Housewares manufacturers waste tens, if not hundreds, of thousands of dollars every year introducing new products that don’t sell. Money that they would not have wasted if they had done product concept testing early in the product development process.
How Product Concept Testing Saves Money
Product concept tests cost a whole lot less than what it costs to develop a new product. By conducting concept testing early in the development process, housewares companies can figure out which product concepts have a high probability of success and which have a low probability of success — before they have invested tens of thousands of dollars in development and tooling.
A kitchenware manufacturer that I worked with a couple of years ago saved $17,000 in tooling costs by dropping the four kitchen gadgets that had purchase likelihood scores of less than 25%. (A purchase likelihood score of 25% means that 25% of the survey respondents said that they would be “very” or “completely” likely to purchase the product at the given price.)
How Product Concept Testing Works
Concept testing determines how interested consumers are in a new product idea. I use a battery of questions that measures interest along four key dimensions: likeability, desirability/need, uniqueness/superiority, and purchase likelihood. In other words, I ask questions to find out whether survey participants like the product concept, whether they think the product is better than what is already on the market, how well the product meets their needs or solves their problems, and how likely they would be to purchase the product. Then I ask questions to find out what they do and don’t like about the product and why they would or would not purchase the product.
I conduct product concept tests with my proprietary panel of HomeTrend Influentials (HIP) for two reasons. First, because they are the bellwether for the mainstream population. If the HIPsters embrace a new product, it is highly likely that the mainstream population will also embrace it. Likewise, if they reject a new product, chances are the mainstream population will, too. Second, because the HIPsters put a lot of thought into their answers so I know that I will be able to glean a lot of insight from their responses.
Product concept testing protects against bad decision making. It provides another viewpoint — that of the people who are actually going to buy and use the product — to help counter the blinders-on optimism that the people developing the product often get as they fall in love with their product. It also protects against HiPPO-driven decision making. HiPPO stands for “the highest paid person’s opinion”. The term refers to those people who have the final word on any design issue on the basis that they’re the highest paid person in the room.
Product concept testing does not replace management intuition and experience. Certainly, intuition grounded by years of in-market experience should always be listened to carefully, but it pays to augment even the best intuition with consumer feedback.
Product Concept Testing Works
I readily admit that product concept testing has its flaws. It does not measure actual behavior. It does not simulate the real world of a retail store. Survey participants don’t get to actually see, touch, feel, and use the product.
But despite the flaws inherent in the methodology, product concept testing works. Research proves that it is predictive of new product success.
In the late 1980’s, Sunbeam Appliance Co., then a division of Allegheny International, determined that its concept testing procedure was predictive of the success of several product ideas that were developed, marketed and broadly distributed. The test also successfully predicted the failure of several products that the company did not develop but that were introduced by competitors.
A 2011 study I did found a correlation between purchase likelihood scores and how well the product met company expectations. All of the products with top two box purchase likelihood scores of 30% or more met or exceeded company expectations. All the products with purchase likelihood scores of 24% or below failed to meet expectations. Products with purchase likelihood scores in the range of 20% to 29% fell into the gray area: three failed to meet expectations and two exceeded expectations.
Should you add product concept testing to your company’s new product development process?
Ask yourself these two questions to find out.
- How many of the new products that your company introduced in the past couple of years failed to meet expectations?
- How much does it cost on average to develop a new product, including tooling?
- Now do the math. Multiply your answer to question 1 by your answer to question 2.
If the answer shocks you, you might want to consider adding product concept testing to your company’s new product development process.