The developers of Barclays Bank’s recently launched brand b2 exacted a swift and immediate punishment from members of the project group who took their eyes off the target market during brainstorming sessions. They put a swear box on the table. Anyone who became too obscure or attempted to blind with science or confuse with calculations had to pay up.
It is easy to lose sight of the target market when you become immersed in developing a new concept, admits Steven Hastings, planning partner at Banks Hoggins O’Shea, which developed the b2 brand. “You spend a lot of time brainstorming in dark rooms, late at night and you can forget the project. This was a way of reminding us to keep it simple.”
But this was not the only procedure used to ensure that the developers kept potential customers in sight. Every two weeks throughout the planning process, Banks
Hoggins O’Shea ran a rolling programme of qualitative research, where ideas were put to real punters to see what they thought. The name b2 emerged fairly early and proved popular. Then the name “Advanced Savings Account” also tested well, following resistance to the word “investment”, which some people considered to be something “for rich people, not for me”, explains Hastings.
“We learned that we had to make it as simple as possible. Initial ideas were based on US models, which are much more sophisticated and give people far more choices of funds and savings plans. UK customers don’t want to think 20 years ahead. They just want to say how much they want to put aside each month and whether they want to do that for three, five or seven years,” he says.
Once the concept was clear enough, b2 went into quantitative research to model the size of the potential market and how much individuals would be prepared to save. Research was also used to test the advertising approach and different key messages. “Some ads were better at explaining the whole banana while others focused on specific product benefits,” says Hastings.
By using research throughout the development process, Banks Hoggins O’Shea was able to hone the product in line with consumers’ preferences.
But sometimes, product developers leave research until much later in the process, incurring huge bills for products that may never see the light of day. “Too often test market research is undertaken as an afterthought at the final stage before production,” says Chris Paxton, marketing consultant at research company Market Profiles. “Such research seeks to determine acceptance of a product that is probably going to be launched regardless of the research findings. Such efforts are unrealistic as significant product modification is impossible in terms of time and cost. It is essential that research and development departments appreciate market testing as part of a process, not simply as a last-minute insurance policy.”
This is particularly true for durables, which are very expensive to develop. In one case, Market Profiles conducted research for electric heater manufacturer Dimplex, when the company was developing a dual fuel fire using gas for heat and electricity for the flame effect.
“We needed live gas, so we went to British Gas Energy Centres for the tests,” explains Chris Stammers marketing manager for fires at Dimplex. “Model makers made a representative model. Aesthetically, it had to be like the final product, but we didn’t have to commit too much money to producing it.”
The research showed that consumers liked the appearance of the fire, but thought it too expensive. As a result, Dimplex decided not to pursue the project and was saved from committing too much of its research and development budget to a product that was ultimately not going to reach the showroom.
Market Profiles also uses models when it undertakes research for electrical goods manufacturer Panasonic. “We made up prototypes for a new range of televisions with the casing as it would look,” says Paxton. “Then we tested them against the current range and key competitor TVs to see what people thought. We were thinking of going back to a wood surround, but people really disliked that, so they were never produced in the UK. However, consumers in Germany and Scandinavia were more positive.”
Richard Herbert, business development director in the consumer division of Taylor Nelson SofRes, agrees that some manufacturers leave the research until too late in the development process, but he also warns against taking too long: “You can find that the competition has come out with a product first,” he says.
Sophisticated software can be used to predict the market for a new product, but most of the packages that do this will not account for a competitor getting in there first. Taylor Nelson SofRes has an analysis tool called Optima, which enables companies internationally to see how their products are positioned in different markets. It identifies a brand’s strengths and weaknesses as well as consumer groups who will be attracted to a particular brand.
“You can look at sales and penetration build over time plus competitive impact and cannibalisation of other markets,” explains Herbert. “You can also look at the impact of other aspects of the marketing mix, such as advertising, distribution, positioning and trial and you can identify hypothetical gaps in the market.”
Optima has been used by chewing gum maker Stimorol to analyse the gum market across Europe and to identify the potential for brand extensions such as strawberry and liquorice flavours.
Herbert says the biggest failing when using this sort of modelling software is in being too optimistic in terms of product awareness and trial. During the testing process, consumers are handed the product and asked to try it, whereas once the product is on the shelves, there is nothing to force the consumer’s hand.
Jeanette Vivier, associate director of research company GfK, agrees: “Consumer tests tend to assume 100 per cent awareness and 100 per cent distribution.”
GfK has conducted extensive test market research in Germany for products such as detergents, foodstuffs and other packaged goods. The test product is placed on a simulated supermarket shelf in a studio to identify whether consumers would reach for the product rather than its competitors. The results of this can then be fed through the test market software to predict potential market share.
Research International’s MicroTest product aims to take into account the impact of distribution and advertising to predict awareness and thus trial.
“You need to ask three questions,” says Julian Bond, global brand director, innovation and new product development. “How many people will buy it? How many will repeat purchase it? And how often will they buy it?
“A group of consumers test the product and from this you can predict trial and repeat purchase,” he adds. “You can also factor in other things such as awareness and the impact of distribution and advertising.”
Bond explains that the research also needs to be diagnostic in that it should be able to identify why people don’t want to try a product. “Is it because they don’t like it, don’t understand it or don’t believe it?”
He gives the example of instant tea, a product that consumers believe will be a poor imitation of the real thing. In this case, they must be given the chance to sample the product before they will have any faith in it. Instant coffee, on the other hand, has ready-made ranks of consumers content with the idea of it and willing to try a new brand.
Low repeat purchase may not only be because people don’t like the product, says Bond. It may be that the product does not live up to consumers’ expectations. “If you describe something as beef curry, but the curry flavour is too mild, then people buying it may be disappointed. But if you call it beef stew, the same consumers may decide they like the taste.”
“New electronic goods tend to follow a predictable pattern, with the product being taken up by the early innovators and then spreading throughout other consumer groups. Take the Internet, for example. As soon as it left anoraks’ bedrooms, the market started to grow. It is about five years behind mobile phones and growing in the same way.”
But other, totally new markets are harder to predict: “We had no precedent for the National Lottery,” says Bond. “Our figures for the potential market were much higher than anyone expected and the reality turned out to be even higher than that. We were about right on individual ticket sales, but we hadn’t taken into account the impact of company syndicates, which accounted for the extra.”
Runaway successes are very hard to predict, adds Bond. Mller knew it was on to a good thing when it launched its yoghurt pots, but no test software on the market could have predicted quite what a good thing they were. Products like Mller are the Holy Grail that all new product developers are aiming for. While they may not be able to replicate that sort of market success, they can at least have an idea of a product’s potential – or lack of it – if they do their homework during the entire development process. That way they will be better informed before committing a huge chunk of the research and development budget to a product that may be more of an instant tea than an instant hit.
Research 98, Europe’s largest exhibition for the market research industry, is taking place between October 20 and 22 at Earls Court Olympia.
The number of exhibitors registered at this year’s show stands at 90 and last year visitor numbers were up by nearly 20 per cent, with 2,674 going to the show.
Analysis of registration data shows that more than 80 per cent of the visitors had direct buying authority, with over 70 per cent holding a senior management position.
Among the exhibitors at Research 98 are Reuters, Statsoft, Scolari and Weeks Computing, and from the US, Bernett Research Services and FocusVision Worldwide.
Apart from the usual exhibitors expected at the show, Research 98 has drawn an increasing number of online and telemarketing specialists.
The show also incorporates a 28-session seminar programme which last year saw more than 3,000 seminar bookings over the three days.
Some of the brands to be studied during the seminar programme this year include Nokia mobile phones and Guinness in “Effective risk management – the role of research in creative new product development”; Goldfish credit card and Virgin Direct in “Marketing financial services – gaining differentiation in a market of new products”; and BSkyB on ‘The TV viewer of the future’.
For more information on the show see Website: www.research98.com