lecture 5 npd sir awais

8/13/2019 Lecture 5 npd sir awais

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CHAPTER SEVEN

ANALYTICAL ATTRIBUTE

APPROACHES:TRADE-OFF ANALYSIS ANDQUALITATIVE TECHNIQUES


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Trade-Off (Conjoint) Analysis


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An Example from this Weekend!

Control Panel

Quality of Motor

Cost


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Determinant Attributes

Control Panel Digital

Non-digital

Quality of Motor Low

Medium

High

Cost Low

Average

High


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Set of Determinant Attributes

As a customer, I had to choose between two

set of determinant attributes (based on

options available at that time):

Control Panel Quality of Motor Cost

Option 1 Digital Medium Average

Option 2 Non-Digital High Average


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As a company, you can look for all possible

sets of determinant attributes and ask

customers to rank them in accordance to their

importance, to find new product concepts.


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Control

Panel

Quality of Motor Cost Rank

Option 1 Digital Low Low

Option 2 Digital Low AverageOption 3 Digital Low High

Option 4 Digital Medium Low

Option 5 Digital Medium Average

Option 6 Digital Medium High

Option 7 Digital High LowOption 8 Digital High Average

Option 9 Digital High High

Option 10 Non-Digital Low Low

Option 11 Non-Digital Low Average

Option 12 Non-Digital Low High

Option 13 Non-Digital Medium Low

Option 14 Non-Digital Medium Average

Option 15 Non-Digital Medium High

Option 16 Non-Digital High Low

Option 17 Non-Digital High Average

Option 18 Non-Digital High High


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Lets do an Example from the Book!

Salsa(Spanish for Sauce)

Thickness Regular

Thick Extra-Thick

Spiciness Mild

Medium-Hot

Extra- Hot Color

Red

Green


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Thickness Spiciness Color Actual

Ranking*

Ranking as

Estimated

by Model

Regular Mild Red 4 4Regular Mild Green 3 3Regular Medium-Hot Red 10 10

Regular Medium-Hot Green 6 8Regular Extra-Hot Red 15 16Regular Extra-Hot Green 16 15

Thick Mild Red 2 2

Thick Mild Green 1 1Thick Medium-Hot Red 8 6

Thick Medium-Hot Green 5 5Thick Extra-Hot Red 13 13Thick Extra-Hot Green 11 11

Extra-Thick Mild Red 7 7Extra-Thick Mild Green 9 9

Extra-Thick Medium-Hot Red 14 14Extra-Thick Medium-Hot Green 12 12Extra-Thick Extra-Hot Red 17 18Extra-Thick Extra-Hot Green 18 17

* 1 = most preferred, 18 = least preferred.


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Regular Thick Ex-Thick

2

1

0

-1

-2

Mild Medium-Hot Ex-Hot Red Green

Thickness Spiciness Color

0.161 0.913 -1.074 1.667 0.105 -1.774 -0.161 0.161

Conjoint Analysis: Graphical Output


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Conjoint Analysis:

Relative Importance of Attributes

0 20 40 60 80 100 %

Spiciness

Thickness

Color

59.8%

34.6%

5.6%


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CHAPTER EIGHT

THE CONCEPT EVALUATIONSYSTEM


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Planning theEvaluation System


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Planning the Evaluation System: Four

Concepts

Rolling Evaluation (tentative nature of new

products process)

Potholes

People

Surrogates


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Rolling Evaluation (or, "Everything is

Tentative")

Project is assessed continuously (rather than a single Go/No

Go decision)

Financial analysis also needs to be built up continuously

Not enough data early on for complex financial analyses

Run risk of killing off too many good ideas early

Marketing begins early in the process

Key: new product participants avoid "good/bad" mindsets,

avoid premature closure


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Potholes

Know what the really damaging problems are

for your firm and focus on them when

evaluating concepts.


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People

Proposal may be hard to stop once there is

buy-in on the concept.

Need tough demanding hurdles, especially

late in new products process.

Personal risk associated with new product

development.

Need system that protects developers and

offers reassurance (if warranted).


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The ATAR Evaluation Method


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A.T.A.R Model

The ATAR model provides a framework to help

estimate the adoption rate in each year.

It has been used by companies to estimate

Sales. (Sales Forecast)


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A.T.A.R Model

The concept is based around four principles:

Awareness

Trial

Availability

Repeat


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Afor (Appl) Awareness In order for a person to be a regular purchaser of the

new product they must first become Aware that it

exists.


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Tfor Trial

Once they have become aware of it they must

make the decision to Try it out.


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Afor Availability

In order to be able to try it out, it must be Available

for them to purchase.


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A.T.A.R Model AWARENESS% OF TARGET MARKET AWARE

OF PRODUCT

TRIAL - % OF THOSE AWARE WILLING TO TRY

PRODUCT AVAILABILITYMEASURE OF DISTRIBUTION

INTENSITY

REPEAT% OF REPEAT BUYERS


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A.T.A.R Model

This model is then combined with theestimation on Profit per-unit to givemanagement indication on Annual Profits

expected from the New Product Concept.

Profits = Units Sold x Profit Per Unit

Unit Sold = ATAR

Profit Per Unit = Revenue per unit - cost per unit


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A.T.A.R Model

Profits = Units Sold x Profit Per Unit

Units Sold = Number of buying units

x % aware of product

x % who would try product if they can get it

x % to whom product is available

x % of triers who become repeat purchasers

x Number of units repeaters buy in a year

Profit Per Unit = Revenue per unit - cost per unit

Figure 8.5


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A-T-A-R Model Application

10 million Number of owners of Walkman-like CD playersx 40% Percent awareness after one year

x 20% Percent of "aware" owners who will try

product

x 70% Percent availability at electronics retailers

x 20% Percent of triers who will buy a second unit

x $50 Price per unit minus trade margins and

discounts ($100) minus unit cost at the

intended volume ($50)

= $5,600,000 Profits


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Points to Note About A-T-A-R Model

1. Each factor is subject to estimation.

Estimates improve with each step in the development phase.

2. Inadequate profit forecast can be improved by

changing factors.

If profit forecast is inadequate, look at each factor and seewhich can be improved, and at what cost.


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In developing estimates for each element, the followingshould be kept in mind:

Awarenesswill depend on the extent to which the new product isadvertised in the marketplace. For example, it might cost $1.0 millionto make 10% of the market aware of the product.

Trial implies that the customer actually decides to purchase the newproduct and try it out. Receiving a free sample in the mail does notnecessarily mean that they actually tried the product.

Availabilityrelates to the ease with which the purchaser can find theproduct to purchase. This is directly related to the number of channels(retail stores, internet, etc) that are available to the purchaser.

Repeatmeans that the trial was successful. In the case of convenience

items, the purchaser has decided to make repeat purchases. For one-time shopping goods, or specialty goods purchases, repeat may meanrecommending the product to a friend.

lecture 5 npd sir awais

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