IT S TIME TO RETHINK CONCEPT TESTING

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1 GfK 2017

2 concept testing no longer predicts innovation success Many of our clients tell us that traditional ways to test concepts fail to provide the level of agility, direction and prediction they need. Existing KPIs are inadequate for today s decision-makers, whatever their function. For instance: Executives need answers to questions such as are we delivering innovations that excite, engage, and energize consumers? Insight teams ask can we deliver innovations in a shorter timeframe? Brand managers and innovation teams want to get closer to consumers than ever before. They need to understand if their innovation drives incremental brand growth. GfK

3 Three ways to deliver value and ensure innovation success Successful innovation is the value exchange between brands and people. The ideal concept testing approach measures the extent to which a new concept improves individual consumers lives. For brands, value is defined as achieving the target ROI, driving incremental growth and building a long-term relationship with consumers. For people, value amounts to improving their life. The only reason consumers switch from what they currently use to try something new is the expectation that it will provide a better experience. By extension this means improving life even if it s only in a small way. Indeed, three things are important in creating value for people: broader consideration set and the tradeoffs made by different consumer segments when considering their options. It is in this context that the concept needs to be evaluated. If you know that certain segments are not doing certain jobs, then why bother to test an idea with this group of people? Why interview the general population? The simple answer is you don t need to. Once you are open to rethinking general population recruiting, you can then re-evaluate how you benchmark the success of any innovation. The only reason consumers switch from what they currently use to try something new is the expectation that it will provide them a better experience. One: Consumers must see your new product as a better way to get the job done Clay Christensen, author of The Innovator s Dilemma, defines jobs as the circumstances that arise in people s lives (for example: get the kids out in the morning, getting from A to B or connecting with friends and family). Every innovation needs to be evaluated in the context of these circumstances or jobs. We typically refer to this as a need state, occasion or demand space in research. If value is created in the context of a job, it is essential to understand the The product must be a better way to get the job done Make it easy for consumers to switch and adopt Create an emotional connection GfK

4 Three ways to deliver value and ensure innovation success If you know that certain segments are not doing certain jobs, then why bother to test an idea with this group of people? Two: Make it easy for consumers to switch to your new product and know the five levers that impact trial and adoption Traditional performance indicators in concept testing are similar to liking a social media status: consumers state in the most non-committal way that they appreciate your effort. In the real world, trial and adoption require commitment, energy and action. To facilitate adoption and predict the real success of products, brands need to understand that consumers have individual ways of building up commitment, energy and willingness to act. Traditional performance indicators in concept testing are similar to liking a social media status. We have identified five levers (see page 5) that impact adoption of new products that you can use to detect hurdles pre- and post-launch. The relative importance of each individual lever is largely dependent on the industry or category the brand is playing in, but also varies from person to person. KPIs should mirror the adoption drivers that are most relevant to turn a like into a buy. GfK

5 Three ways to deliver value and ensure innovation success 1 Category engagement How relevant is the category for me? What other solutions are around? Do I trust the brand(s) behind the innovation? 2 Behavioral change Do I need to change my routines? Do I have to learn something? Do I expect a pleasant user experience? 3 Value How happy am I with my current solution? - Does the new product/service really improve my life? How? - What new benefits are offered? Is there an emotional connection? How big is the relative advantage of the new product/service? 4 Incremental costs Do I need additional infrastructure to use the new product/service? 5 Recommendations Does my peer group love it/recommend it? Is there positive evaluation in (social) media? What does my retailer or sales person recommend? Our five adoption levers provide a framework for deriving drivers of category adoption. Using this framework, you can capture KPIs with both individual and social considerations. Individual level KPIs allow us to build trial curves for each respondent, enabling better forecasting and providing deeper insights on category dynamics across populations. GfK

6 Three ways to deliver value and ensure innovation success Brands that enjoy high levels of emotional attachment will also thrive economically. Three: Create an emotional connection to your product This point is critical. Brands that enjoy high levels of emotional attachment will also thrive economically, as seen in Boatwright and Cagan s widely recognized book Built to Love. The authors emphasize the crucial role that emotion plays in product and br. They provide empirical evidence to support their contention that product innovations that enjoy higher levels of emotional attachment among consumers also thrived economically. In other words, a strong emotional connection to a new product is a crucial factor in creating the energy and commitment that adoption requires. Put simply, emotional attachment is the key to brand growth. This reinforces the importance of concept testing that gets brands closer to their consumers emotional reactions than ever before. Measuring the emotional impact requires implicit metrics Nobel Prize winner Daniel Kahneman s research on decision-making and behavioral economics highlights the relevance of implicit (System 1) and explicit (System 2) thinking processes in making purchase decisions. Traditional research methods using Likert scales are able to measure reflective thinking (System 2) but can t capture implicit (System 1) intuitive feelings, such as the emotional connection. This means scales are perfectly valid for measuring contextual relevance where reflective thinking is necessary, but they are not suitable for measuring the emotional impact. Measures both intuitive System 1 (implicit) and reflevtive System 2 (explicit) thinking GfK

7 program These three pillars for value become the foundation for what to measure to define innovation success. These three pillars for value getting the job done, making it easy to adopt, and making an emotional connection become the foundation for what to measure to define innovation success. But how you measure is equally important. Implicit measurement captures intuitive emotional impact. However, to better predict the true potential of innovation uptake and ultimately lead to better launch forecasts, you must understand the why and how the product improves life at the individual level, in addition to aggregate metrics. The next generation of concept testing solutions Core KPIs should be based on both implicit and explicit measures to capture truer understanding of the concepts trial potential through behavioral insights. Emotional Impact KPI Our new concept performance scores capture peoples emotional reactions to your new product ideas. The E3 Scores measure the level of Excitement, Engagement and Energy elicited by the idea. These KPIs are versatile so they can be used at any time you want to test a concept s emotional impact, from early to late-stage research. Whenever you choose to employ them, E3 Scores strengthen your existing research; it will get you much closer to your consumers. Speech is the natural way to communicate feelings, thoughts and actions. To that end, we measure E3 by simply asking respondents what they think of the idea and why. By listening to what people say, as well as how they say it, we can measure both implicit thinking (System 1) and explicit thinking (System 2). This is captured spontaneously and unprompted, providing an authentic approach to understanding the emotional impact of new market experiences. Capture better results more efficiently Voice analytics provides more than Emotional Impact (EI) metrics; it allows you to hear why the concept performs as it does. This provides robust insight for how to improve the concept. Merging rich qualitative insights with the rigor of quantitative metrics into one test saves you time and money in your innovation process. GfK

8 program Move beyond concept boards to capture better data Concept boards have been the standard for years. First, as boards designed to be read face-to-face and then, designed to fit electronic screens. Most are used in a problem-solution format, where the concept s benefits (promise) are explicitly detailed against some insight that expresses unfulfilled needs. This might have worked when marketing relied heavily on network advertising, but now, with digital campaigns and a fragmented media landscape, this is not ideal. Today, intended product launches and post-launch experiences vary by client and brands. Some products launch online, and others in traditional channels. Some plans aim to let the new packaging do the heavy lifting in communicating benefits to consumers, while others intend to support the launch with heavy media spend. Ideally, the choice for how to present the concept should consider the intended launch plans and inmarket push rather than holding on to outdated standards. Especially since these standards exist primarily for one reason normative benchmarking. When these outdated standards are pushed aside, you can consider videos, rough ads, or packages as stimuli rather than a stereotypical visual with a long-written description. Ideally, the choice for how to present the concept should consider the intended launch plans and in-market push rather than holding on to outdated standards. Beyond the stimuli format, it may make sense to show the idea in the context of its competitive set. You may be anxious to know the merit of the idea without competitive reference, but also recognize it will need to stand up to this rigor eventually. By introducing the concept as it will be shown at retail you can reduce one step in the process. GfK

9 program Virtual or simulated retail testing Virtual or simulated retail testing showcases products in a competitive context. It allows your concept s potential to be measured against a behavioral KPI, getting you one step closer to predicting future market behavior. Even if you are vetting early-stage concepts, you may find this method more robust. With the dropping costs and increased speed of creating digital renderings, producing mock-ups has minimal impact on budgets and timing. If you intend to sell online, this becomes even less of an issue. After all, most online retailers include a product description with the picture, promise, and a product description. GfK

10 program The new way forward So what does this mean for your next concept evaluation testing? It means you should reconsider both the design and the KPIs. It means the end of traditional black box forecasts and testing against general population. It means developing the program that is right for your innovation, more flexible, faster, closely tied to your brand growth, and not dependent on a single supplier. Once you have customized programs with stimuli and relevant target sets that are right for the business, large cross-client normative databases are meaningless. This opens the opportunity to use concepts that have met your definition of success as the control. Customized benchmarks have an added advantage; you can analyze brand and category KPIs that are driving your success and further hone what winning innovation success means for your business. A better simulated retail experience With GfK s Simstore, our simulated retail experience technology, you can test concepts in a way that closely mimics consumers in-market experiences. We can capture passive behavior (such as whether they pick up a test product) and be flexible on how the product is presented. We can also highlight products so consumers can read the claims made on the pack. Our technology allows you to introduce the concept within its competitive set, whether online or offline. GfK

11 program Summary Challenge the status quo. Don t settle on an innovation research process because it is what has always been done. Your brand and business are unique, so design a research program and KPIs that are tailored to you. Some takeaways to employ for your next market disruption: We want to empower you with the right KPIs and insights, and that means adding truer, spontaneous consumer feedback to your concept testing. Adding emotional scores will enable you to confidently rollout an optimized, emotionally-relevant commercial proposition that will fit seamlessly into customers lives. It will help you increase your chances of backing and delivering winning innovations that achieve long-term consumer adoption and enjoy maximum market impact. GfK

12 Questions?! Dirk Moersdorf Global Director Go-to-market Solutions Market Opportunities and Innovation, GfK T , dirk.moersdorf@gfk.com About GfK GfK is the trusted source of relevant market and consumer information that enables its clients to make smarter decisions. More than 13,000 market research experts combine their passion with GfK s long-standing data science experience. This allows GfK to deliver vital global insights matched with local market intelligence from more than 100 countries. By using innovative technologies and data sciences, GfK turns big data into smart data, enabling its clients to improve their competitive edge and enrich consumers experiences and choices. GfK. Growth from Knowledge GfK 2017