Best Practices for Product/Service Development Research

Innovative Techniques and Examples

Today’s Webinar

• Who is Chadwick Martin Bailey?

• Today’s Speakers

• Innovations in Product/Service Development research

• Q & A (please enter questions into the webex Q & A feature and we’ll answer them at the end)

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Chadwick Martin Bailey:Company Facts• Founded in 1984

• 60 Employees

• Headquartered in Boston

• Global, Full-service Provider

• Fully Dedicated Retail, Healthcare, eCommerce, Technology, Financial Services, and Travel and Hospitality Practices

• Sweet Spot: when you want a supplier who will provide original ideas, not just a response to an RFP

Our Clients: We Partner with Leaders in a Range of Industries

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Chadwick Martin Bailey: Our Specialties

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Product and Service Development

Research to support the development, positioning, and launch of new products and services

Segmentation Finding the high potential growth opportunities and providing direction on ways to realize the growth

Customer / Brand Experience

Driving customer acquisition and market share by linking customer experience to the brand message

Customer Experience and Loyalty

Research to enhance (retain and build) relationships with key customers

Rich SchreuerChief MethodologistChadwick Martin Bailey

Amy ModiniAccount Director, HealthcareChadwick Martin Bailey

Today’s Speakers:Rich Schreuer and Amy Modini

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Research Along the Product/Service Development Pipeline

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Key Steps in the Product Development Process

1. Idea Generation

4. Strategy 5. BusinessAnalysis

6. ProductConfiguration

7. Market Testing

8. Marketing

2. ConceptDevelopment

3. ConceptTesting

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Research Innovation at Key Steps in the Process

• Research plays a role throughout the product development process, providing market input that drives innovation

• Multi-method, multi-source

• Problem Analysis• Prioritization• Social Media Listening

• Maximum Difference Scaling• Dual-Choice Maximum

Difference Scaling

• Dual Choice Discrete Choice

• Adaptive Choice- Based Conjoint

• Interactive Decision Tool

• Brand-Based Product Messaging

Stage 1:Idea

Generation

Stage 3:Concept Testing

Stage 6: Product

Configuration

Stage 8:Marketing

Innovative Techniques

1. Idea Generation

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Traditional Idea Generation Methods Are Lacking

• Many companies:• Focus on incremental improvements, not

groundbreaking ideas• Rely heavily on engineering for new product/service

and product/service refinement ideas• Fail to adapt to changing market conditions• Focus more on the what than the why

• Taking a multi-method, multi-source approach helps:• Understand the issues people are facing surrounding

your offerings, not just the offerings themselves • Hear customers and prospects as they talk amongst

each other, and directly to you• Focus on solving problems and meeting goals

There is No Shortage of Sources and Methods To Utilize

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M U L T I P L E A N D D I V E R S E M E T H O D S

Face-to-Face (Interviews, groups, etc.)

Online(BBs, blogs, groups, etc.)

Telephone Interviews

Observational

MULTIPLE AND DIVERSE SOURCES

Households/End Customers

Employees

Agents/Intermediaries

Experts/Thought Leaders

International (subsidiaries, etc.)

Suppliers

In Qualitative Alone, the Past 4 Years has Shown Huge Growth in Tools and Techniques

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Well Known Qualitative Options in 2010

Brain scanning Online bulletin boards

Customer generated videos Online chats

Ethnography Online communities

Facebook comments and polls Online focus groups

Focus groups Open ended questions in quant. research

Journaling or audio journaling Qual-quant research sessions

Mobile diaries Sharing photos via cell phones

Monitoring blogs and forums Text message based feedback

Mystery shopping Using Twitter as a customer feedback tool

Observational research Video chats

One on one face to face interviews Virtual shopping

One on one telephone interviews Voice of the customer programs

Well Known Qualitative Options in 2006

Ethnography

Focus groups

Journaling or audio journaling

Mystery shopping

Observational research

One on one face to face interviews

One on one telephone interviews

Open ended questions in quant. research

Multi-Method, Multi- Source: Combining Methods From Traditional and Non-Traditional Sources Gives You a Clearer Picture

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Ideas to Consider

Social Media Listening

Competitive Analysis

Customer and Employee Feedback

Qualitative Research

Problem Analysis

For Example, Combining “Listening” with Primary Research Helps Gather and Evaluate Ideas

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Traditional Focus Groups

Ideas for improvement

Social Media Listening

(using Crimson Hexagon)

Ideation Sessions

Social Media “listening” Mines Traditional, Online, and Social Sources to Extract Meaning and Deliver Insights

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2. Choose the categories the posts represent

3. Train the algorithm with examples for each category

Monitor summarizes online conversation4.

Select the content sources and search terms1.

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Problem Analysis: Focus on Solving Problems• Customer-centric: makes the voice of the customer part of the development process • Rating Index: focuses developers on consumer needs that are most urgent/common• Competitive Differentiation: Identifies opportunities for compelling and distinctive

positioning against alternatives• One Rock, Many Birds: Can be leveraged into many other areas, such as sales,

marketing, communications, and market positioning

Never ConstantlyNot at all bothersome

Extremely bothersome

Did not know where to check in 0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10

Had to go to counter because reservation was not available 0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10

Waited to get add-on item that I had pre-reserved 0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10

Choices too similar 0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10

Choices did not meet my specific travel needs 0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10

Had to wait for a service representative because person was unavailable

0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10

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Problem Analysis: Focus on Solving Problems

40 50 60 70 8040

50

60

70

80Critical Impact

Lesser ImpactLimited menu selection at hotel restaurant

Limited concierge hours Not able to check-in at promised time

Slow serviceLimited booking access

No internet access in rooms

Over-priced menu

Dimly lit rooms

Rooms not clean

Rude staff

Long lines at check-in

Hotel Guests Likelihood to Stay Again

Intensity (%8-10)

Freq

uenc

y (

%8-

10)

GoalsProduct Features

Definition Importance Scarcity Priority

Loan Access Eligibility to borrow money from the bank (e.g., mortgage, student loan) 13.1 54% 11.0

Customer Service Dedicated access to card member service, including call centers 12.4 44% 10.3

Transparency Full disclosures of rates, fees and charges 11.6 59% 9.9

Discounts Eligibility to special event offers (e.g., birthday, wedding, etc.) 10.3 54% 7.8

Protection Insurance to cover payments if you are unable to make them 9.2 59% 7.4

Responsiveness On-time arrival of bills and answers to charge queries 9.0 59% 6.9

Benefits Variety in rewards programs to match card-member's choices or life styles 8.7 63% 6.2

Connectedness Ability to link and transact with other accounts with the bank 8.1 45% 3.6

Online Ability to make payments on internet with card 10.8 22% 3.2

Limited Editions Exclusive cards designed to promote social positions 8.3 64% 2.5

Prioritize Individual Product Features From a Customer Centric Viewpoint

2. Concept Testing

Concepts Need to Be Evaluated Based on Customer and Business Goals• Customers:

• What are customers and prospects trying to achieve?• Where are there gaps? • Where is incremental improvement appropriate vs. wholesale changes?

• Business:• What would make this offering a “success”?• What limitations do we have in developing, servicing, and selling?• How does this fit with our brand?

Market Share Growth Revenue Growth Profit Growth

Concept 1

Concept 2

Concept 3

Concept 4

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Maximum Difference Scaling is a Great Way to Measure Appeal• This approach is especially useful because it:

• Derives the preferences of respondents, rather than asks it• Eliminates halo effects• Can handle a large number of features

Think about the different rewards available for using credit cards. For each group of rewards listed below, please indicate which one of the four rewards is most appealing to you and which one is the least appealing to you.

Least Appealing Of these 4 statements, which is the MOST and LEAST appealing? Most

Appealing

Discounts on gas

Money towards your mortgage

Donation to a charity/school

Interest rebates

A New Approach: Anchored (Dual-Choice) MaxDiff

• In Anchored MaxDiff, we ask respondents to make best/worst choices… • We then ask a follow-up question for each task that is used to set a true 0

threshold level through the use of dual-response questions.

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96 94 92 91 90 88 87 86 86 84 83 82 80 79 78 76 75

A B C D E F G H I J K L M N O P Q

Stated Preference Rarely Discriminates

Appeal of Features(%8-10)

A Discounts on gas

B Deposit to a savings or investment account

C Money towards utilities bill

D Gift cards

E Money towards your mortgage

F APR discounts

G Interest rebates

H Discounts at selected retailers

I Travel rewards for use with a variety of carriers

J Bonus miles/points after spending a certain amount

K Travel upgrades or discounts (hotels, rental cars)

L Frequent flyer miles for a specific airline

M Online mall

N Money towards school tuition

O Tickets to events and shows

P Donation to a charity/school

Q Donation to reduce carbon footprint

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A B C D E F G H I J K L M N O P Q

14.1

11.010.3

8.7 8.4

6.9 6.4 6.45.3

4.63.8 3.5 3.2

2.51.9 1.6 1.4

But Employing a Trade-off Technique (Such as Max-Diff) Ensures Differentiation

Desired Features

IChart displays the mean appeal (importance) score for each item. Maximum Difference utilities are converted into ratio-scaled probabilities that sum to 100 across the items. Thus an item with a score of 8 is twice as important as an item with a score of 4. The dotted line represents the average (5.9). NTERPRET WITH CARE – MEAN VALUES HIDE HETEROGENEITY OF PREFERENCE AND ARE SKEWED BY OUTLIERS.

A Discounts on gas

B Deposit to a savings or investment account

C Money towards utilities bill

D Gift cards

E Money towards your mortgage

F APR discounts

G Interest rebates

H Discounts at selected retailers

I Travel rewards for use with a variety of carriers

J Bonus miles/points after spending a certain amount

K Travel upgrades or discounts (hotels, rental cars)

L Frequent flyer miles for a specific airline

M Online mall

N Money towards school tuition

O Tickets to events and shows

P Donation to a charity/school

Q Donation to reduce carbon footprint

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With Anchored MaxDiff You Get Mean Utilities

A B C D E F G H I J K

14.110.3

6.9 6.4 5.3

-3.0 -3.3 -3.8-6.2

-8.5-13.2

Desired Concepts

Concept:

3. Product Configuration

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Traditional Product Configuration Methods Are Lacking

• Typically, companies follow one of these processes:• Use best guess, and go to test market• Develop concepts based on an internal model,

then go to test market• Rely on slight changes to a competitively successful

product• Conduct focus groups to refine existing concepts

• Trade-off modeling such as Discrete Choice and Adaptive Choice help:• Predict market share under competitive situations• Identify dollar value of product features• Optimize product configuration for key sub-groups• Segment market based on unique configurations• Identify price/demand curve

For Years Discrete Choice Has Been Solving Several Problems

Scenario 1 of 16 Option 1 Option 2 Option 3 Option 4

Card Scheme MasterCard Visa American Express Diner’s Club

Annual Percentage Rate 11% 19% 15% 23%

Account Support None 24/7 telephone assistance 24/7 account management via ATM 24/7 online assistance

Managing Cash Spending Alert sent advising when close to spending limit

Ability to choose daily ATM withdrawal limits

Ability to set daily or weekly card spending

limitsAbility to limit outlets

where card can be used

Free Trial None 6-months 3-months 12 months

Security Photo ID included on the card

Alert sent if unusual activity noticed on your

account

Secret Personal Identification Number

required for all purchases or cash withdrawals

Security call made to your bank, at the time of

purchase, on all purchases over €100

Card Holder Benefits NoneOne extra year warranty

on items over €100 purchased

1% cash back on all individual purchases over

€1,000

Annual fee rebated when spend over €1,000 in a

year

Annual Fee €60 €30 No annual fee €15

Which card configuration do you most prefer? Option 1 Option 2 Option 3 Option 4

Would you actually sign up for the card you selected above if it were available to you today?

Yes

No

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Adaptive Choice-Based Conjoint is Going Further

• ACBC is an innovative approach to trade-off modeling because it adapts to respondent choices in order to collect better data• Captures more information from the respondent for more stable individual level

estimates• Allows us to better analyze smaller sample sizes• Is more effective in situations where pricing is a critical objective• Based on respondent feedback, we find it provides more engaging interviews and

respondents like this method better than standard choice models

Adaptive Choice-Based Conjoint is Going Further

• ACBC consists of multiple stages:• Build-Your-Own (BYO) task• “Near Neighbor” concepts• Determine “must haves”

and “unacceptables”• Choice Tournament

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A Market Simulator Can Be a Powerful Predictive Tool

• For example, Credit card usage was lagging behind the US in Europe, and our client tasked CMB to explore how various credit card offerings would affect market share and usage

• The following features are included:

• Free Trial: Trial period before any other service fee is charged

• Security: Card features designed to ensure that no one except the legitimate card holder can use the card to make purchases or cash withdrawals

• Protection: Card features designed to limit the financial liability of the card holder

• Card Holder Benefits: Extra benefits for using the credit card to make purchases

• Annual Fee: Yearly fee charged by the issuer to administrate the card and transactions

• Card Scheme: The credit card provider used for the card

• Card Issuer: The type of financial institution that issues the credit card and provides support to card holders

• Annual Percentage Rate: Interest rate charged on credit card

• Account Support: Additional types of customer service available to card holders

• Managing Cash Spending: Methods by which card holders can control spending with the card

• Managing Repayments: Payment plan options available to card holders

Interactive Decision Tools

The Interactive Decision Tool (IDT) allows you/your users to explore trends

• Quickly and easily optimize your offering based on particular parameters or model various scenarios

• Understand the relative importance of features

• Model in the tool or simply download charts or underlying data to excel

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4. Marketing Support

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Ensure Product-Specific Messaging Supports the Brand

TRUST CUSTOMERSERVICE LOW COST

Discloses all info up front Highest security standards on web Work with same specialist Specialist available 24/7 Close loan at your location Guided throughout process Low rate guarantee / cash back Beats national average on rates

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LOW

LOW

HIGH

HIG

HA

WA

RE

NE

SS

I M P O R T A N C E

Specialist available 24/7

Guided throughout

process

Work with same specialist

Close loan at your locationHighest security

standards on the web

Discloses all info up front

Beats national average on rates

Low rate guarantee / cash back

TRUST

CUSTOMER SERVICE

LOW COST

Prioritize Messaging Based on Brand Support AND the Impact on Loyalty

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In Summary: Best Practices of Product and Service Development Research At Each Stage• Idea Generation: Use a multi-method, multi-

source approach to listen to the market and gather ideas for concept testing

• Concept Testing: Test concepts in terms of how they meet both customer and business goals

• Product Configuration: Use sophisticated trade-off modeling (such as Dual Choice Discrete Choice and Adaptive Choice) to develop the optimal set of features, benefits, and tiers

• Marketing: Evaluate messaging holistically in terms of relevance, appeal and brand fit

179 South Street, Boston, MA 02111 ● 617-350-8922 phone ● 617-451-5272 fax www.chadwickmartinbailey.com

Questions?

Rich SchreuerChief MethodologistEmail: Rschreuer@cmbinfo.com

Amy ModiniDirector, Healthcare PracticeEmail: Amodini@cmbinfo.com

Follow us on twitter @cmbinfo , Read our blog at blog.cmbinfo.com or become a fan on Facebook

See some of these approaches from a respondent perspective by going through the trade-off technique demos at:

http://www.cmbinfo.com/why-cmb/analytics/