• Concept Testing

• Concept Testing

Concept testing calls for testing new­product concepts with a group of target concept testing consumers. The concepts may be presented to consumers symbolically or physi­

Testing new product cally. Here, in words, is Concept 3:

concepts •with a group of target consumers to find

An efficient, fun­to­drive, fuel­cell­powered electric subcompaet car that out if the concepts have seats four. This high­tech wonder runs on hydrogen created from

utrung consumer appeal. mcthanol fuel, providing practical and reliable transportation with almost

no pollution. It goes up to 110 km per hour and, unlike battery­powered electric cars, never needs recharging. It's priced, fully equipped, at £32.000.

For some concept tests, a word or picture description might be sufficient. However, a more concrete and physical presentation of the concept will increase the reliability of the concept test. Today, marketers are finding innovative ways to make product concepts more real to consumer subjects. For example, some are using virtual reality to test product concepts. Virtual reality programmes use

computers and scjnsory devices (such as goggles or gloves) to simulate reality. For example, a designer of kitchen cabinets can use a virtual reality programme to help a customer 'see' how his or her kitchen would look and work if remodelled with the company's products. Virtual reality is still in its infancy, but its applica­ tions are increasing daily.

After being exposed to the concept, consumers may then be asked to react to it by answering the questions in Table 14.2. The answers will help the company decide which concept has the strongest appeal. For example, the last question

asks about the consumer's intention to buy. Suppose 10 per cent of the consumers said they 'definitely' would buy and another 5 per cent said 'probably'. The

company could project these figures to the population size of this target group to estimate sales volume. Concept testing offers a rough estimate of potential sales, but managers must view this with caution. The estimate is uncertain largely

because consumers do not always carry out stated intentions. 1 ­ Drivers, for

example, might like the idea of the electric car that is kind to the environment, but might not want to pay for one! It is, nonetheless, important to carry out such

tests with product concepts so as to gauge customers' response as well as to iden­ tify aspects of the concept that are particularly liked or disliked by potential buyers. Feedback might suggest ways to refine the concept, thereby increasing its appeal to customers,

Marketing Strategy Development marketing strategy

The marketing logic by TC/MC/I the business unit

Suppose Toyota finds that Concept 3 for the fuel­cell­powered electric car tests hopes to achieve its best. The next step is to develop a marketing strategy for introducing this car to

marketing objectives. the market.

614 • Chapter 14 Product Development and Life­Cycle' Strategies

marketing strategy The marketing strategy statement consists of three parts. The first part

statement describes the target market, the planned product positioning, and the sales, A statement of the

market share and profit goals for the first few years. Thus:

planned strategy for a new product that

The target market is younger, well­educated, mo derate­to­high income outlines the intended

individuals, couples or small families seeking practical, environmentally target market, the

responsible transportation. The ear will he positioned as more planned product

economical to operate, more fun to drive and less polluting than today's positioning, and the

internal combustion engine cars, and as less restricting than battery­ safes, market share and

powered electric cars which must be recharged regularly. The company profit goals for the first

few years. will aim to sell 100,000 cars in the first year, at a loss of not more than

£10 million. In the second year, the company will aim for sales of 120,000 cars and a profit of SIS million.

The second part of the marketing strategy statement outlines the product's planned price, distribution and marketing budget for the first year.

The fuel­cell­powered electric car will be offered in three colours and will have optional air­conditioning and power­drive features. It will sell at a retail price of £12,000 ­ with 15 per cent off the list priee to dealers. Dealers who sell more than 10 ears per month will get an additional discount of 5 per cent on each car sold that month. An advertising budget

of £10 million will be split fifty­fifty between national and local advertising. Advertising will emphasize the car's fun and low omissions. During the first year, £70,000 will be spent on marketing rescareh to find out who is buying the car and to determine their satisfaction levels.

The third part of the marketing strategy statement describes the planned long­run sales, profit goals and marketing mix strategy:

The company intends to capture a 3 per cent long­run share of the total car market and realize an after­tax return on investment of 15 per cent. To achieve this, product quality will start high and be improved over time. Price will be raised in the second and third years if competition permits. The total advertising budget will be raised each year by about 10 per cent. Marketing research will be reduced to £40,000 per year after the first year.