How often do you purchase canned soup?
If you are having trouble coming up with an answer, you are not alone. I barely remember what I ate for lunch yesterday, much less what I bought last weekend at the store. Normally, this sort of flawed memory isn't a big deal. But when millions of dollars are on the line in new-product development, this flaw could wind up being fatal.
New-product concept evaluation—the process of using consumer recall and opinions to gauge the potential of a product concept prior to launch—relies directly on this same flawed memory. With data, the future of your business doesn't have to rely on fuzzy memories. Combining data from actual consumer purchase behaviors with insights collected from consumer recall and opinions provides the strongest predictive measure of how a new-product concept will perform. Simply stated, using actual consumer purchase behavior brings more accuracy and reliability to forecast numbers.
Three principles lead to the strongest new-product concept evaluations: Garbage in, garbage out; actions speak louder than words; and more-important consumers matter more.
1. Garbage in, garbage out. The new-product innovation insights you generate are only as good as those consumers you talk to, so the key to revolutionizing those insights starts with talking to the right people. By verifying in advance that you are only talking to those consumers who meet the engagement standards you're seeking (whether it's brand engagement, category engagement or a specific need), you can ensure all further analysis is built on a strong foundation
2. Actions speak louder than words. There is still value in traditional concept-evaluation processes to gauge consumer preference for and reaction to different ideas. Understanding how receptive people are to a new idea—the uniqueness it brings to the market, how superior it is to existing products and other traditional measures of consumer acceptance to new ideas—brings powerful insight and is critical to concept evaluation. However, these measures can be strengthened with a deep understanding of what the responding consumers actually do.
3. More-important consumers matter more. Count those who matter the most more heavily. Not all consumers have the same experience with your brand and your category, but traditional concept evaluation methods treat their opinions equally. Our research has shown that almost 90% of new-item sales come from existing brand or category buyers who switch to the new product versus bringing in new households. Given this, it's important to ensure your innovations resonate first with your most important consumers.
Those consumers already loyal to your brand should receive a brand-receptivity halo. We should expect their interest to be higher than a random consumer's. Similarly, if a consumer hasn't purchased gluten-free products, for example, in the last year, should we take their claim to purchase 25 boxes of a gluten-free cereal over the next year at face value?
After conducting a study comparing traditional concept evaluation predictions to actual post-launch product performance, we found some interesting discrepancies that indicated behavioral weighting of attitudes can lead to much stronger results. When respondents were asked to estimate their willingness to try a product, on average almost 85% of respondents (behaviorally verified to be current category buyers) claimed to be willing to try. When we looked at actual trial of these new items, that number was less than 10% of category buyers at 12 weeks post-launch. This profound drop from claim to action confirms what many of us already knew: Consumers are more generous with their words than their wallets.
In addition to often being overly positive, consumers have a tough time estimating their likely spending in a category. We found that consumers overestimated their engagement with a new item by a factor of 52 compared to their actual behavior. Using past performance, we can quantify individual respondents with their likelihood to engage based on their current behavior to adjust for such flawed recall.
Building brands is a science, and new-product development is a high-stakes process. There is little room for guesswork. Using actual behavior as the foundation for concept evaluation enables better insights and innovation, which leads to stronger sales over the long term.
About the Author
Anna Saffer is a director of new product development at dunnhumbyUSA. She leads dunnhumbyUSA's product innovation capability and is responsible for the development of sophisticated solutions that allow manufacturers to think differently about their innovation through data and insights.
About the Sponsor
dunnhumby is a leading customer science company. We analyze data and apply insights from more than 400 million customers across the globe to create better customer experiences and build loyalty. Our insights and strategic process help clients create competitive advantage and enjoy sustained growth. dunnhumbyUSA is a joint venture of Kroger Co. and London-based dunnhumby. dunnhumby employs more than 2,000 in offices throughout Europe, Asia and the Americas, and serves a prestigious list of companies such as Kroger Co., Tesco, Coca-Cola, General Mills, Kimberly-Clark, Macy's, PepsiCo and Procter & Gamble. For more information, please visit us at www.dunnhumby.com.