Npd idea generation & idea screening & concept testing tools

Idea Generation Idea Screening Concept Testing Tools

Ehsan RiahiBaran EmamNeda JafarianAzadeh ShomaliMahdi yazhari Kermani

New Product Development Dr. Sadeghi

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Importance of NPD

> The existence of a business linked with the course of its products. > Products’ life cycle. eventually dies out.> So long-term operation of a business depends on the on going

development of new products.

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Importance of NPD

forced business to adopt (NPD) as a necessary

and unavoidable business practice.

rapid development

of new technologies

gradual increase of

the competition

the shift change in customer needs and attributes

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Importance of NPD

> David S. Hopkins and Earl L. Baily> research has shown that 40% of new consumer products, 20% of new

industrial products and 18% of new services related products have failed completely as products.

> To avoid development of a new product that will not be a success in a market and to minimize the costs of such a development a NPD Roadmap can be used.

> through a series of logical steps, starting from the process of idea generation and ending at the launch of the product into a market.

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Comparisons of the Process of NPD

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Kotler Commonly presented linear NPD model

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Comparison of the idea mortality curve obtained from the survey of previous studies

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The First 3 Steps

Idea Generatio

nIdea

ScreeningConcept Testing Tools

DevelopMarketing Strategy

Business Analysis

Product Developm

entTest

MarketingCommercialization

Idea

Generation

Idea

Screening

Concept

Testing Tools

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The Importance of First 3 Steps

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Cash flows and new product development

The First 3 stages of NPD represent the formation and development of an idea prior to its taking any physical form. In most industries it is from this point onwards that costs will rise Significantly. It is clearly far easier to change a concept than a physical product.

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Idea Generation

Idea

Generation

Idea

Screening

Concept

Testing Tools

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Idea Generation

> Idea Generation is the Systematic Search for New Product Ideas Obtained Internally or Externally

> Idea generation is a process in which creative thinking is used to produce large amount of ideas for new products.

> It is very important that all ideas no matter how ludicrous or extreme may sound, to be gathered.

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Characteristics of a good Idea Generation Process

1. should be on - going 2. have a specific purpose3. involve the whole of the company4. use a variety of methods5. have one person in charge6. not evaluate the gathered ideas7. one should not criticize the ideas of others8. should be freewheeling and generate as many ideas as possible

the problem of this level is to generate as many ideas as possible and manage them in such a way that it will be

possible and easy for screening them later on.

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Sources for Idea Generation

CustomerScientific researchCompetitorsMiscellaneous sources dealers and representativesTop management

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> 1. Customer-defined needs and wantsThese are the result of several actions:

• Direct customer surveys. to solicit feedback and to obtain information in a directed manner.

• Focused group discussions. multiple-person input and prompted discussion to generate ideas.

• Suggestion systems and communication from customers. unsolicited feedback from users and relatively anonymous input from stakeholders of the company.

• Customer complaints. an excellent feedback system for those who truly listen to the customer complaint for what it actually is and take the additional step to correct it through a product implementation.

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> 2. Scientific researchThis method generally occurs as a result of a scientific breakthrough of totally new technology or, more often, from applied research. Scientific research is usually responsible for breakthrough products or processes.

3. CompetitorsWatch what your competitors are doing in the way of new product development and introduction.They are a yardstick measurement of marketplace activity .

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> 4. Company dealers and representativesThese sales channels can feed back customer ideas and also generate ideas of their own.

However, this medium must be evaluated in light of any individual agendas that may exist.

The sales function is market-share driven. This is not necessarily the best source of new product ideas because feedback may be slanted to make their sales job easier, rather than toward what may be in the best interest of the firm in total.

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> 5. Top managementThis can be a valuable source or a destructive influence in product development. Top management has the largest bat with which to drive a new product development idea through the organization.A program can be initiated and implemented in short order and with amazing results. However, less-than-constructive results can occur in cases in which supporting data, primary customer feedback, and due diligence are not practiced in favor of exercising executive privilege.

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> 6. Miscellaneous sources Some of the miscellaneous sources are:Inventorspatent counselsuniversity laboratoriesgovernment agencies industrial consultantsmarketing research firmsindustry journals and periodicals.

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Tools For Idea Generation

Ideas for new products can easily come from any sources. When all data is collected a series of tools can help the company quantify these needs and translate them into new product ideas.

I. BrainstormingII. Competitive IntelligenceIII. Conjoint AnalysisIV. Delphi TechniqueV. Morphological ChartsVI. Six Thinking HatsVII. TRIZ - Idea generation using a problem-solving tool

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Key Factors for Successful Idea Generation

> Time Pressure

> Try smart incentives> trying harder and providing more “meat” around each idea> following instructions more accurately> actual number of ideas

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Key Factors for Successful Idea Generation> Try smart incentives

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Idea Screening

Idea

Generation

Idea

Screening

Concept

Testing Tools

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Idea Screening

> Once all viable ideas are gathered and managed, they must be further developed, examined, prioritized and evaluated so that a single product idea is selected for further development into a product concept. This whole process is called screening and is the main problem to solve in this Level using different tools and techniques.

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Idea Screening

> Actually, The second step in the new-product development process is idea screening which involves screening new product ideas in order to spot good ideas and drop poor ones as soon as possible. Because product-development costs rise dramatically in later stages, companies must proceed only with product ideas that will turn into profitable products. One way to keep information organized is to have executives write up new-product ideas on a standard form that can be reviewed by a new-product committee. A well-designed system for rating and evaluating new-product ideas prevents problems at latter stages.

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Idea Screening

> Two potential risks in screening> Dropping ideas too early means missed opportunities! > Developing the "wrong" ideas means wasted resources in terms of

time, financial investments and may risk your activities with your current portfolio

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Idea Screening

> An initial screening is the first decision to commit resources to the idea and to decide whether a NPD project starts or not. This gate is a "gentle" screen of certain "must meet" and "need to/should meet" criteria.

> Must meet criteria: corporate policy, strategic fit, magnitude of market opportunity, product advantage, project feasibility, availability of resources, regulations, impact on corporate image.

> Need to/should meet criteria: synergy (with product portfolio, production lines and capacity etc.), market attractiveness, competitive advantage, organizational and operational issues.

> .

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> Screening Ideas Against Company's Marketing Strategies

> Screening Ideas Against Company Sales and Profitability Minimums

> Screening Ideas Against Key Customers and Buyers

Idea Screening

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> Alignment with your Product Innovation Strategy > Degree of compatibility with the company’s values & principles (ex:

moral, health, environmental) > Market attractiveness / opportunity > Project feasibility > Degree of product advantage over other options > Ability to leverage existing company resources

Idea Screening

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> The challenge at this gate is to identify and decide on the "right" ideas for further exploration. Your task is to strike a balance between what is desirable (especially from a consumer point of view) and what is feasible both in technical and market terms. A good strategy is also to keep a balanced portfolio of NPD projects in the pipeline with varying degrees of risk (low, medium and high) and rewards (short-, medium- and long-term).

> As precise information about market responses and technical requirements is not present at this stage you also need to rely on your intuition or gut feeling.

Idea Screening

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Tools and Solutions

> Assessing New Product Feasibility

Is there a need?

Is it real?Will the customers buy? Will it satisfy the market?

Is the product real?Can it be made?

Differentiation?

Can we win?Low cost position?

Industry structure?Company competitive?

Organizational effectiveness?

Is the return adequate?

Is it worth it?Is the risk acceptable?

Supports company's objectives?Satisfy other needs?

Other factors?

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Tools and Solutions> Qualitative Research

> Dot Sticking (voting)

> Delphi Method

> Discussion Boards

> PMI Analysis (weighting)

> SWOT Analysis

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Qualitative Research

> an original company research tool on a subject such as new product ideas or concepts, which is concerned with getting a "feel" for the research topic without doing a numerical and statistical measurement. One can think of Qualitative Research as an in - depth - interview or conversation with a target of potential users of the new product.

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Dot Sticking (voting)

> Step 1. Each concept or idea must be presented in a similar way having the same amount detail

> Step 2. The participants must be then selected> Step 3. Dots are allocated to each of the participants.

Depending on the number of concepts or ideas these can be 3 to 5. Different colored dots can be used to indicate different things such as performance, functionality, design etc. Participants can use his or her dots to indicate choice, by sticking them next to the concept or idea drawing.

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> Step 4. After all participants have used their corresponding dots, dots for each concept or idea are summed and the best concept is declared. Also a second round of dot sticking can take place by selecting the best 2 or 3 strongest concepts or ideas.

> Step 5. It is sometimes helpful and necessary to understand the reason of the voting or dot sticking. In this case the participants are required to indicate or note likes and dislikes about the concepts by using post-it notes. This enables the design team to keep strong features of rejected concepts in mind.

> .

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> a concept or idea selection tool that engages a wide number of people in the process.

> It is a simple tool and easy to administer but does not provide rich feedback on the reasons or motivations of the people involved in the process.

> It can be a powerful tool if the target customers are involved in the process. The tool is extremely useful when there are a lot of potential or competing ideas on the table.

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Delphi Method

Structuring of information flow

Regular feedback

Anonymity of the participants

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Delphi Method

Advantageous

> free expression of opinions

> encourages open critique

> and facilitates admission of errors when revising earlier judgments.

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Discussion Boards

> A discussion board is an asynchronous communication tool that allows one individual to post a comment or question online. Other individuals who are members of the same discussion board may read that comment/question, and respond with their own remarks over time.

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PMI Analysis (weighting)

> an improvement of the weighting the pros and cons technique. When one has selected a course of action, PMI is a good method of evaluating this course. This method can be used in any case when decision-making plays a great role in the success of a project. In the case of NPD it can be used in any Level but can be extremely helpful during Level 2 where screening and evaluating new product ideas take place and a decision for the best one must be made.

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PMI Analysis (weighting)

Plus Minus Implications

More going on (+5) Have to sell house (-6) Easier to find new job? (+1)

Easier to see friends (+5) More pollution (-3) Meet more people?

(+2)Easier to get places (+3) Less space (-3) More difficult to get

own work done? (-4) No countryside (-2)

More difficult to get to work? (-4)

+13 -18 -1

scores the table as 13 (Plus) - 18 (Minus) - 1 (Implications) = - 6

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SWOT Analysis

> a very effective way of identifying one's Strengths and Weaknesses, and of examining the Opportunities and Threats one can face. Carrying out an analysis using the SWOT framework can help focusing activities into areas where the company is strong, and where the greatest opportunities lie. By Performing a SWOT analysis, one can use the analysis results to screen new product ideas against the characteristics of one's company and ultimately its strategic goals.

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SWOT Analysis

> Strengths:> What are your advantages? > What do you do well? > What do other people see as your strengths?> Weaknesses:> What could you improve? > What do you do badly? > What should you avoid?.

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SWOT Analysis

> Opportunities:> Where are the good opportunities facing you? > What are the interesting trends you are aware of? > Useful opportunities can come from such things as: > Changes in technology and markets on both a broad and narrow scale > Changes in government policy related to your field > Changes in social patterns, population profiles, lifestyle changes, etc. > Local Events

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SWOT Analysis

> Threats:> What obstacles do you face? > What is your competition doing? > Are the required specifications for your job, products or services

changing? > Is changing technology threatening your position? > Do you have bad debt or cash-flow problems?

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Product portfolio analysis

> In this process, new projects are evaluated, selected, and prioritized. Existing projects may be accelerated, killed, or de-prioritized and resources are allocated (or reallocated) to the active projects

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Goals of Portfolio Management

1. Value Maximization2. Balance3. Business Strategy Alignment

The three main approaches are: top-down (strategic buckets); bottom-up (effective gate keeping and decision criteria) and top-down and bottom-up (strategic check).

4. Pipeline Balance5. Sufficiency

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FMEA (Failure Modes and Effects Analysis),

> a structured approach to the analysis of route causes of product failure

> the estimation of the severity of impact to the product> the effectiveness of strategies for prevention.

The output of the analysis: > the generation of action plans to prevent, detect or reduce the

impact of potential modes of product failure.

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Concept Testing Tools

Idea

Generation

Idea

Screening

Concept

Testing Tools

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Concept testing definition

> Process of using quantitative and qualitative methods to evaluate consumer response to a product idea prior to the introduction of a product to the market

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Product development process

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Problems Solved with Concept Tests

• Modifications and upgrades can reformulate and add new life to existing products and services. Again, identifying the optimal bundle of features is a priority. Differentiating those features that are "need to haves" vs. "nice to haves” is critical in creating products or services that are truly “New and Improved” “New Release” and “Upgrade” worthy

Product Modification/Upgrade

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• Many products and services offer upgrade or migration paths. For the customer, it is a reflection of a need for the next level of sophistication. Understanding the key features and benefits is critical in mapping consumer needs to the likelihood of upgrading an existing product or adopting a new technology.

Migration path

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• Identify which benefits are most important to customers and which features are most likely to lead to the fulfillment of that promise. Features can be categorized into those which are "need to haves" vs. "nice to haves." Customer need must be identified and prioritized for product development and advertising.

New Product

Concepts

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• The most effective concept tests assess the use experience of a specific product or service and determine how that experience can be improved

Product Usability-

Serviceability

• No one underestimates the importance of price expectations in new product adoptions.

Pricing and Incentives

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What is a Concept Test?

> For Product Marketing, a product concept test is conducted when the product is in the conceptual stage, where only the core concept is defined, through a story board, sketches, graphics, or even a product mock-up. The concept should be developed to the point that it conveys the product attributes, the desired positioning and the intended brand personality.

> The concept test is pre-design, and differs from a pre-test or test market, which are conducted later in the development cycle - based on a finalized product design. Pre-tests and test-markets are a final check point at avoiding a major market error.

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Types of “Concept” Tests

(I) Concept Screenings

(II) Concept Test-Positioning - Demand Analysis

(III) Pre-Market Concept Tests

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Type I: Concept Screening> Identifies concept ideas that are sufficiently promising to merit further

consideration and development> Believability, Relevance

> Perceived Uniqueness, Value

> Trialability: Potential for trial

> Relative Attribute Performance Advantages

> Integration of multiple measures, leading to a more sensitive forecast.

> Provides trial potential based on multiple measures that go beyond purchase intent.

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Type II: Concept Test-Positioning - Demand Analysis

Selected measures from the Type I Concept Test, plus measures that…> Presents consumers with test concepts defined to include the

concept and competing brands in product consideration sets.

> Identify potential opportunity size for a chosen concept, including preliminary sales estimates.

> Strengths/Weaknesses analysis based on attributes/benefits

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Type III: Pre-Market tests> Measures attractiveness of a new product or service before its launching into the market by

identifying its strengths and weaknesses.

> Allows to evaluate the level of agreement between the concept and the specific brand attributes.

> Detects communication problems that may interfere with appropriate comprehension by the target segment.

> Provides purchase intention indicators, with scenarios varying from most optimistic to most conservative.

> Minimizes the risk of failure in the market by allowing product and communications adjustments before launch.

> Possible with both qualitative and quantitative techniques.

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Considerations in the Concept Test Core Idea vs. Positioning/Commercial Concept Statement New Brand vs. Old Brand vs. No Brand Concept statement: narrative, drawing, model? Respondent group: Lead users? Large users? Response situation: Where? How? Purchase Measure Decisions:

Buyer Intent Frequency Price

Product Diagnostics Attribute Diagnostics

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How can concepts be tested?

> Focus Groups> One-on-One Personal Interviews> Mall Intercept> Phone Interviews> Postal Surveys> Internet Surveys> Hybrids (e.g., phone-mail-phone)> Prototyping & Rapid prototyping> Alpha, Beta & Gama Tests

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Ask the right people...

time

SalesThe Chasm

Early Market Mainstream Market

TechnologyEnthusiasts

Visionaries Pragmatists Conservatives

See (1) Rogers (1995) Diffusion of Innovations (2) Moore (1991) Crossing the Chasm (3) www.chasmgroup.com

Lead U

sers

and In

novato

rs

vs. M

ainstr

eam M

arket

http://www.chasmgroup.com/

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Ask the right questions...

> How important is the product “experience”? Does the customer have to “touch & feel” the product to understand the

benefits offered?

“Simulate” the Experience

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Concept Testing Process

> Define the purpose of the test> Choose a survey population> Choose a survey format> Communicate the concept> Measure customer response> Interpret the results> Reflect on the results and the process

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Concept Testing Example:Electric Scooter

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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

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Communicating the Concept> Verbal description> Sketch> Photograph or rendering> Storyboard> Video> Simulation> Interactive multimedia> Physical appearance model> Working prototype

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Sketch

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Rendering

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Storyboard

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3D Solid CAD Model

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Appearance Model

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Working Prototype

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Beta Prototype

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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.>

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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 definitely

not purchase the scooter.

I might or might not

purchase the scooter.

I would definitely purchase the scooter.

I would probably

not purchase

the scooter.

I would probably purchase the scooter.

“top box”

“second box”

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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.

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Interpreting the Results:Forecasting Sales

Q = N x A x P> Q = sales (annual)> N = number of (annual) purchases> A = awareness x availability (fractions)> P = probability of purchase (surveyed)

= Cdef x Fdef + Cprob x Fprob

“second box”

“top box”

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Production Product

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Summary of Concept Testing

> Advantages relatively easy to get customer input can be used as an early screen for new product ideas

> Limitations not that helpful for the design and development of specific

product forms not as reliable for discontinuous

innovations

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Documents

Npd idea generation & idea screening & concept testing tools