CONCEPT

TESTING
Shrikumar M
 EMPOWE
R’S
ELECTRIC
SCOOTER
 EMPOWER ELECTRIC
SCOOTER
The emPower Corporation, a start-up company, had developed a new product
concept to address the personal transportation market.
Exhibit 9-1 shows a photograph of a prototype of the product.
The concept was a three-wheeled electric-powered scooter that could be folded up
and carried easily.
emPower wished to assess the customer response to this concept in order to decide
whether to proceed with its development and to support the company’s financing
efforts.
 7 STEP METHOD
1. Define the purpose of the concept test.
2. Choose a survey population.
3. Choose a survey format.
4. Communicate the concept.
5. Measure customer response.
6. Interpret the results.
7. Reflect on the results and the process.
 1. DEFINE THE PURPOSE OF
THE CONCEPT TEST.
Explicitly articulate in writing the questions that the team wishes to answer with the test.
Concept testing is essentially an experimental activity, and as with any experiment,
knowing the purpose of the experiment is essential to designing an effective
experimental method.
The primary questions addressed in concept testing are typically:
• Which of several alternative concepts should be pursued?
• How can the concept be improved to better meet customer needs?
• Approximately how many units are likely to be sold?
• Should development be continued?
 2. CHOOSE A SURVEY
POPULATION.
The team should choose a survey population that mirrors the target market in as
many ways as possible.
In the actual survey, the first few questions are called the screener questions and
generally are used to verify that the respondent fits the definition of the target market
for the product.
For the scooter, there were two primary consumer segments: college students and
urban commuters.
The team decided to form a survey population from both segments.
The team had also identified several smaller secondary segments, including
transportation for factory and airport employees.
 2. CHOOSE A SURVEY
POPULATION.
The sample size of the survey should be large enough that the team’s confidence in
the results is high enough to guide decision making.
The emPower team performed two different concept tests.
In early concept testing, the team sampled only a dozen or so potential customers to
solicit feedback on the attractiveness of the basic concept.
Later, the team performed a purchase-intent survey of 1,000 customers.
This survey was used to make a demand forecast on which financing decisions were
based.
Because of the importance of this objective, the team felt that the time and expense
associated with such a large sample were justified.
3. CHOOSE A SURVEY FORMAT.
Face-to-face interaction
Telephone/Mobile
Postal mail
eMail
Internet – Social Media, Blogs, Pop-ups
 4. COMMUNICATE THE
CONCEPT.
Verbal description: The product is a lightweight electric scooter that can be easily
folded and taken with you inside a building or on public transportation. The scooter
weighs about 25 pounds. It travels at speeds up to 15 miles per hour and can go
about 12 miles on a single charge. The scooter can be recharged in about two hours
from a standard electric outlet. The scooter is easy to ride and has simple controls—
just an accelerator button and a brake.
4.
COMMUNICATE
THE CONCEPT.
Sketch:
4.
COMMUNICATE
THE CONCEPT.
Photos and renderings:
4.
COMMUNICATE
THE CONCEPT.
Storyboard:
4.
COMMUNICATE
THE CONCEPT.
Video
Simulation
Physical Model
Interactive Multimedia
Working Prototypes
4.
COMMUNICATE
THE CONCEPT.
Matching survey with means of
communicating the concept
 5. MEASURE CUSTOMER
RESPONSE.
Most concept test surveys first communicate the product concept and then measure
customer response.
Concept tests also generally attempt to measure purchase intent.
The most commonly used purchase-intent scale has five response categories:
• Definitely would buy.
• Probably would buy.
• Might or might not buy.
• Probably would not buy.
• Definitely would not buy
5. MEASURE CUSTOMER
RESPONSE.
5. MEASURE CUSTOMER
RESPONSE.
 6. INTERPRET THE RESULTS
A model for estimating the sales potential of durables.
Products that last several years, and for which there is, therefore, a negligible repeat-
purchase rate.
These products are in contrast to consumer packaged goods, like razor blades,
toothpaste, or frozen food, for which forecasting models must consider rates of trial
and subsequent repeat purchase.
 6. INTERPRET THE RESULTS
We estimate Q, the quantity of the product expected to be sold during a time period,
as Q = N × A × P

N is the number of potential customers expected to make purchases during the time period. For an
existing and stable product category (e.g., bicycles) N is the expected number of purchases to be
made of existing products in the category over the time period.
A is the fraction of these potential customers or purchases for which the product is available and the
customer is aware of the product. (In situations where awareness and availability are assumed to be
separate independent factors, they are multiplied together to generate A.)
P is the probability that the product is purchased if available and if the customer is aware of it. P is
estimated in turn by
 6. INTERPRET THE RESULTS
P is estimated in turn by
P = Cdefinitely × Fdefinitely + Cprobably × Fprobably
Fdefinitely is the fraction of survey respondents indicating in the concept test survey that they would definitely
purchase (often called the “top box” score).
Fprobably is the fraction of survey respondents indicating that they would probably purchase (often called the “second
box” score).
Cdefinitely and Cprobably are calibration constants usually established based on the experience of a company with
similar products in the past.
Generally the values of Cdefinitely and Cprobably fall in these intervals:
0.10 < Cdefinitely < 0.50, 0 < Cprobably < 0.25.
Absent prior history, many teams use values of Cdefinitely = 0.4 and Cprobably = 0.2.
Note that these values reflect the typical bias of respondents to overestimate the probability that they would actually
purchase the product.
 6. INTERPRET THE RESULTS
Scooter Sold as Single-Person Transportation in Large Factories
This is an existing category.
Assume that scooters are currently sold into this market at a rate of 150,000 units per year (N =
150,000).
Assume that the company sells the product through a single distributor that accounts for 25
percent of the sales in this category (A = 0.25).
Assume that results from a concept test with factory managers responsible for purchasing
transportation devices indicate a definitely-would-buy fraction of 0.30 and probably-wouldbuy
fraction of 0.20.
If we use a value of 0.4 for Cdefinitely and 0.2 for Cprobably,
then P = 0.4 × 0.30 + 0.2 × 0.20 = 0.16 and Q = 150,000 × 0.25 × 0.16 = 6,000 units/year
 6. INTERPRET THE RESULTS
Scooter Sold to College Students
This is a new category and therefore poses a much more difficult estimation challenge.
First, what should be the value of N? We could define N several other ways.
For example, how many students purchase bicycles or motor scooters intended for basic transportation of up to two
miles. This number is approximately 1 million per year.
Alternatively, how many students must travel distances of between one and three miles either in commuting from home
or traveling between classes or other school activities. This number is approximately 2 million.
Assume that we sample students in this second group, and that we obtain a definitelywould-buy fraction of 0.10 and a
probably-would-buy fraction of 0.05. (Note that these numbers represent the fraction of respondents that indicate intent
to purchase within one year.)
Further assume that the company plans to sell the scooter through bicycle stores near campuses and advertise in campus
newspapers, for the 100 largest college campuses in the United States.
Based on this plan, the company expects that 30 percent of the students in the target market will be aware of the product
and have convenient access to a dealer.
 6. INTERPRET THE RESULTS
Scooter Sold to College Students
If we use a value of 0.4 for Cdefinitely and 0.2 for Cprobably,
then P = 0.4 × 0.10 + 0.2 × 0.05 = 0.05 and Q = 2,000,000 × 0.30 × 0.05 = 30,000 units in the
first year
 7. REFLECT ON PROCESS AND
RESULTS
The primary benefit of the concept test is in getting feedback from real potential customers
The qualitative insights gathered through open-ended discussions with respondents about the
proposed concepts may be the most important result of concept testing, especially early in the
development process.
The team should reflect on this evidence as well as on the numerical outcome of its forecast.
 7. REFLECT ON PROCESS AND
RESULTS
The team benefits from thinking about the impact of the three key variables in the forecasting model:
(1) the overall size of the market,
(2) the availability and awareness of the product, and
(3) the fraction of customers who are likely to purchase.
Considering alternative markets for the product can sometimes increase the first factor.
The second factor can be increased through distribution arrangements and promotion plans. The third
factor can be increased through changes to the product design (and possibly advertising) that improve
the attractiveness of the product.
In considering these factors, a sensitivity analysis can yield useful insights and aids in decision
making. For example, what would be the impact on sales if the team were able to secure a partnership
with a retailer and therefore increase A by 20 percent?
 7. REFLECT ON PROCESS AND
RESULTS
In reflecting on the results of the concept test, the team should ask two key diagnostic
questions.
First, was the concept communicated in a way that is likely to elicit customer response that
reflects true intent?
For example, if one of the primary benefits of the concept is its aesthetic appeal, was the
concept presented in a way that this aspect of the product was clear to respondents?
Second, is the resulting forecast consistent with observed sales rates of similar products?
For example, if only 1,000 gasoline-powered GoPed scooters (a competing product) are
currently sold to college students each year, why does the emPower team believe it will sell
30 times as many of its product?