Failure rates for new products on the market are notoriously high but are an important aspect of sustaining a business’s innovation (Ernst, Hoyer, Krafft and Krieger, 2010). Following the idea generation stage for a new or enhanced product or service, a company may think they have a great idea, but do potential customers agree? In essence, this is the purpose of concept testing (or market testing), to ensure that a product concept is likely to be well-received by the market (Kotler and Armstrong, 2014).
Consider the rebranding of a clothing store. Before making the decision to change the logo, the layout of stores and other facets of the business, it is important that consumers buy in to the concept and are consulted to make sure that they are likely to accept the change. Unfortunately, for the clothing chain GAP, they were faced with an uncomfortable reality in the winter of 2010, when they decided to rebrand their stores with a new logo without proper concept testing. While the firm described the new brand as more contemporary and modern, within a week, the business was forced to revert back to its original logo following a consumer backlash (Sharma and Garikaparthi, 2013). It is estimated that this folly cost the business in excess of $100 million USD as well as the associated negative publicity (Hardy, 2013).
The purpose of concept testing is therefore to reveal flaws in a product or design concept and to identify consumer reactions to reduce the possibility of market failure. Peng and Finn (2008) recognise a number of key outcomes from the concept testing process including the idea being refined, developed further or abandoned altogether. However, they also recognise the importance of using concept testing as a tool to identify the value of the concept and generate estimates of potential sales.
Algers (2011) identifies a wide range of techniques which can be used to facilitate concept testing. These can range from simple telephone, email and web surveys to face-to-face focus groups. While there are numerous techniques, the important message is that the concept is formed in a way which is tangible to the individuals assessing the idea, so this may include a proposed name for the product, a detailed description, an artist’s impression of the product or concept and a list of all the potential benefits to a consumer.
A technique which is growing in popularity for concept testing is crowdsourcing. This technique employs the use of volunteers in online communities to assess and develop product concepts on behalf of business. But, as Hardy (2013) observes, the use of crowdsourcing was the downfall of the GAP rebranding as the ‘crowd’ got it wrong and didn’t necessarily reflect the views of the consumers it was actually targeting with the new brand.
While concept testing can be expensive, as demonstrated by GAP, effective testing can reduce product failure rates and save reputation and money, making it an important stage in the product development lifecycle.
Algers, A. (2011) Strategic new product development: Concept Testing. [Online]. Available from: http://qpc.adm.slu.se/SNPD_ver2/page_28.htm (Accessed: 9 February 2014).
Ernst, H., Hoyer, W., Krafft, M. & Krieger, K. (2010) ‘Customer relationship management and company performance – the mediating role of new product performance’, Journal of the Academy of Marketing Science, 39(2), pp. 290-306, Springer. [Online]. Available from: http://link.springer.com.ezproxy.liv.ac.uk/article/10.1007/s11747-010-0194-5 (Accessed: 9 February 2014).
Hardy, T. (2013) 10 Rebranding Failures and How Much They Cost. [Online]. Available from: http://www.canny-creative.com/2013/10/10-rebranding-failures-how-much-they-cost/ (Accessed: 9 February 2014).
Kotler, P. & Armstrong, G. (2014) Principles of Marketing, 15th Edition. London: Pearson Education Ltd.
Peng, L. & Finn, A. (2008) ‘Concept testing: the state of contemporary practice’, Marketing Intelligence & Planning, 26(6), pp. 649-674, Emerald. [Online]. Available from: http://dx.doi.org.ezproxy.liv.ac.uk/10.1108/02634500810902884 (Accessed: 9 February 2014).
Poetz, M. & Schreier, M. (2012) ‘The Value of Crowdsourcing: Can Users Really Compete with Professionals in Generating New Product Ideas?’, Journal of Product Innovation Management, 29(2), pp. 245-256, Wiley. [Online]. Available from: http://onlinelibrary.wiley.com.ezproxy.liv.ac.uk/doi/10.1111/j.1540-5885.2011.00893.x/full (Accessed: 9 February 2014).
Sharma, R. & Garikaparthi, M. (2013) ‘What’s In A Name – Logos That Express New Thinking’, International Journal of Management Research and Business Strategy, 2(3), pp.58-67. [Online]. Available from: http://ijmrbs.com/ijmrbsadmin/upload/IJMRBS_51d1b2d6e3f74.pdf (Accessed: 9 February 2014).