Optimising your portfolio for new products

So you’ve identified where you are going next with your NPD – you have a great new line or product that has tested well and the teams are finalising its formulation, features and price.

But how does it fit with the rest of your product line? And where does it stand against competitors? Does it maximise the potential of your portfolio? Are there small changes you can make to prices, range or features that could get you that elusive extra share?

These are questions that are not asked – or at least not answered – often enough. Shelf and concept testing will get part of the way to the new product’s strength, but will not give the detail needed to fully optimise your whole portfolio on product launch.

This is where a conjoint exercise can fill in the gaps. Conjoint provides each respondent with a series of choices between different products and brands, each with a range of features and prices. From the responses to these limited options, we can use a sophisticated model to predict what shoppers would choose in a vast range of different scenarios.

Case study: Optimising the portfolio and understanding the value of features

In a recent study, our client wanted to understand how a new product range would fit with the rest of its portfolio. The NPD team had developed 6 variations, but could only launch up to 4 – the key was understanding which should be launched, which from the current portfolio could be retired and how to set the pricing strategy to maximise return.

The client also had another item on the wishlist: quantify the value that customers placed on each feature – giving the NPD team a direction for future development.

The Ink team worked closely with our client to understand the parameters – which features could be varied, what prices were realistic and what parts of the portfolio could and could not be changed. We designed a conjoint exercise with 14 products, each with up to 8 varied features and 5 price points. This was implemented across three markets among over 3,000 respondents.

The results, as with any well designed conjoint, were incredibly rich:

• Optimum portfolios and prices
• We first provided the optimum portfolio across the current and new NPD range – which products to include and at what prices gave the maximum volume and value. We were also able to say which products should be used when the space for the range was limited (aiding in retailer conversations) and which consumer segments were driving the volumes.


• The value of features to customers
• By putting a $ value on the individual features the teams were able to see both which features to concentrate support on for the new products and where to dedicate resource for future development.


• An interactive leave-behind model
• We created an Excel based version of the model which we left with the client. This allowed the client to investigate the effect on value and volume of a huge range of scenarios as well as investigating further which segments drove volume for each product.

For more information about how we can help with your NPD, either via Conjoint or our unique shelf-led NPD volume predictions, contact:
Barry Noble, Managing Director
barry.noble@inkmr.com, 07969 815274

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The Ink NPD Model
(why traditional concept testing fails the “real world” test)

The recent industry focus on shopper decision making at shelf has been on “unconscious” decisions: consumers buying everyday brands without any engaged thought processes, the purchase instead triggered by “heuristics” and branding cues. But for new products, the decision process is necessarily different; to encourage purchase of a new product on shelf, the brand must disrupt the usual shelf experience and force shoppers to make a considered decision in which they compare the new product with others on shelf.

Our research backs up this thinking. Among a set of new product releases for well known brands (all of which had received significant marketing support) the majority of shopper decisions are made at shelf, with only a quarter being driven purely by in-market activity and word of mouth:

WHY TRADITIONAL NPD TESTING FAILS THE “REAL WORLD” TEST

Most traditional NPD research concentrates on understanding reaction to a concept – i.e. testing a product in isolation from its competitors. But, as we have seen, this is not how most decisions are made in the real world – the concept test route misses out on the key comparative shelf element of the decision.

Other testing routes flip this around completely by concentrating the research wholly on a mocked-up shelf. Again, however, this misses out on a key element: the support that a brand gives a new launch which reinforces the messaging and directs shoppers to find the products in store or online. Using only a shelf also significantly restricts the detail of diagnostic feedback research can provide.

THE INK NPD MODEL

Just as in real life, the Ink NPD model has shoppers assessing the new product both at shelf and concept in turn. Half of our sample sees the shelf first (replicating those who come across it on shelf first in real life) and half see the concept first (mirroring those who see some brand support before going in store).

Results are then modelled, weighting the relative shelf and concept scores to provide a Market Potential Score and year 1 value and volume predictions – real world figures which feed directly into our clients’ new product development processes.

The Ink NPD model not only replicates real life purchase decisions more closely, but gives us an understanding of:

• Whether the new product has enough shelf presence to succeed (our bespoke “at shelf pick-up tool” measures interest and conversion to purchase)
• Whether the new product concept is strong enough to drive shoppers to seek out the product on shelf
• Whether the packaging communicates the message that is intended
• How to further develop the concept via in-depth diagnostics

For the full thought piece or more information on the Ink NPD Model or the study we conducted, contact:
Barry Noble, Managing Director
barry.noble@inkmr.com, 07969 815274

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A client recently challenged us at Ink to think about the Behavioural Economics of supermarket choice: Specifically, how much of choice was ingrained, unconscious and "fast". And how much was more considered and comparative. We speculated that while most people will at some point make rational comparisons between grocers, almost all individual grocery trips would be "fast".

Our recent study addressing precisely these questions among a representative group of 1,000 UK adults generated some fascinating insight:

• One in three grocery shopping missions is a considered decision (i.e. shoppers take into account one or more factors when deciding which supermarket to use). From a Behavioural Economics point of view this means that a huge amount of decision making is System 2 – not automated, same every time, but consciously considered and thought out, based on research of some sort.
• The discounters and ASDA are the least researched of the supermarkets - only a little over one in four of their missions are researched, vs. almost 40% of those for Tesco, Sainsbury's and Morrisons. The low price message seems to have penetrated shoppers core beliefs for ASDA (via their everyday low prices strategy) and the discounters – so shoppers are making decisions more automatically for these brands (perhaps explaining some of their recent success).
• Unsurprisingly, mission type also played a big role in whether supermarket choice was considered or not. Big weekly or bi-weekly shops, where shoppers have the most to gain (or lose) financially are the most considered, while top up shops are less researched and emergency shops very little.

Powerful though these insights are, one thing stuck out considerably more:

Millennials are far more considered about their choice of supermarket than the older cohorts

This was interesting at first – of course, we thought, younger groups research their supermarkets more because they've grown up with the internet and are more likely to be online. And we were right – Millennials are far more likely than the older groups to research via sites and apps, particularly the supermarkets' own.

What came as more of a surprise was the fact that Millennials used more offline tools too. They were more than twice as likely to use store magazines and leaflets than those over 35 and more than three times as likely to admit to considering advertising to decide where to shop.

Millennials, it seems, are simply more comfortable with making comparisons and are less brand loyal (or brand centric) than the older cohorts when it comes to shopping for groceries. This is despite evidence that this age group tend to be more loyal to brands they respect and feel close to.

Our hypothesis is that this is likely to be due to a combination of their comfort level with the vast number of comparative information sources available to them and a financial crisis-driven outlook which has forced recent frugality and savviness upon this generation.

The question is: Is it an ingrained attitude that will remain into their later life or will the Millennial generation morph into the same, less considered decision making their older relatives display. Given the relatively little difference between the 18-24s and 25-34s on this, our money is on the former – this generation simply being more choosy and considered in their supermarket choices.

Whatever the reasons, it seems to be good news for advertisers – particularly those targeting Millennials. But less good for the non-discount supermarkets.

For more information on this thought piece or more detail on how we conduct our shopper research, contact:
Barry Noble, Managing Director
barry.noble@inkmr.com, 07969 815274

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CASE STUDY: Concept testing for business forecasting

Our client’s position

The market leader and the pioneer in their field, our client (an online retailer) was coming under increasing pressure from new me-too market entrants. Following extensive customer research they came up with a newly refreshed product offer, with a lifestyle rather than function focus. As the launch date came closer and the range detail became clearer, the business needed a detailed, quantitative understanding of:

• Current customers to check they were not alienated by the new range
• Lapsed customers to understand likely win back (if any)
• Prospects to feed into acquisition strategy and messaging

Critical for the business was to measure the switching process, putting solid numbers behind which customers would switch to which products, feeding into forecasting modelling.

To complicate matters further, our client needed results within a week in order to be able to launch the new product range on time. So not an easy feat – exactly a challenge that we at Ink were delighted to help with!

How we went about the challenge

Those familiar with Ink will know that we place huge importance on research staying as close to reality as possible and on replicating how people make decisions in real life. We therefore worked closely with our client on the look and feel of the range concepts and reproduced the way the products are displayed on our client’s website.

So, current and lapsed customers evaluated the new range as if it were already online – for these groups it was easy to compare to what they currently (or used to) get and decide whether they would continue buying (or start again).

Potential new customers were a little more difficult. These we split into two – one exposed to the current range and one to the new (in real life they would never see both ranges, so we didn’t show the two side by side in this test either). The difference between those who saw the current and the new gave us the likely impact on acquisition.

Reporting back the results

We presented the results hot off the press – the day after the fieldwork completed! – to all teams involved in the re-launch. The research gave a clear indication of the new range’s likely impact on our client’s sales figures with regards to their retention, re-engagement and acquisition strategy. The debrief was followed up by a series of meetings with the forecasting and comms teams to define the launch strategy and to plan the most effective messaging campaign when transitioning from the current to the new product range.

For more detail on the study or more information on how we go about concept testing, contact:
Barry Noble, Managing Director
barry.noble@inkmr.com, 07969 815274

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