Grow up your brand with "The Baby Steps"

Hierarchy of Effects Models- "The baby steps"

Various illustrations of the notion that marketing promotion induces consumers to move in steps from one mental state to the next before eventually deciding to purchase a particular product; in this model the steps, in ascending order, are Awareness, Knowledge, Liking, Preference, Trial and Loyalty. It sounds like “Baby Steps” growing up from nothing to the great brand. Let’s quick discover each step and its appropriate communication tools.

Unawareness => Awareness

This is first step that target customers do not know anything about the brand. They cannot recall and even recognize the brand. So the best communication tool that should be employed is mass advertising. It could be huge billboards which display the brand name or logo. It should be placed at high traffic areas where target customers are. The content contained in ad should be simple and stimulate consumers to recognize the brand name and what products or services the brand offers.

Awareness => Knowledge

The target customers might have brand awareness but they do not know much about its features and benefits. So communication tool must be able to convey products features and benefit in detail. For example, the brand website could show product portfolio, features, benefits and pictures. Beside the website, company could hand out brochures or send direct mail to target customer. Moreover, company should evaluate the effectiveness and accuracy of communication in order to ensure that target customers have got the right information of the brand.

Knowledge => Liking

Once the target customers know the brand, the next step is “How do they feel about it?” So the best way to make them like the brand is to link the brand to the things they like. The association might be celebrity endorsement, lifestyle and so on. Furthermore, the brand might be the sponsorship of public events that are relevant to the target customers. With this method, consumer will use affective think rather than cognitive thinking to make decision on even product such as laptop.

Liking => Preference

Once the target customer looks favorably on the brand, Would they prefer it to the others? To make the brand be preferable, opinion leader could be used to promote the brand quality, value and other features as well as comparative advertising. Product manager should monitor closely what are the factors customers prefer and how competitors respond to improve communication methods later on. (Comparative ads, Word of Mouth, Opinion leader)

Preference => Trial

The target customers might prefer the brand but they do not build up a conviction of buying. The simple action is sampling. Moreover, brand shelf space, shelf facing and shelf locations in retails are crucial because they affect customer trial.

Trial => Loyalty

This step is the last but not least since it greatly benefits to the brand. Customers will repeat buying and spread good word of mouth. The moment of truth is crucial and must be managed properly in term of shelf display, packaging, merchandising and logistic in order to make sure that customer get right product quality and the right time. The appropriate communication tool is sale promotion and loyalty programs which might be membership, peer to peer incentive, redemption card and so on.

New Product Management (10)

Chapter 10: The Full Screen

Purposes: after the original idea emerged, we put it concept format, then gave it a brief initial exposure for reaction by key players. Concept testing then enables us to add thoughts of potential users to the set of market and other data collected since the time of the PIC. We have been compiling inputs of key functional people in the firm. We now have as much info as we are going to get before undertaking technical work on the product. It involves the use of scoring model – an arrangement of checklist factors with weights (importance) on them.

Full screen has three objectives:

1) It helps the firm decide whether it should go forward with the concept or quit decide whether these financial/ human resources should be devoted to the project – whether we can do (feasibility) the job or we want to do it (what will we get out of the project – profits and market share).

2) It helps manage the process by sorting the concepts and identifying the best ones (rank order/ prioritize, and record is kept of rejected concepts to prevent reinvention).

3) It encourages cross-functional communication (it is a learning process which makes manager more sensitive to how other functions think).

The scoring model

What social activity to undertake in the weekend – Four criteria are listed out: fun (much, some, little, none), involve more than 2 people (over 5, 4-5, 2-3, and under 2), affordable (easily, probably, maybe, no), and something capable of doing (very, good, some, little) - 4 point scale was chosen, and three activities are skiing, boating, and hiking. Then the person proceeds to evaluate each option and total the score for each. Boating is the final answer 3+4+4+4 = 15 points in total. However, some protesting could be made (a special person will be present at skiing, hiking enable more exercise, and etc). A scoring process is what we actually use in making decisions. The person’s objections contain the basic problems of new product scoring model.

What is being evaluated?

There is a financial term called net present value of the discounted stream of earnings from the product concept, considering all direct and indirect costs and benefits. It is the bottom line on an income statement for the product, where we have included all costs and then discounted back the profits into what their value is today. We use surrogates for it. Profit/ net present value comes from chances of technical accomplishment and commercial accomplishment (sales, margins, and expenses). Sales would depend on the newness of the wholesalers, familiarity with the market, and product advantages.

Analytic Hierarchy Process (AHP) – a technique that systematically gathers expert judgment and uses it to make optimal decisions. It can be applied in full screening as a way to prioritize and select new product projects. AHP gathers managerial judgment and expertise to identify the key criteria in the screening decision and obtain scores under consideration relative to these criteria and rank the projects in order of desirability. AHP converts the comparison data into a set of relative weights, which are then aggregated to obtain composite priorities of each element at each level. The available choices are rank ordered in terms of their prefer-ability to the manager.

If an idea progresses through early concept testing (much more productive when it is in prototype form) and development to the point where it is a full-blown concept ready for technical workup, it must then be screened. Screening is commonly done with scoring models, whereby the firm’s ability to bring off the required development and marketing is estimated.

New Product Management (9)

Chapter 9: Concept Testing

The importance of up-front evaluations

The biggest cause of new product failure is that the intended buyer did not see a need for the item – no purpose, no value, and not worth the price. In concept testing, we get our first confirmation that this will be a quality product. We save time by gathering information and making decisions that help assure the product will move through development fast. We lower cost in several ways (avoid the rising cumulative expenditures curve and the best time to get off a loser is at the bottom of the curve, the elimination of the many losers naturally picked up in an aggressive concept generation program, info gathering also helps make cost forecast). The highly relevant is also the stage where we set the basic marketing strategy on firm ground. We confirm the target market and settle on a product positioning statement which guides all the rest of the marketing activities.

PIC – the earliest evaluation that a firm makes is of itself and its situation. These decisions decree what types of new products fit best (ex. Nabisco sought technological breakthroughs in snack foods). The PIC will eliminate many new product ideas as firms will reject ideas that violate PIC guidelines. Following the PIC should result in excluding these ideas: ideas that require technologies the firm does not have, ideas to be sold to customers about whom the firm has no close knowledge, ideas that offer the wrong degree of innovativeness, and ideas wrong on other dimensions (not low cost, to close to certain competitor). When used at the beginning of the new products system, it precludes the unfortunate practice of having unwanted proposals eat up valuable development fund before they are detected.

Market analysis – The second evaluation that precedes appearance of the concept, it is an in-depth study of the market area that the PIC has selected for focus. This study takes place immediately after the PIC is approved.

Initial reaction – concepts begin flowing in (usually very fast), and opinions on them are formed instantly. Firms have special technique to handle this deluge more systematically (for example: if either sales VP or engineering VP approved the idea, the idea will be sent to another VP, and once both VPs approved, the idea went to a committee – both VPs primarily use their experience to judge). However, firms must resist the “bazooka effect” (where suggestions are quickly blasted out) – the idea source does not usually participate in the initial reaction (idea originator should not be able to vote), two or more persons are involved in any rejection decision, and the initial reaction is based on more than a pure initiative sense (evaluators are trained and experience and records are kept). PIC is often use in this initial reaction (knowing what a firm really wants). Most firms also use heuristics (rule of thumb) for this rough screening – evaluation are based on three factors: market worth, firm worth, and competitive insulation.

Concept testing and development – most major firms make use of concept testing (while some firms rely on intuition and experience). It is a mandatory part of the process for makers of customer packaged goods and its use is growing in industrial firms. However, there are times when this does not help – when the prime benefit is a personal sense. Concept testing usually fails in testing the aroma of new perfume or the taste of new food as the concept cannot be communicated short of actually having some product there to demonstrate (a type of gun failed badly in concept test and became very successful in real market). 2nd, concepts of new art and entertainment are tough to test (Whistler could not have concept-tested his idea for a painting of his mother). 3rd, when the concept has some new technology that users cannot visualize and 4th when firms mismanage concept testing and then blame the tool for misleading them (New Coke got favorable reply when tested and sometimes customers were asked to predict their behavior without knowing all the facts – they will deceive developers who are not careful). 5th customers sometimes simply do not know what problems they have. For service, there is also a prototype concept testing (which is much more reliable with physical prototype to talk around).

What is a new product concept?

A concept is an idea or an abstract notion – the product promise, the customer proposition, and the real reason why people should buy. It is a stated relationship between product features and customer benefits (needs) – it is a claim of proposed satisfaction. This promise can have four interpretations: producer/ consumer’s perception of the features of the new product, and the producer/ consumer’s estimate of the benefits delivered by that set of features. A complete new product concept is a statement about anticipated product features that will yield selected benefits relative to other products/ problem solutions already available.

The purpose of concept testing – concept testing is a part of the prescreening process (full screening of the idea just before beginning serious technical work. The purpose is

1) To identify the very poor concept so it can be eliminated.

2) To estimate the sales/ trial rate that the product would enjoy (market share/ revenue). The top-two-boxes score is the total number of times one of the top 2 boxes on the questionnaire were checked. Researchers usually calibrate their figures (if the total is 60%, the real figure might be 25% - while sometimes experience calibrates the probable intention higher than the respondents say now – on complex items, customers prefer to have a chance to see the final item and hear about it).

3) Purpose is to help develop the idea.

Considerations in concept testing research

Preparing the concept statement - A concept statement states a difference and how that difference benefits the customer (it sounds like a positioning statement).

1) Format – should make the new item’s difference absolutely clear, claim determinant attributes, offer a chord of familiarity (to things familiar to customers), and be short, credible, and realistic. There are different formats: a narrative format (brief, only minimum of attributes), a drawing/ diagram (usually supplemented by a narrative statement), a model/ prototype (only useful in special situations – simple to prepare food or concepts so complex that customer cannot react without more knowledge), or in virtual reality (captures the advantages of the prototype without most of it disadvantage).

2) Commercialized concept statement – presented in promotional style (a marvelous new way to chase the blahs from your diet has been discovered by General Mill scientists – a low-calorie version of ever-popular peanut butter – as tasty as ever and produced by a natural process). This format draw different reactions and produce more realistic evaluations but they also risk bias of good and poor ads writing. It should be simple, clear, and realistic.

3) Offering of competitive information – customer know much less about products and other options than we’d like. A new concept may offer a benefit that customer does not realize is new. One solution is to provide a full data sheet about each competitive product while most data will be bent slightly in favor of the new product (with full info).

4) Price – whether to put a price in the concept statement. Some object saying reaction to concept is wanted (not price). Yet price is part of a product (an attribute in customers’ eyes) and buyers cannot be expected to tell purchase intentions without knowing price.

Define the respondent groups – we would like to interview all persons who play a role in deciding whether the product will be bought and how it might be improved. Stakeholders – any person/ organization that has a stake in the proposed product. Some try to seek out small number of lead users, influencers, or large users. This saves money and gets more expert advice but often fails to reflect key differences. Some firms try to put interest in innovators and early adopters (concentrate concept testing solely on them), if this group is interested, others are likely to be so.

Select the response situation – There are two issues: the mode of reaching the respondents and if personal, whether to approach individually or in a group. Most testing takes place through personal contact (direct interviewing samples about 100-400 people or smaller), which allows the interviewer to answer questions and to probe areas there the respondent is expressing a new idea or is not clear. Groups (focus-groups) are also excellent when we want respondents to hear and react to the comments of others. The real-time response survey combines the best features of the focus groups and surveys (proven useful in screening new customer product concepts) – computers are used in real time that result can be read directly and moderator can develop original open-ended questions and ask them in real time.

Interviewing sequence – simple interviewing situations state the new product concept and ask about believability, buying intentions, and other info wanted. We first explore the respondent’s current practice (how they are trying to solve their problems, what competing products they and what do they think, how willing would they be to change and what specific benefits do they want?). This helps us understand and interpret comments about the new concept. We are especially interested in what changes they would make in the concept (what it would be used for and why, what would be replaced). We are exploring what people are doing and thinking.

Analyzing research results – most firms rely on a simple top-two-boxes score (may be adding 30% based on industry experience). Sometimes more info is needed as we cannot assume that all customers will have the same needs or look for the same benefits. Through benefit segmentation, a firm may identify unsatisfied market segments and concentrate efforts on developing concepts which suit those needs.

To identify benefit segments, customers are to rate how important each attribute was in determining their preference among brands (importance rating – used to model existing brand preference and predict likely preferences for new concepts). Cluster analysis puts observations together into relatively homogeneous groups (it is also a data reduction method like factor analysis). It groups together individuals into a small number of benefit segments.

Joint space maps – a perceptual map which allows us to assess the preferences of each benefit segment for different product concepts. The most direct way is to get customers to rate their ideal brand on each attribute. We expect the brand that is located closest to a segment’s ideal brand will be preferred by that segment. Preference regression can be used to identify the optimum combination of attributes desired by the market. This relies on a different kind of numerical input (ranking of brands). The relative sizes of the regression coefficients give us an indication of the relative importance of each factor. The ideal vector represents the optimum proportion of attributes desired by this market.

Conjoint analysis – It is useful in concept testing too (not only concept generation). Based on the three attributes of Salsa, conjoint analysis can be used to identify high-potential gaps: combinations of attributes that customers like, and are not on the market yet. The model identifies the levels of combinations from most to least preferred. Each combination could be thought of as a concept and the top-ranking concept have the highest potential and should be consider for further development. This analysis is extremely useful in concept testing because its ability to uncover relationships between attributes and customers’ preferences. Benefit segments can also be identified as the analysis identifies each customer’s value system, the relative importance of the attributes to each customer, and the preferred level of each attribute.