Concept Testing

Teaching materials to accompany:

Product Design and Development
Chapter 9
Karl T. Ulrich and Steven D. Eppinger
5th Edition, Irwin McGraw-Hill, 2012.
 Product Design and Development
Karl T. Ulrich and Steven D. Eppinger
5th edition, Irwin McGraw-Hill, 2012.
Chapter Table of Contents:
1.Introduction
2.Development Processes and Organizations
3.Opportunity Identification
4.Product Planning
5.Identifying Customer Needs
6.Product Specifications
7.Concept Generation
8.Concept Selection
9.Concept Testing
10.Product Architecture
11.Industrial Design
12.Design for Environment
13.Design for Manufacturing
14.Prototyping
15.Robust Design
16.Patents and Intellectual Property
17.Product Development Economics
18.Managing Projects
 Product Development Process

Concept System-Level Detail Testing and Production

Planning Development Design Design Refinement Ramp-Up

Qualitative Quantitative
Concept Concept
Testing Testing
 Concept Development Process
Mission Development
Statement Identify Establish Generate Select Test Set Plan Plan
Customer Target Product Product Product Final Downstream
Needs Specifications Concepts Concept(s) Concept(s) Specifications Development

Perform Economic Analysis

Benchmark Competitive Products

Build and Test Models and Prototypes

 Outline
• Essence of concept testing
• Process for product concepts testing

01/25/24 5
 Nature of concept testing
• Further narrow the set of concepts under
consideration,
– based data gathered from potential customers in
the target markets, rather than the judgments
made by the development team
• Specific Objectives
– Select one from multiple concepts,
– Gather information on how to improve a concept,
and
– Estimate the sales potential of the product
01/25/24 6
 Input and output
• Input to the potential customer
– Prototype
• Output from the potential customer
– Likelihood for the potential customer to buy
the product
– Estimate of how many units of the product
the company is likely to sell

01/25/24 7
 Purposes for Concept Testing
• Go/no-go decisions
• What market to be in?
• Selecting among alternative concepts
• Confirming concept selection decision
• Benchmarking
• Soliciting improvement ideas
• Forecasting demand
• Ready to launch?
01/25/24 8
 Concept testing process
1. Define the purpose of the concept testing
2. Choose a survey population and sample
size
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
01/25/24 9
 Define the purpose (step 1)
• Which of the alternative concepts
should be pursued
• How can the concept be improved to
better meet customer needs
• Approximately how much units are likely
to be sold
• Should the development be continued

01/25/24 10
 Choose a survey population and
sample size (step 2)
1. Sample size varies from a few to thousands
2. Factors affecting the sample size
1. The stage of product development
2. Cost to conduct survey
3. Nature and intent of the survey
4. Budget (amount) of the development project
5. How possible to collect the intended information.
3. Possible to structure multiple surveys with
different objectives at different stages.

01/25/24 11
 Choose a survey format (step 3)

• Formats
– Face to face interaction
– Telephone
– Postal mail
– Electronic mail
– Internet (a test site on the internet)
• Each has its pros and cons
• Each has its bias.
01/25/24 12
 Communicate the concept (step 4)
• Communication means
– Verbal description
– Sketch
– Photos and renderings
– Storyboard (a series of images shown a temporal sequence
of actions involving the products)
– Video (allowing more dynamic than the story board)
– Simulation
– Interactive multimedia (video and simulation)
– Physical appearance model (looks-like)
– Working prototypes (works-like)
• Survey formats vs. means, page 154

01/25/24 13
 Measure customer response (step 5)
• Measurement
– Mere their preferences among alternative concepts
– Understand why and how they respond to the product concepts
– Attempt to measure purchase intent (the likelihood of buying)
– But avoid aggressively promoting the product concepts
– The solution space?
– Alternative function diagrams?
– Alternative ways to decompose the problem?
– Additional external resources?
– All ideas generated and integrated?
• Survey form, page 156.
01/25/24 14
 Interpret the results (Step 6)
• Q =N xAxP
– Where P = Cd x Fd + Cp x Fp
• Q = the quantity of the expected sales
• N = the number of potential customers expected to buy
• A = the fraction of these potential customers aware of the product and
the product is available
• P = the the probability that the product is purchased if the customer is
aware of it and it is available.
• Fd = the fraction of survey respondents indicating that they would
definitely purchase
• Fp = the fraction of survey respondents indicating that they would
probably purchase
• Cd = the percentage that those in Fd will actually buy (.1-.5)
• Cp = the percentage that those in Fp will actually buy (0-.25)
• Be aware that sales also depends on
– Words of month
– Fidelity of the concept description
– Pricing
– Level of promotion
01/25/24 15
 Market sizes
• Population and demographic data
• Sales volume of various products
– Airplanes
– Machine tools
– Cars
– Hand tools
– Printers
– Ball pens
– Razor blades

01/25/24 16
Concept Testing Example:
emPower Electric Scooter
 Scooter Example
• Purpose of concept test:
– What market to be in?
• Sample population:
– College students who live 1-3 miles from
campus
– Factory transportation
• Survey format:
– Face-to-face interviews
 Communicating the Concept
• Verbal description
• Sketch
• Photograph or rendering
• Storyboard
• Video
• Simulation
• Interactive multimedia
• Physical appearance model
• Working prototype
 Verbal Description
• The product is a lightweight electric scooter that can
be easily folded and taken with you inside a building
or on public transportation.
• The scooter weighs about 25 pounds. It travels at
speeds of up to 15 miles per hour and can go about
12 miles on a single charge.
• The scooter can be recharged in about two hours
from a standard electric outlet.
• The scooter is easy to ride and has simple controls
— just an accelerator button and a brake.
Sketch
Rendering
Storyboard
3D Solid CAD Model
Appearance Model
Working Prototype
Beta Prototype
 Video
Animation
Interactive Multimedia
Live Demonstration
 Survey Format

• PART 1, Qualification
– How far do you live from campus?
• <If not 1-3 miles, thank the customer and end interview.>
– How do you currently get to campus from home?
– How do you currently get around campus?
• PART 2, Product Description
– <Present the concept description.>
 Survey Format

• PART 3, Purchase Intent

– If the product were priced according to your
expectations, how likely would you be to purchase
the scooter within the next year?

I would I would I might I would I would

definitely not probably not or might not probably definitely
purchase purchase purchase purchase purchase
the scooter. the scooter. the scooter. the scooter. the scooter.

“second box” “top box”

 Survey Format

• PART 4, Comments
– What would you expect the price of the scooter to
be?
– What concerns do you have about the product
concept?
– Can you make any suggestions for improving the
product concept?
• Thank you.
 Interpreting the Results:
Forecasting Sales
Q=NxAxP
• Q = sales (annual)
• N = number of (annual) purchases
• A = awareness x availability (fractions)
• P = probability of purchase (surveyed)
= Cdef x Fdef + Cprob x Fprob
“top box” “second box”
 Forecasting Example:
College Student Market
• N = off-campus grad students (200,000)
• A = 0.2 (realistic) to 0.8 (every bike shop)
• P = 0.4 x top-box + 0.2 x second-box
• Q=
• Price point $795
 Forecasting Example:
Factory Transport Market
• N = current bicycle and scooter sales to
factories (150,000)
• A = 0.25 (single distributor’s share)
• P = 0.4 x top-box + 0.2 x second-box
• Q = 150,000 x 0.25 x [0.4 x 0.3 + 0.2 x 0.2]
= 6000 units/yr
• Price point $1500
emPower’s Market Decision: Factory Transportation
Production Product
 Sources of Forecast Error
• Word-of-Mouth Effects
• Quality of Concept Description
• Pricing
• Level of Promotion
• Competition
 Discussion
• Why do respondents typically overestimate
purchase intent?
– Might they ever underestimate intent?
• How to use price in surveys?
• How much does the way the concept is
communicated matter?
– When shouldn’t a prototype model be shown?
• How do you increase sales, Q?
• How does early (qualitative) concept testing
differ from later (quantitative) testing?