How concept testing reduces the risk of failure
Key highlights
- Concept testing is a powerful tool that can help businesses de-risk their product development process.
- Its primary objectives are to assess the market viability of a product concept, identify areas for improvement, and gather feedback on key elements.
- It can help businesses save time and money by avoiding costly rework and delays, launch products that are more likely to succeed in the market, and enhance brand reputation.
Why do most product launches fail? Let’s understand the importance of concept testing through the example of Coca Cola C2.
In 2005, The Guardian reported in bold letters – “Coke shaken by low-carb failure”. The article shed light on the departure of Javier Benito, the company’s Chief Marketing Officer, and head of retail in its crucial North American market, from the company. The move pointed towards the disappointment of C2’s US launch, a mid-calorie, low-carbohydrate version of the core brand.
Coca-Cola’s C2 faced several challenges that ultimately contributed to its failure in the market. One key factor was its pricing strategy. The company priced C2 at a premium compared to regular Coke, making it more expensive for consumers. This pricing strategy posed an obstacle, especially considering that consumers were not willing to pay a higher cost for just half the calories with half the taste. Additionally, C2 was launched during a time when the low-carbohydrate diet trend was on the decline. This poor timing meant that the product did not align with prevailing consumer preferences, further impacting its sales.
In other words, the combination of a premium price, misjudged market trends, and the competitive landscape contributed to C2’s disappointing performance. To add salt to the wound, this failure hit Coca-Cola’s overall sales volume in North America, forcing them to restructure as a desperate attempt to revive their fortunes.
Source: ThoughtCo.
The above example sheds light on exactly how complex and challenging product development is. From ideation to launch, businesses must navigate a myriad of factors, including market dynamics, technological advancements, and customer expectations. Above all, amidst these challenges, minimizing the risk of failure is essential for successful product launches.
Concept testing is a powerful tool that can help businesses de-risk their product development process. By gathering and analyzing feedback from target customers early in the development cycle, businesses can identify potential pitfalls and make informed decisions that improve the chances of success.
By minimizing failure risks, businesses can:
- Save time and money by avoiding costly rework and delays.
- Launch products that are more likely to be successful in the market.
- Enhance brand reputation and customer loyalty.
Nearly 85% of businesses that don’t take customer feedback into consideration when developing their product, fail. This statistic makes concept testing frighteningly crucial. Concept testing is a market research method that involves presenting product concepts to target customers and gathering their feedback. Further, this feedback helps assess the viability of a product concept, identify areas for improvement, and make informed decisions about product development.
Concept testing can be conducted during various stages of the product development process, from ideation to launch. It is particularly valuable in the early stages of development, when businesses have more flexibility to make changes to the product concept.
The primary objectives of concept testing are to:
- Assess the market viability of a product concept.
- Identify areas for improvement in the product concept.
- Gather feedback on key elements of the product concept, such as features, benefits, pricing, and positioning.
Key elements of concept testing
Identifying the target audience
Firstly, it is important to identify the target audience for the product. This is the first stage of concept testing. It involves understanding the needs, wants, and pain points of the people who are most likely to buy and use the product.
Various types of concept tests
There are various types of concept tests, each with its own strengths and weaknesses. However, the most common types of concept tests include:
- Exploratory concept testing: Generate and evaluate new product ideas.
- Comparative concept testing: Evaluate different versions of a product concept and compare them to existing products in the market.
- Validation concept testing: Assess the market viability of a refined product concept and gather feedback on specific elements of the concept, such as features, benefits, pricing, and positioning.
Evaluation metrics and parameters
The specific evaluation metrics and parameters of concept testing vary depending on the type of the test being conducted and the specific objectives of the research. However, some common evaluation metrics include:
- Purchase intent: Evaluates the likelihood of a customer purchasing the product.
- Product appeal: Assesses how appealing customers find the product concept.
- Brand fit: Measures how well the product concept aligns with the brand image.
- Pricing sensitivity: Indicates how sensitive customers are to price changes.
The synergy between concept testing and risk reduction is instrumental for businesses engaged in product development, consequently offering multifaceted risk mitigation strategies. Therefore, by integrating is early in the development cycle, businesses gain a proactive mechanism for the early detection of potential pitfalls in the product concept. This allows for timely adjustments and avoids significant resource investment in flawed directions.
Financial risk is further mitigated through informed decision-making, as concept testing provides valuable market insights, enabling businesses to make sound judgments on whether to proceed with development and launch. Additionally, it facilitates an iterative approach to product refinement, ensuring alignment with the evolving needs and preferences of target customers. This iterative process furthermore enhances product-market fit, substantially increasing the likelihood of success in the competitive market landscape.
In addition to reducing risk in product development, concept testing also offers a number of other benefits, including:
Improving product design based on user feedback
It provides businesses with direct feedback from target customers on their product concepts. This feedback is then used to improve the product design and ensure that it meets the needs and wants of customers.
Streamlining marketing strategies for better market penetration
By understanding what customers like and dislike about their product concepts, it can help businesses develop more effective marketing strategies. As a result, they can reach their target audience more effectively and achieve better market penetration.
Fostering customer loyalty through user involvement
By allowing businesses to involve target customers in the product development process, it helps businesses build stronger relationships with their customers and foster customer loyalty.
Increasing the likelihood of market success through targeted refinements
By using concept testing to identify and address potential pitfalls and refine their product concepts, businesses can increase the likelihood of market success.
To navigate the ever-changing terrain of consumer behavior and market trends, businesses must embrace innovation by investing in new technologies and methodologies, fostering an environment of experimentation. Similarly, being customer-centric serves as a conduit for understanding and addressing customer needs, ensuring the development of products that resonate with the target audience. Above all, seeking feedback early and consistently throughout the product development journey is key.
For businesses looking to elevate their concept testing strategies, partnering with experts can provide a valuable edge. Moreover, specialized companies bring expertise and resources to the table, empowering businesses to refine their approach and make informed decisions. Meanwhile, by embracing innovation, prioritizing customer insights, and partnering with experts, you can easily thrive in this dynamic landscape. This is why leading industry disruptors, innovators and savvy players partner with us.
Ready to enhance your concept testing strategy and drive successful product development? To explore our market research services to gain valuable insights and stay ahead of industry trends, get in touch.
