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Marketing Research Can Use New Product Evaluation

As stated in Stadelman, William & Cotteril, Owen J (1995), product managers who screen product ideas to be developed into products, pretty much follow the following sequence:

An 'expert' team analyzes the ideas from technological, manufacturability, and Voice of the Customer standpoints (VOC includes web site claims and reports from the sales-force and technical assistance staff).

The ideas that pass 'expert judgment' in terms of technology, manufacturability and compliance to Expressed Customer Needs go thru additional technical analysis by the product development department. If the PD Dept. states that - yes, the idea is feasible from a technical standpoint, - then the product concepts are analyzed in terms of economics (costs to make the product and investments required).

In parallel, a market analysis is done: unit sales to be expected in how many years and at what price.

Finally, the financials are calculated and priority ranking is done based on those parameters. It is very important to use multiple criteria because the highest NPVs will overcome the others. This is risky due to NPV Volatility. In other words, the bigger developments will throw out the smaller ones, but because they are bigger, they are also more difficult to sell, hence the higher NPVs found in larger projects are inherently more volatile than for smaller developments.

Show how market(ing) research can be used to assist the use of any 2 of the following new product evaluation tools:

Compliance to Expressed Customer Needs/Claims (Y/N)
Fit with Strategic Imperatives (Y/N)
Feasibility of development concept (H/M/L)
Manufacturability (Y/N)
Time to develop the engineered concept (H/M/L)
Needs for Qualified Internal Resources (H/M/L/N)
Needs for Plant & Equipment (P&E) Investments (H/M/L/N)
Expected Contribution Margin (H/M/L)
Net Present Value (NPV)
NPV Volatility Estimate (H/L)
Internal Rate of Return
Payback time

Use the Yahoo and Google search engines to find new product ideas to demonstrate the marketing research concepts and frameworks for analysis.

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Solution Preview

Determining Compliance to Expressed Customer Needs and Net Present Value of a Product
Through Marketing Research

Marketing research is the process of designing, gathering, analyzing, and reporting information that may be used to solve a specific marketing problem (Burns and Bush, 2003).
This paper intends to determine the extent to which the needs of the target customers are complied with through a product offering (e.g. a Brand of car) by a company. It will also further determine how marketing research would complement with Net Present Value method in evaluating product performance as indicated by its contribution to the overall company performance.
Specifically, the following research questions will be answered through this study:
1. What are the expressed needs of target customers of cars in terms of:
1.1 Functionality,
1.2 value for money,
1.3 status symbol, and
1.4 long-term usage?
2. Are there significant differences in the expressed needs for a car of the target customers when grouped as to: age, size of family, occupation, socio-economic status?
3. To what extent does the company's product comply/meet the expressed needs of its target customers?
4. What is the level of cash flows that are contributed by the product that is being studied to the ...

Solution Summary

The solution discusses marketing research that can use new product evaluation.