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Friday, December 31, 2010

Why Traditional Product Concept Testing Doesn’t Work.

Say that you have an idea for a new consumer product or service. It could be an improvement to existing one, a breakthrough new idea altogether or one that occupies a growing niche. You are excited and sure that others will be too. But how do you know if your idea is a good one? Do you know it’s good? Do you just think it’s good? Do you just think you know it’s good?

There are over 25000 new consumer products introduced every year. Almost half fail or disappoint at launch and only a few survive a few seasons. Only about 1 idea in 7is a good idea to begin with and that one idea can get ruined by a poor execution.

The worst mistake a product manager or developer can make is to do no market research at all. The second worst is to do incomplete or self-serving market analysis. But between the two, nearly 75% of product launches come to market anyway, usually with poor results.

The third worst move is to conduct research at the concept level.

Concepts are little more than ideas posing as a commercial product offering. The idea of a cola with just 60 calories may be a great idea. The reality of a cola with 60 calories sweetened with saccharine and recycled high-fructose corn syrup, available in a 12 oz. lead-lined steel can and selling warm for $1.49 each at flea markets is terrible idea. One is the concept of a reduced calorie cola; the other is as it would reach the market as an execution of the idea at the SKU (Stock Keeping Unit) level.

Details matter. Details define a product much more than the idea behind it.

Nowhere in the go-to-market value chain does anyone manufacture, distribute sell or buy a concept. It is all done at the SKU level, item-by-item. The sooner a product developer articulates an idea as it would realistically appear in the market, as a SKU, the faster and more productive will be its development and execution.

Yet traditional concept testing continues unabated and methods virtually unchanged for decades. Results continue to disappoint and little progress is made. Most concepts are fuzzy ideas at best, and typically ignore critical information concerning the product as it must appear in the real world. Incredibly, many concept tests for food or beverages do not include prices, contents, nutrition facts, ingredient statements or directions for use. Results are interpreted in comparison to the results of previously conducted tests, just as shoddily composed.

In the end, the market decides which concepts succeed and which fail once expressed, by necessity, as finished SKUs.

Product managers will be wise to consider that endpoint, and test with fully articulated SKUs, to align development inputs with executional outputs from the start.

Details matter.