This document discusses various market analysis tools used in new product development (NPD). It describes tools for idea generation, product optimization, marketing mix optimization, and market prediction. Specific tools covered include brainstorming, the Delphi technique, focus groups, user observation, conjoint analysis, concept testing, prototyping, and diffusion models. The document provides details on how each tool is used, its process, advantages, and disadvantages to help product developers select the right tools for analyzing markets and predicting new product success.

1. Market Analysis Tools
in NPD
Armin Azizpour
Mehdi Ghazvinizadeh
Vahid Soltani
Shahryar Doosti
Instructor: Dr. Sadeghi

2. Market analysis areas
 Idea Generation
 What product to develop?
 Product Optimization
 How must the product be designed?
 Marketing Mix Optimization
 How to introduce the product?
 Market Prediction
 What is the new product’s anticipated success

3. Usage of tools by NPD

4. What product to develop?
 Brainstorming
 Synectics
 Focus group
 User-observation
 Delphi method
 Morphological analysis

5. Brainstorming
 Developing creative solutions
 New ideas
 Spark off

6. Four basic rules
 No criticism
 Welcome unusual ideas
 Quantity wanted
 Combine and improve ideas

7. Brainstorming steps
 Gather the principles from a wide range of
disciplines
 Write down a brief description of the problem
 Encourage an enthusiastic uncritical attitude
 Write down all the solutions
 DO NOT evaluate or censor
 The leader should keep it on subject
 Evaluation

8. Delphi technique
Does not require face to face communication
it is used to:
 Forecasting future strategic, economic,….
 Explore underlying assumption or background
information leading to different judgments
 Seek out information on which agreements may later
be generated

9. Advantages
 Allows participants to remain anonymous
 Inexpensive
 Free of social pressure, personality influence and
individual dominance
 A reliable judgement or forecast results
 Allow sharing of information and reasoning among
participants
 Conducive to independent thinking and gradual
formulation
 Can be used to reach consensus among groups
hostile to each other

10. Disadvantages
 Judgements are those of a selected group of people
and may not be representative
 Tendency to eliminate extreme positions and force a
middle-of-the–road consensus
 Time-consuming
 Require skill in written communication
 Require adequate time and participants commitment
(about 30-45 days)

11. Focus group
What is a focus group?
 Evaluating services
 Testing new ideas
Managing a focus group
 Preparing for a focus group
 Identify and define the issue
 No more than 5 or 6 questions
 Selecting the participants
 Preparing ice-breakers

12. Synectics
 Closely related to brainstorming
 More formalised and structured
 Trigger questions
 Making the strange familiar and familiar strange
 Emphasis on fantasy

13. Trigger questions
 Subtract
 ADD
 transfer
 Empathize
 Animate
 Change scale (time, dimensions, proportion…)
 Substitute
 Isolate
 Fantasize
 Combine

14. User-observation
 Direct
 Indirect
observation
methods
personal mechanical audit
content
analysis
trace
analysis

15. Benefits
 Direct
 Focus attention on specific areas
 Indirect
 Natural behaviour

16. How must the product be designed?
 QFD
 Conjoint analysis
 Concept test
 Prototype test
 In-home-use test
2

17. QFD
 A method designed to help the NPD-project team to
identify and interpret the needs and wants of
customers. The aim is to establish the importance of
product attributes and transform them into technical
requirements.
 Originated in Japan in 1966 by Yoji Akaro

18. QFD
 QFD helps transform the VOC (voice of the
customer) into engineering characteristics.
 Maximizes positive quality that adds value.
 A key practice of DFSS (design for six sigma)
 Tasks in QFD:
 Acquiring market needs by listening to the Voice of
Customer (VOC)
 sorting the needs
 numerically prioritizing them (using techniques such as
the AHP)

19. Functional fields of QFD
 Product development
 Quality management
 Customer needs analysis
 Product design
 Planning
 Engineering
 Decision-making
 Management
 Teamwork, timing, costing, and others

20. QFD Process
 Product Planning (House of Quality)
 Translate customer requirement into product technical
requirements to meet them
 Product Design
 Translate technical requirements to key part
characteristics or systems
 Process Planning
 Identify key process operations necessary to achieve key
part characteristics
 Production Planning (Process Control)
 Establish process control plans, maintenance plans,
training plans to control operations

21. QFD Process

22. House of quality

23. Example
 Customer need:
 “the headlamp is bright enough to see well”
 Customer requirement:
 “I can see distant objects well”
 “I can see close objects well”
 “I can see well even under adverse conditions”
 Demanded quality:
 “I can see distant objects well”
 “broad beam”
 “light does not scatter”

24. Example
 Quality characteristics:
 flux distribution
 flux distribution value
 headlamp life
 Safety
 Secondary quality characteristics:
 flux distribution value
 flux of light
 lens size
 low beam and high beam
 Transmissivity
 voltage

25. Conjoint Analysis
 The early 1970s, market researcher developed
conjoint analysis to overcome some key
shortcomings of a standard concept test.
 Conjoint has been widely used in the new product
development process for selecting among alternative
product designs, targeting, and pricing.

26. How Conjoint Works
 Defining a Product
 A fundamental idea in conjoint analysis is that a product
can be broken down into a set of relevant attributes
 By defining products as collections of attributes and
having the individual consumer react to a number of
alternatives, one can infer each attributes (i) importance
and (ii) most desired level.

27. How Conjoint Works
 For instance, if the item is a personal computer, we
may have:
 A parameter related to the hard disk size. For example, it
takes the value 1 if the size belongs to [50 GO, 80 GO],
the value 2 if the size belongs to (80 GO, 120 GO] and
the value 3 if the size is greater than 120 GO (if we use
figures from recent years).
 A parameter related to the memory size. It takes the
value 1 if the size belongs to [256, 512 KO] and 2
otherwise.
 A parameter related to the training. It takes the value 2 if
the training is free and 1 otherwise.
 A parameter related to after sale service. It takes the
values 1, 2 or 3 depending on the type of service.

28. How Conjoint Works
 Conjoint estimates an individuals value system, which
specifies how much value a consumer puts on each level
of each of the attributes.
 If we know an individuals value system, we can predict
which of a set of available alternatives he will buy.
 Individuals usually do not find it easy to state their value
system reliably. Rather than forcing consumers to think
separately about individual attributes, conjoint asks the
consumer to make judgments about products overall and
then uses mathematical analysis to uncover the value
system which must be behind the preference judgments.

29. How Conjoint Works
 As an example, consider a fitness facility, interested
in optimal design of its locker rooms.
 Two attributes are potentially important to users: (i)
whether or not there is a sauna and (ii) the size of
available lockers. There are two alternative .levels.
for the sauna (.yes. and .no.) and three levels for
lockers:

30. How Conjoint Works
 There are thus 2 x 3 = 6 different sauna/locker
combinations or products.
 One might in practice ask individuals how important
these alternative attributes are. Alternatively, one can
simply ask the respondent to rank order the six
possible combinations from most to least preferred.
 The individual might respond as follows:

31. How Conjoint Works

32. How Conjoint Works

33. How Conjoint Works
 Note that the value of a parameter does not reflect an
assessment, but a choice. This point is important.
 Splitting the broad evaluation of an item among the
values of its parameters implies that the overall
evaluation of an item is the sum of the evaluations
assigned to the values of the parameters.
 In other words, the utility function is assumed to be
additive.
 This assumption is strong since it implies that
parameters are disjoined (i.e., independent from each
other from the point of view of customers’ perception of
the item value).
 The evaluation of a parameter value is called part-worth.
We obtain a set of partworths from each tester

34. B. Decision stage in conjoint analysis

35. B. Decision stage in conjoint analysis
 Determining Relevant Attributes
 In conjoint, the burden is on the analyst to prespecify
the attributes impacting a consumers purchase
decision.
 If an attribute of no real importance is included in the
study, the value system will indicate this attributes
limited role.
 However, the conjoint analysis will not indicate the
absence of an important attribute. Consequently, one
must be confident that the right attributes have been
included.
 In practice, the preliminary attribute list is usually
developed in-house via contact with company people
from a variety of functions - new product
development, advertising, manufacturing, etc.

36. B. Decision stage in conjoint analysis
 Stimulus Representation
 The second design question is how to present products to
the respondent: partial or full profile method.
 In the full profile approach, each product is described on
all the relevant attributes.

37. B. Decision stage in conjoint analysis
 Response Type
 Design decision three is the manner in which respondents
express their judgments, viz. as ratings or ranks.
 The made-in-the-U.S.A. study noted above is a ratings
scale application, i.e., without explicitly considering other
options, consumers were asked to state how likely they
would be to purchase an item.

38. B. Decision stage in conjoint analysis
 Criterion
 Whatever the stage 3 decision, there is still the related but
distinct issue of the standard to be used in the judgments.
 The two major types of standards are:
 preference
 likelihood or intention to purchase

39. B. Decision stage in conjoint analysis
 Methods of Data Analysis
 The data analysis depends on the previous decisions
made with respect to the input data collected.
 Most commonly, the following are used:
Form of Judgment About Alternatives Data Analysis
Rating Scores Simple
Regression
Probability of Purchase Logit Model
Rankings MONANOVA

40. Concept test
 Stage in product development process where a
detailed description of a product (and of its attributes
and benefits) is presented to prospective customers
or users, to assess their attitudes and intentions
toward the product. See also concept optimization.
 another approach to new product development,
helps you minimize risk and maximize revenue when
entering service, consumer product, and high-tech
markets.

41. Prototype test
 While CAD/CAE simulation and analysis clearly
reduces the required number of physical prototypes
necessary to validate a new product or component,
physical prototype testing remains an important and
necessary step in the product development process.
 So what is it about prototypes that make them so
critical to product development? Since prototypes
are by definition the first of their kind, they are used
in product design for testing, testing and more
testing. Let's take a minute to find out how testing a
prototype generally works and the benefits of taking
the time to do this.

42. Prototype test
 The biggest benefit is probably to the bottom line.
 Prototypes can be tested for aspects like design flaws
and ease of use, two things that are critical if your product
is going to be a success.
 You need to make sure everything works the way it
should -- and that your customers can figure out how to
make it work, too.
 One of the reasons for this is that time is a huge factor in
product development. One designer's great idea could
also be cooking in the head of a competitor the very same
moment. Having the first product to hit the market has a
number of benefits -- as long as it's a good product.
 they can also be useful if you want to start pitching your
idea to investors, upper level management and other
interested parties before you have a finished product.

43. In home use test
 An approach that has a number of potential
customers/users test a new product (“at home”) for a
certain period of time. Afterwards
experiences/problems encountered are discussed.

44. How to introduce the product?
 Mini test
 Test marketing
 Limited roll-out
 Scanner market
3

45. Test marketing
 Test marketing is about trying something out before
making a big commitment to it. It gives the firm
producing and marketing the product or service
some idea of what is likely to happen should it
decide to go ahead with a broader expansion on a
regional or national basis.

46. Aims of Test marketing
 To provide estimations of sales volume and market
share for a new product, a product extension or a
new marketing device.
 Traditional test marketing
 Controlled test marketing
 Simulated test marketing

47. Traditional test marketing
 Traditional test marketing is marketing under ‘normal’
conditions and the company’s own salesforce gets
retailers to stock the product, give it good shelf
position and provide in-store promotion and
cooperative advertising. The sales staff also make
sure that the shelves remain stocked.

48. Conditional test marketing
 This is a test where sales are measured within a
controlled store environment.
 The research firm stocks the product in the stores,
handling both warehousing and distribution. It
maintains retail inventory levels, handles pricing,
shelf conditions and the building and placement of
displays.

49. Simulated market test
 A method that confronts customers with a product
and its marketing mix using an interview and virtual
store-environment.
 The objectives is to simulate the "awareness-trail-repeat
purchase" process.
 It applies only to a situation where the product and
its packaging, pricing, and advertising and promotion
have been developed in finished form.

50. Limited roll out
 An approach for introducing a new product to the
market. The new product is first introduced on a
small scale, with the objective to expand slowly in
order to limit market risk. During the introduction the
content of the market strategy may be modified.

51. 4 What is the new product’s anticipated
success?
 Diffusion model
 Market prediction model

52. Consumer innovativeness
 measures of innovativeness:
- life innovativeness scales
- adoptive innovativeness scales.

53. Diffusion models
 The aggregate growth of new products has enjoyed intensive study
in marketing over the last 35 years, beginning with Bass (1969) and
now totaling over 700 estimates of the parameters of diffusion or
applications of the model (Bass 2004, Van den Bulte and Stremersch
2004).
 Everett Roger’s book (Rogers 1962); A normal distribution is
specified for the timing of adoption, and five classes of adopters are
specified:
(1) Innovators; (2) Early Adopters; (3) Early Majority; (4) Late
Majority; and (5) Laggards.
 According to the theory, apart from innovators (defined as the first
two and one-half percent of the adopters), adopters are influenced in
the timing of adoption by the pressures of the social system, the
pressure increasing for later adopters with the number of previous
adopters.

54. Diffusion models
 The probability that an initial purchase will be made
at T given that no purchase has yet been made is a
linear function of the number of previous buyers.
P(T)  p (q /m)Y(T)

55. Diffusion models
 If the coefficient of imitation is greater than the
coefficient of innovation the solution rises to a peak
and then declines.

56. Diffusion models
 M, p, q
 The coefficient of innovation is
relatively stable and averages about 0.03.
 The coefficient of imitation varies
substantially across contexts, with
an average of about 0.4.

57. Diffusion models
 The Bass model has had great appeal and
widespread use because:
1. simple
2. generally fits data well
3. enables intuitive interpretations of the three
parameters
4. and performs better than many more complex
models.
 It is well known that changes in prices and other
decision variables will influence the diffusion process
(demand).
 Some exceptions

58. Market prediction models
 Different methods/models (often computer
models) that try to estimate the market share of
the new product (over time) calculating for
factors like customer preference, the market mix
of the new product and competition (level of
competition an competitive reactions).

59. Marketing strategy and NPD
 4P:
1. Pricing
2. Promotion
3. Place
4. Product
 STP
1. Segmentation
2. Targeting
3. positioning
• Brand/branding
• Multi national
marketing
strategy
• Market entry
1. How
2. when
• Growth
strategies
5

60. Positioning
 Position differ from image in that it implies a frame of
reference, the reference point is usually being the
competition. Thus when the bank of California
positions itself as being small and friendly it is
explicitly or perhaps implicitly positioning itself with
respect to bank of America.
 The positioning decision is often the crucial strategic
decision for company or brand because the position
can be central to customer’s perception and choice.
A clear positioning strategy can insure that the
elements of the marketing program are consistent
and supportive.

61. Six approach for positioning
 Attributes (most frequent, Toyota: economy and reliability,
Volkswagen: value for money, Volvo: durability and safety, BMW:
handling and engineering efficiently), ignored points.
 Price/ quality. It is an important attribute. Service, features, or
performance (department stores – stores like Sears- discount stores
like Kmart).
 Use or application, associating product with use or
application(Campbell’s soup for many years was positioned for use
at lunch time).
 Product users. Many cosmetics companies have used this ( Johnson
& Johnson saw market share moved from 3 percent to 14 when they
repositioned their shampoo form a baby shampoo to one used by
people who wash their hair frequently and need mild shampoo)
 The product class ( the hand soap “Caress” by Lever Brothers
positioned itself as a bath oil product rather than a soap).
 The competitors. In most positioning strategies an explicit or implicit
frame of reference is competition. 1. established competitor’s image
2. you are better than a given competitor (Avis we’re number two, so
we try harder).

62. The process of developing a positioning
strategy
1. Identify the competitors (it is not as simple as it
seems). Primary group and secondary group.(
1.asking 2.use context)
2. Determine how the competitors are perceived and
evaluated( associations).
3. Determine competitor’s position. 1.Product
association based 2.similarities based
multidimensional scaling.
4. Analyze the customers, Segmentation.
5. Select the position, segmentation commitment,
economic analysis, don’t try to be something you
are not
6. Monitor the position