goal of concept selection is The goal of concept selection is notnot totoSelectSelect the best conceptthe best concept

The goal of concept selection is toThe goal of concept selection is toDevelopDevelop the best conceptthe best concept

So remember to So remember to combine and refinecombine and refine the the concepts to develop better ones!concepts to develop better ones!

•• Beware of the best "average" productBeware of the best "average" product•• Perform concept selection for each different Perform concept selection for each different

customer group and compare resultscustomer group and compare results•• Check sensitivity of selection to the importance Check sensitivity of selection to the importance

weightings and ratingsweightings and ratings•• May want to use all of detailed requirements in May want to use all of detailed requirements in

final stages of selectionfinal stages of selection•• Note features which can be applied to other Note features which can be applied to other

conceptsconcepts

More to RememberMore to Remember

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Concept Testing: Concept Testing: When & How to Use SurveysWhen & How to Use Surveys

Define the purpose of the testDefine the purpose of the testChoose a survey populationChoose a survey populationChoose a survey formatChoose a survey formatCommunicate the conceptCommunicate the conceptMeasure customer responseMeasure customer responseInterpret the resultsInterpret the resultsReflect on the results and the processReflect on the results and the process

Concept Testing is Used for...Concept Testing is Used for...

Go/noGo/no--go decisionsgo decisionsWhat market to be inWhat market to be inSelecting among alternative conceptsSelecting among alternative conceptsConfirming concept selection decisionConfirming concept selection decisionBenchmarkingBenchmarkingSoliciting improvement ideasSoliciting improvement ideasForecasting demandForecasting demandReady to launch?Ready to launch?

16

When To Use A Survey Format?When To Use A Survey Format?

What would you expect the price of the What would you expect the price of the product or service to be?product or service to be?

What concerns do you have about the What concerns do you have about the product concept?product concept?

Can you make any suggestions for improving Can you make any suggestions for improving the product/service concept?the product/service concept?

Interpreting the Results:Interpreting the Results:Forecasting SalesForecasting Sales

Q = N x A x PQ = N x A x PQQ = sales (annual)= sales (annual)NN = number of (annual) purchases= number of (annual) purchasesAA = awareness x availability (fractions)= awareness x availability (fractions)PP = probability of purchase (surveyed)= probability of purchase (surveyed)

= = CCdefdef x x FFdefdef + + CCprobprob x x FFprobprob

“second box”“top box”

17

Forecasting Example:Forecasting Example:College Student Market for BikesCollege Student Market for Bikes

N = offN = off--campus grad students (200,000)campus grad students (200,000)A = 0.2 (realistic) to 0.8 (every bike shop)A = 0.2 (realistic) to 0.8 (every bike shop)P = 0.4 x P = 0.4 x toptop--boxbox + 0.2 x + 0.2 x secondsecond--boxboxQ = 200,000 x 0.20 x [0.4 x Q = 200,000 x 0.20 x [0.4 x 0.30.3 + 0.2 x + 0.2 x 0.20.2]]

= 6400 units/yr= 6400 units/yrPrice point $795Price point $795Revenue = 5 million dollarsRevenue = 5 million dollars

Forecasting Example:Forecasting Example:Factory Transport MarketFactory Transport Market

N = current bicycle and scooter sales to N = current bicycle and scooter sales to factories (150,000)factories (150,000)A = 0.25 (single distributorA = 0.25 (single distributor’’s share)s share)P = 0.4 x P = 0.4 x toptop--boxbox + 0.2 x + 0.2 x secondsecond--boxboxQ = 150,000 x 0.25 x [0.4 x Q = 150,000 x 0.25 x [0.4 x 0.30.3 + 0.2 x + 0.2 x 0.20.2]]

= 6000 units/yr= 6000 units/yrPrice point $1500Price point $1500Revenue = 9 million dollarsRevenue = 9 million dollars

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Market Decision: Market Decision: Factory TransportationFactory Transportation

Sources of Sources of Marketing Forecast ErrorMarketing Forecast Error

Quality of Concept DescriptionQuality of Concept DescriptionQuality of Testing MethodQuality of Testing Method

Concept testing v. conjoint analysisConcept testing v. conjoint analysis

PricingPricingLevel of PromotionLevel of PromotionWordWord--ofof--Mouth EffectsMouth EffectsCompetitionCompetition

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DiscussionDiscussionHow does early (qualitative) concept How does early (qualitative) concept testing differ from later (quantitative) testing differ from later (quantitative) testing?testing?Why do respondents typically overestimate Why do respondents typically overestimate purchase intent? Would they ever purchase intent? Would they ever underestimate intent?underestimate intent?How to use price in surveys?How to use price in surveys?How much does the way the concept is How much does the way the concept is communicated matter?communicated matter?

When shouldnWhen shouldn’’t a prototype model be shown?t a prototype model be shown?

Going to the next stageGoing to the next stage

Does it fit with the corporate strategy?Does it fit with the corporate strategy?Does it offer a competitive advantage?Does it offer a competitive advantage?Is the market attractive?Is the market attractive?Is it technically feasible?Is it technically feasible?Is it financially attractive?Is it financially attractive?Critical evaluation before Stage 3 Critical evaluation before Stage 3 -- the the ““money stagemoney stage””