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					New Products Management

             Chapter 7
 Analytical Attribute Approaches:
Trade-Off Analysis and Qualitative
            Techniques
  Trade-Off (Conjoint) Analysis
• Put the determinant attributes together in
  combinations or sets.
• Respondents rank these sets in order of
  preference.
• Conjoint analysis finds the optimal levels of
  each attribute.
 What is Conjoint Analysis?

A way to incorporate the structure of customer preferences into
the new product design process. It helps evaluate how
customers make tradeoffs between various product attributes (a
decompositional approach).

The basic outputs of conjoint analysis are:
     A numerical assessment of the relative importance each
     customers attaches to attributes of a product set.
     The value (utility) provided to each customer by each
     attribute option.
Use of Conjoint Analysis
 Designing new products that enhance consumer utility.
 Forecasting sales/market share of alternative product
 concepts.
 Identifying market segments for which a given concept
 has high value.
 Identifying the “best” concept for a target segment.
 Pricing products/product bundles.
 Product line management.
 Positioning new products to different segments.
Product Design: Conjoint
        Analysis
 The approach derives customers’ utility values for
 attributes and attribute options based on customers’
 stated overall preferences for different bundles of
 attributes. The following example shows Memory and
 Price bundles.


                               Price
 Memory        $1,000         $1,500   $2,000
  8 Mb            4             2        1
 16 Mb            7             5        3
 24 Mb            9             8        6
     9 =    Most preferred
                   •
                   •
                   •
     1 =    Least preferred
      Simplified Part-Worth
       (Utility) Calculation
                             Price                   Part-
Memory        $1,000        $1,500   $2,000          Worth
 8 Mb           4             2        1       7/3    2.3
16 Mb           7             5        3      15/3    5.0
24 Mb           9             8        6      23/3    7.7
               20/3          15/3     10/3
Part-Worth:    6.7           5.0      3.3
    9 =   Most preferred
                 •
                 •
                 •
    1 =   Least preferred
       How to Use in
 Design/Tradeoff Evaluation
Example:     24 Mb    vs 16 Mb     = 7.7 – 5.0    = 2.7 units
             $1,000   vs $1,500    = 6.7 – 5.0    = 1.7 units

       So:    8 Mb is worth more than $500 to this customer.

                      2.7
                (    –––  (1,500 – 1,000)  $795)
                      1.7


             Can use to assess value to customer of non-product
             (service) attributes.
 Conjoint Analysis Input: Salsa Example
                                                                  Figure 7-2



  Thickness       Spiciness       Color        Actual    Ranking as
                                              Ranking*   Estimated
                                                          by Model
  Regular         Mild            Red            4            4
  Regular         Mild            Green          3            3
  Regular         Medium-Hot      Red           10           10
  Regular         Medium-Hot      Green          6            8
  Regular         Extra-Hot       Red           15           16
  Regular         Extra-Hot       Green         16           15
  Thick           Mild            Red            2            2
  Thick           Mild            Green          1            1
  Thick           Medium-Hot      Red            8            6
  Thick           Medium-Hot      Green          5            5
  Thick           Extra-Hot       Red           13           13
  Thick           Extra-Hot       Green         11           11
  Extra-Thick     Mild            Red            7            7
  Extra-Thick     Mild            Green          9            9
  Extra-Thick     Medium-Hot      Red           14           14
  Extra-Thick     Medium-Hot      Green         12           12
  Extra-Thick     Extra-Hot       Red           17           18
  Extra-Thick     Extra-Hot       Green         18           17

* 1 = most preferred, 18 = least preferred.
                                                                                Figure 7-3


     Conjoint Analysis:
     Graphical Output
               Thickness                   Spiciness                    Color
2

1

0

-1

-2
     Regular     Thick   Ex-Thick   Mild   Medium-Hot    Ex-Hot Red             Green
    0.161        0.913     -1.074 1.667      0.105      -1.774 -0.161           0.161
                                                     Figure 7-3
                                                     (cont’d.)


          Conjoint Analysis:
   Relative Importance of Attributes
            0     20   40      60           80   100 %




Spiciness                           59.8%

Thickness              34.6%
Color           5.6%
    Some Qualitative Attribute
      Analysis Techniques
• Dimensional Analysis
• Checklists
• Relationships Analysis
  – There are many others.
                                             Figure 7-4




     A Dimensional Attribute List
•   Weight             •   Explosiveness
•   Rust resistance    •   Flammability
•   Length             •   Aroma
•   Color              •   Translucence
•   Water resistance   •   Buoyancy
•   Materials          •   Hangability
•   Style              •   Rechargeability
•   Durability         •   Flexibility
•   Shock resistance   •   Malleability
•   Heat tolerance     •   Compressibility
                                                             Figure 7-5




         An Idea Stimulator Checklist
• Can the dimensions be changed? (larger, smaller, longer,
    shorter, thicker...)
• Can the quantity be changed? (more, less, combine,
    fractionate...)
•   Can the order be changed?
•   Can the time element be changed?
•   Can the cause or effect be changed?
•   Can there be a change in character?
•   Can the form be changed? (animated, speeded, slowed,
    attracted...)
• Can the state or condition be changed?
• Can the use be adapted to a new market?
         Relationships Analysis
• Force combinations of dimensions (features, functions, and
  benefits) together.
• Techniques:
   – Two-dimensional matrix
   – Multidimensional (morphological) matrix
• Household cleaning products example used six
  dimensions:
   – Instrument used, ingredients used, objects cleaned, type
     of container, substances removed, texture or form of
     cleaner
    Other Methods: Lateral Search
            Techniques
•   Free association
•   Stereotype activity
•   Lateral thinking -- avoidance
•   Creative stimuli words
•   Studying “big winners”
•   Use of the ridiculous
•   Forced relationships
    Some Creative Stimuli Words
•   Guest stars    •   Photography
•   Alphabet       •   Testimonials
•   Truth          •   Decorate
•   Outer space    •   Fantasy
•   Charity        •   Hobbies
•   His and hers   •   Holidays
•   Style          •   Weather
•   Nation         •   Calendar
•   Family         •   Push button
•   Videotape      •   Snob appeal
Designing Courtyard by Marriott
    Problem for Marriott
      Early 1980s:
        Running out of good sites for typical full service Marriott
        Hotels (missing low-end business traveller segment).

      Idea:
        New chain for low-end business and/or pleasure travellers.
          Business travellers? (6+ trips/mid-week).
          Pleasure travellers? (2+ trips/stay in hotels/motels).

      Hotel Chain should:
           Offer good value for the money.
           Have minimal cannibalization of Marriott’s other facilities.
           Have market position with competitive advantage.
Overall Study Design
50 attributes, 2–8 levels/attributes.

Hybrid conjoint task.

Price elasticity, using ELASTICON model.

Positioning analysis: scaling, clustering to deal with
demographics, attitudes and hotel usage.

263 mid-week business travellers,
83 high-end business travellers,
255 non-business travellers
in Atlanta, Dallas, San Francisco, Chicago.
Optimal Hotel Design Features
  1.   External factors:      G   building shape
                              G   landscape design
                              G   pool type and location
                              G   hotel size

  2. Rooms:                   G   room size & decor
                              G   type of heating & cooling
                              G   location/type of bathroom

  3. Food-related services:   G   type/location of restaurant
                              G   room service
                              G   vending services/stores
                              G   in-room kitchen

  4. Lounge facilities:       G   location
                              G   atmosphere
                              G   type of people (clientele)
Optimal Hotel Design Features
                          cont’d

 5. Services:               G   reservations
                            G   registration/checkout
                            G   limo to airport
                            G   bellman
                            G   message center
                            G   secretarial service
                            G   car rental
                            G   maintenance

 6. Leisure facilities:     G   sauna
                            G   exercise room
                            G   racquetball courts
                            G   tennis courts
                            G   game room
                            G   children’s playroom & yard

 7. Security factors:       G   security guards
                            G   smoke detectors
                            G   24 hour video
                  Overall Study Design and
                          Analysis
Management         Is the           What is the best        What combination     What pricing     What type of
 Question         concept            competitive              of features          strategy         location
                  viable              position?              and services?        to follow?       to select?

   Model                         Hybrid conjoint analysis                        ELASTICON         Attitude and
                                     and simulation                                                 preference
                                                                                                      scaling
Respondents’   Self-explicated         Multifact              Supplementary      Price/demand
   Tasks         evaluation           evaluation of             tasks and          response        Preference
                                    complete offering        background data                       for location
                                                                                                      types
 Additional
Modeling and     Simulation
                                         Cross-                                 Cross-
 Validation
                                        validation                             validation


                                                   Additional
               Guidelines for                                                       Pricing      Recommendation
                                                 guidelines for
  Output       product design,                                                  recommendation      for type of
                                                 segmentation,
                 positioning                                                                         location
                                                positioning and
               and advertising
                                                product design
                  50 Factors and 167 Levels
                 that Describe Hotel Features
External Factors               Pool type                      Corridor view
Building shape                     No pool                         Outside access/restricted view
     L-shaped w/landscape          Rectangular shape               Enclosed access/unrestricted view/
     Outdoor courtyard             Free form shape                   balcony or window
Landscaping                        Indoor/Outdoor             Hotel size
     Minimal                   Pool location                       Small (125 rooms, 2 stories)
     Moderate                      In courtyard                    Large (600 rooms, 12 stories)
     Elaborate                     Not in courtyard

Rooms Size                     Sink location                  Bathroom features
Entertainment                      Small (standard)                In bath only                             None
     Color TV                      Slightly larger (1 foot)        In separate area                         Shower Massage
     Color TV w/movies at $5       Much larger (2.5 feet)          In bath and separate                     Whirlpool (Jacuzzi)
     Color TV w/30 channel         Small suite (2 rooms)      Size of bath                                  Steam bath
       cable                       Large suite (2 rooms)           Standard bath                        Amenities
     Color TV w/HBO,           Quality of Decor                    Slightly larger/sink                     Small bar soap
       movies, etc.                Budget motel decor                separate                               Large soap/shampoo/
     Color TV w/free movies        Old Holiday Inn decor           Much larger bath w/                        shoeshine
Entertainment/Rental in room       New Holiday Inn decor             larger tub                             Large soap/bath gel/
     None                          New Hilton decor                Very large/tub for 2                       shower cap/sewing kit
     Rental Cassettes/Atari        New Hyatt decor            Heating and Cooling                           Above items + toothpaste,
     Rental Cassettes/Stereo                                       Wall unit/full control
     Rental Movies/Betamax                                         Wall unit/soundproof/full control
                                                                   Central H or C (seasonal)
                                                                   Central H or C/full control
                    50 Factors and 167 Levels
                   that Describe Hotel Features
Food Restaurant nearby          Store                             Vending
Restaurant in hotel                 None                               No food in store             None
     None (coffee shop next         Coffee shop                        Snack items                  Soft drink machine only
       door)                        Fast food                          Snacks, refrigerated         Soft drink and snack
     Restaurant/lounge combo,       Fast food or coffee shop             items, wine, beer,          machines
       limited menu                     and moderate restaurant        liquor                       Soft drink, snack, and
     Coffee shop, full menu         Fast food or coffee shop           Above items and               sandwich machines
     Full-service restaurant,           and good restaurant              gourmet food items         Above and microwave
       full menu                Room Service                      In-room kitchen facilities        available
     Coffee shop, full menu         None                               None
       and good restaurant          Phone-in order/guest to            Coffee maker only
Free continental                        pick up                        Coffee maker and
     None                           Room service, limited menu         refrigerator
     Continental included in        Room service, full menu            Cooking facilities in room
       in room rate

Lounge                          Type of people                    Lounge nearby
Atmosphere                          Hotel guests and friends           None
     Quiet bar/lounge                   only                           Lounge/bar nearby
     Lively, popular bar/           Open to public—                    Lounge/bar w/
       lounge                           general appeal                   entertainment nearby
                                    Open to public -
                                        many singles
     50 Factors and 167 Levels
    that Describe Hotel Features
Leisure                         Racquet ball courts              Children’s playroom/
Sauna                                None                               playground
     None                            Yes                              None
     Yes                        Tennis courts                         Playground only
Whirlpool/Jacuzzi                    None                             Playroom only
     None                            Yes                              Playground and playroom
     Outdoor                    Game room/Entertainment          Pool extras
     Indoor                          None                             None
Exercise room                        Electric games/pinball           Pool w/slide
     None                              Electric games/pinball/        Pool w/slides and
     Basic facility w/weights          Ping-Pong                        equipment
     Facility w/Nautilus             Above + movie theater,           Pool w/slides, waterfall,
        equipment                      bowling                          equipment

Security                        Smoke detector                   Sprinkler system
Security guard                       None                             None
     None                            In rooms and throughout          Lobby and hallways only
     11 a.m. to 7 p.m.                 hotel                          Lobby/hallways/rooms
     7 p.m. to 7 a.m.           Alarm button                     24-hours video cameras
     24 hours                        None                              None
                                     Button in room                    Parking/hallway/rooms
                    50 Factors and 167 Levels
                   that Describe Hotel Features
Services                       Limo to airport                Cleanliness/upkeep          Special Services
Reservations                       None                          Management skill             None
   Call hotel directly             Yes                           Budget motel level           Information on
   800 reservation number      Bellman                           Holiday Inn level             restaurants, theaters, etc.
Check-in                           None                          Non-convention Hyatt         Arrangements and
   Standard                        Yes                             level                       reservations
   Pre-credit clearance        Message service                   Convention Hyatt level       Travel problem
   Machine in lobby                Note at front desk            Fine hotel level              resolution
Check out                          Light on phone             Laundry/Valet               Car maintenance
   At front desk                   Light on phone and            None                         None
   Bill under door/leave key         message under door          Client drop off and          Take car to service
   Key to front desk/bill by       Recorded message                pick up                    Gas on premises/bill to
     mail                      Secretarial services              Valet pick up and drop        room
   Machine in lobby                None                            off                    Car rental/Airline reservations
                                   Xerox machine                 Self service                 None
                                   Xerox machine and typist                                   Car rental facility
                                                                                              Airline reservations
                                                                                              Car rental and airline
                                                                                               reservations
                Room Price per Night is $44.85
This full profile description of a hotel offering is one of the 50 cards developed by a fractional factorial design of the seven facets
each at the five levels (developed by the Marriott’s development team). Each rpondent received five cards following a block design.



        Building Size, Bar/Lounge                                           Room Size & Function
        Large (600 rooms) 12-storey hotel with:                             Room 1 foot longer than typical hote;motel room:
              quiet bar/lounge,                                                 space for comfortable sofa-bed & 2 chairs,
              enclosed central corridors & elevators, and                       large desk & coffee table, and
              all rooms have very large windows                                 coffee maker & small refrigerator.
        Landscaping/Court                                                   Service Standards
        Building forms a spacious outdoor courtyard:                        Full service including:
              many trees & shrubs,                                                 rapid check-in/check-out systems,
              the swimming pool plus a fountain, and                               reliable message service,
              terraced areas for sunning, sitting & eating.                        valet (laundry pick-up/delivery),
                                                                                   bellman,
        Food                                                                       someone (concierge) arranges reservations,
        Small, moderately priced lounge and restaurant for                         tickets, generally at no cost, and
        hotel guests/friends:                                                      cleanliness, up-keep, management similar to
               limited breakfast with juices, fruit, Danish,                       Hyatts & Marriotts .
               cereal, bacon & eggs,
               lunch: soup & sandwiches only, and                           Leisure
               evening meal: salad, soup, sandwiches, six hot                      Combination indoor-outdoor pool,
               entrees including steak.                                            enclosed whirlpool (Jacuzzi), and
                                                                                   well-equipped playroom/playground for kids.
        Hotel/Motel Room Quality
        Quality of room furnishings, carpet, etc., is similar to:           Security
              Hyatt Regencies, and                                                 Night guard on duty 7 pm to 7 am,
              Westin “Plaza” Hotels.                                               fire/water sprinklers throughout hotel, and
                                                                                   all rooms have very large windows.


o     Would stay there
      almost all the time      o      Would stay there
                                      on a regular basis      o Would stay there
                                                                now and then             o Would rarely
                                                                                           stay there              o Would not
                                                                                                                     stay there
       Result


“Courtyard by Marriott”

         not

   “small Marriott”
Marriott–13

				
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