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Testing the Product/Service Concept
What is it? Validating the value proposition
How to do it? Talk to customers
MarketBroad landscape of buyers
SegmentSubgroup with similar needs
CustomerRepresentative of segment willing and able to purchase the product
Medical Market
Private Clinics
Specific Private Clinic
Who is the customer?
Types of Customers
BuyerEnd-usersPartners• Joint development partners• Licensee• Re-seller or distributors
Important to recognize layers of value propositions• Value to the buyer or partner• Value to the end-user or customer
Same or different
Defining Customers and Segments: First Pass*Description Examples
Definers Characteristics that delineate customers into groups with similar needs
Allows measurement of segments
Country or geographic regionSize of organizationInstalled base of other productsProfessional title/occupationAnnual income
Descriptors Non-quantitative characteristics of customer
Role in buying decision processRisk toleranceBenefits soughtMotivations
Context How will the customer use this product?
Location of useApplicationIn conjunction with other productsFrequency of use
*modified from So what, who cares, why you? by Wendy Kennedy
Overview
Clearly define the product or service conceptIdentify the type of information neededIdentify who has the informationSelect the best tool(s) for gathering the informationSummarize/analyze information
Importance of product definitionClearly defined product concepts elicit clear responsesDefining the product concept• State the problem that your product is meant to solve• Offer supporting product attributes (features) to add
credibility to the product’s ability to solve the problem• Link features to benefits
o “Rapid file access will increase throughput 2-fold”o “The lighter weight will reduce fuel costs by 30%”
Note: For some, concept testing may be more exploratory• Using customer input to help shape/refine product
concept
Step 1: Identify questions to be answered
What are the most pressing questions I need to have answered?
Value-network questions• Who are the customers with this problem?• Are they solving the problem today? How?• How significant is the problem? What is the
economic impact?• What is it’s impact on others?
Step 1: Identify questions to be answered (cont)
Product-specific questions(value proposition)• How relevant is the product to the customer’s needs?• What is the perceived value?• Need-to-have vs nice-to-have?• What is the price sensitivity?• How unique is the concept?• Are there any certifications or approvals prior to
purchasing?• What is the purchasing process? Who is involved? • How products evaluated?
Industry/Market Information• Trends in the market• Current/Emerging competitors• Regulatory issues
Step 2: Where to get the information?Primary Sources (people)• Product-specific information• Examples
o One-on-one interviewso Focus groupso Quantitative surveyso Field tests
Secondary sources (reports)• Broad market information • Examples
o Internet searcheso Market research reportso Analyst reportso Polls and surveys
Step 2b: Who to talk to?
Customers• Buyers• End-users• Partners
Quasi-customers• Thought leaders• Early adopters• Industry experts
o American Society of Association Executives Gateway: find industry associations to contact for info.
o ThomasNet: list of industrial trade associations
Defined by market segment(s)
Step 3: Choose the information gathering toolAdvantages Disadvantages
Personal interviews
Allow more 'depth'
Allow modification
More flexibility based on customer response
It can take a long period of time to arrange and conduct.
Some respondents will give biased responses when face-to-face with a researcher.
Online surveys
Cost savings
Quick access and response time
Easy to cross geographic boundaries/international
Possibility for large sample sizes
More amenable to data analysis
Access to large target audience can be difficult or expensive
Low response rateSelf-selection can bias results
Step 4: Analyze Information
Look for consistent, significant trendsPossible outcomes• Confirm and support concept feasibility• Need more information• Modify concept based on valid feedback• Identify a brand new opportunity• No-go
Interview TipsInterviewees• Spend time up front finding the right people• Leverage the network (personal, coaches, inventors)• Associations
The Questions• Be specific, when necessary
o “If you were to use this product today, how much time would you save each week?”
• Be general, when necessaryo “What trends over the next 10 years will most affect your buying
decisions”• Be quantitative
o “On a scale of 1 to 10, with 1 being low and 10 being high, how would you rank the value of this product”
o Ask quantitative questions across all interviews
Interview Tips IIThe Interview
• Prepare questions ahead of time and create worksheet• Keep it short and simple• One person leads the interview
o Useful to have several people attending• Ask good follow up questions to explore and probe
o “Why do you say that?”o “Could you elaborate on that point”
• Be on the lookout for great quoteso “Every doctor I know would use this”o “This is one of the most innovative products I’ve seen in years”
Balance flexibility with consistency• Questions may need to be changed after first several interviews• But you need consistent questions across interviews to spot
trends.
Getting Respondents
Your network• Email• Facebook
CraigslistOnline tools offer distribution for fee• Is it worth $100 to test your idea?
Facebook ad
Example 1
Fitness machine for children• “BowFlex for Kids”• Combines strength training web portal to track
progress and win prizesTarget markets• Parents with competitive children• Middle schools• Gyms and fitness centers
Market/Customer DefinitionParents Schools Fitness Centers
Definers Parents with middle-school aged children playing in competitive sports
Middle schools with after-school sports programs
Gyms and fitness centers
Descriptors Parents who push children to succeed in sports
Parents who live vicariously through children’s athletic success
Highly competitive coaches and teachers
Schools with strong parent support
Private schools?
Gyms with large parent membership
Gyms that integrate children into activities
Context Use the product at home
Input from coaches?
As part of the athletic training program
In the gym alongside parents
At home as part of the membership
Questions to be answered
Do middle school parents and coaches care about strength training?
What would motivate a parent to purchase the product?
How do middle schools fund athletics?Which of these three market segments should be
targeted first?Which sports would be the best fit?Are there any children’s safety regulations around the
product?
Who to ask?
Parents• Friends and family
Coaches• Local soccer league• Middle school coaches• School principles
Gyms• Local gyms and fitness centers• YMCA
Industry experts• Product safety issues
Example 2
Biocompatible gel for time release for drug deliveryApplication: subcutaneous injections of cortisone• Time release provides 2x longer effect
Target market• End user: orthopedic doctor• Development partners
o Cortisone suppliers and manufacturers
Market/Customer DefinitionOrthopedic Doctors Cortisone suppliers
Definers Private practice and hospitals Manufacturers of hydrocortisone
Descriptors Doctors who work in orthopedically active areas (retirement communities)
Longer activity = fewer shots
Incentive to broaden their product line
Context As part of a treatment regimen As part of a product line of treatments
Questions to be answered
What is the average number of shots per patient? Per doctor?
Is increasing the effect two-fold significant?Are orthopedic doctors the only ones who give
cortisone shots (primary care physicians)?If the product results in fewer shots, can the doctor
charge more? If not, is there a disincentive?What symptoms trigger cortisone shot?What partners have the competencies needed?• Regulatory expertise• Reimbursement experience
Who to ask?
Orthopedic doctors• UNC Hospitals
Other doctors• Sports medicine• Geriatrics
Local sales rep for cortisoneElderly