This course will highlight the potential of quantitative marketing research for assessing new product opportunities. In addition to focusing on the skills and practices for a successful New Product Development (NPD), the course will illustrate the multi-faceted challenges of NPD using authentic business situations. The first module will provide business practice foundations to help learners devise creative solutions to problems using a design-thinking framework. Learners will experience the idea creation process and then apply the role of surveys for evaluating consumer responses to an idea before introducing a product to market. The second module will explore the technique of conjoint analysis for quantifying the customer benefits, customer values, and the trade-off he or she is willing to make between the price of the product and desired features of the product or service. Concept testing identifies perceptions, wants, and needs of a product or service as the foundation of targeting and positioning a product in the marketplace. The third module will describe a multitude of tools for assessing technology readiness and defining the product features to target the key customer need requirements. Learners will hear an in-depth interview with one of the leading U.S. business executives on the management challenges of innovation. Learners will develop a survey (with appropriate data privacy agreements) and analyze the data for decisions about the pricing and positioning a new product into a focused market. The fourth module will illustrate the use of the tools to create a sales and pricing forecast for a new product. Three new product ideas representing three different types of market unknowns will be analyzed using market research tools. Upon completion of this course, the learner will have defined and redefined their product idea and created a credible sales forecast for use in an overall business case.
1.2 Critical Factors to Assess an Idea
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Do curso por University of Illinois at Urbana-Champaign
Customer Insights: Quantitative Techniques
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Module 1: Idea Generation
In this first module, we will help learners understand the role of surveys and the ability to evaluate consumer responses to an idea before introducing a product to market. Concept testing identifies perceptions, wants, and needs of a product or service as the foundation of targeting and positioning a product in the marketplace.
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James LenzAdjunct Professor
Business Administration
Welcome back to our course on Quantitative Customer Insight Techniques,
and this is Module 1.
I'm, again, James Lenz with the University of Illinois.
Again, we're working on this Idea Generation.
So this is Lecture 2 of this module,
and we'll continue to work on giving you examples of ideas and how they
proceeded to become product developments as a way to stimulate your thinking about ideas.
And, again, the goal is,
"What is your idea?",
and helping you to document this idea and get it on paper.
Well, the whole process of innovation,
which this course and the following course and the whole speciality,
is dealing with is, "What is innovation?
How do I bring a process to this concept of innovation?
What precedes the S curve?
How do I sort through ideas to realize I'm going to start with
the product developments that are going to be successful and have a market appeal?"
So you'll see this form again and again.
Hopefully, you already started scribbling some notes
about this to define this product idea,
come up with a description of this idea,
and even a drawing of this idea.
So you're going to name this idea,
write a sentence about it,
and illustrate your idea to,
again, take a picture of it, you can insert a photo.
So, hopefully, you're creating this.
As this goes on, there'll be more time at the end.
I'm going to keep giving you warnings that this really
is the assignment at the end of this Module 1.
As you think about your idea and want it to be a good idea,
something that is valuable is three more points
to consider is what I call technology readiness,.
The product is defined,
and there's a market forecast.
The technology readiness is the technology known or are there inventions still needed?
I might think of making a levitating type of sphere.
That's a great idea. They could find lots of uses for that.
But is the technology available to make that anti-gravity type of machine?
The two things we always looked for in research centers is ideas that were
sort of hidden behind these two concepts because they are such fascinating concepts.
There is such a market need for them as one is levitation
and the other one is free energy, perpetual energies, machines.
And you'd be surprised how many ideas come.
They're not called that,
but when you start unraveling them,
start really looking at them,
what is the technology behind those ideas,
that they end up really portraying that type of
capability because there is such a strong market pull for those ideas.
But it's not what we want to do is come up with ideas that just have market pull.
They also have to have some technology readiness.
So how do you learn about this?
You need to talk to your friends again,
learn about things, go out and Google.
Today with the Internet,
so much information is available about what technologies are available,
how things work, how things can be done.
So you need to do a little bit of that homework on
your idea to think about its technology readiness.
The second activity to think about,
from a critical issue point,
is this product defined?
Can you envision the operation of the product and its approximate recurring cost?
Many technologists don't want to deal with this,
but in reality, that exercise gives you so much thought about your idea.
Can I build it in my garage,
or do I need a hundred million dollar semiconductor fab
to be able to build this type of device?
Then what is the cost of that?
What is the cost of those parts after I get done doing that,
and what is the capital equipment that's needed to then build this device?
Do I need to build a factory to build this type of device?
Thinking about the cost really helps you define the product,
helps you think through what is really in that product and how does it get done.
So that's another factor that you should think about.
As you think about your idea,
think about what is the cost to manufacture this idea,
or what's the cost of the factory to manufacture this idea?
The third thing that I want you to think about is market forecast.
Are there lots of customers for your idea?
Can you confirm this?
Is there one customer,
or is there no customers?
I've had people come to me with ideas and say, "I've got this great idea.
I've got a drawing. I have it all worked out."
Well, is there any customer for it?
And most people say, "You know, I wouldn't even buy this.
I don't need this thing. But I think it's a great idea."
If you don't need it,
you should start thinking about where other ideas need to go.
And certainly there's many things I've worked on, I don't need them.
I mean they're controls for airplanes.
They're controls for spacecraft.
They're new sensors for automobiles.
They're new safety features that are built into automobiles.
I personally don't need them,
but I like to know that they're available,
and they're part of that machine itself.
So I know that there are customers but maybe not myself.
And then I can look at how many customers there are.
But you should think about this.
But the first question you should ask for your idea is,
would you buy it yourself?
Is it a valuable to you? If not,
then where is there a value,
and what type of customers would there be interested in this idea?
And try to explore this and think this through.
Think through these three points
with your idea and see if you can answer these questions that are posted here.
We're expanding this form and, now,
there will be a little scoresheet and,
as part of the assignment,
I will be asking each of you to look at other people's ideas and try to take
a first cut from your own knowledge of what the technology readiness,
how well the product is defined,
and what the market forecast is from the little descriptions we have.
And you might think this isn't the way the world works,
but then I'll tell you, I've been involved in many, many meetings,
where you've got one page to describe your idea to get initial funding from
various suppliers or your boss or for different companies or venture capitalists.
You need to be able to put your idea in a very simple form for
people to understand it and be able to get some sort of initial feedback on,
is this idea worth pursuing or not?
So let's come back to my friend Endo,
Ichiro Endo, CTO of Canon.
In 1995, Canon developed and started selling their bubble jet printers,
and they sold 20 million of them by this time.
It was a 20 billion dollar a year business.
His story was he invented this serendipitously with dropping a syringe of ink.
I mean, I don't know how many other people maybe this happened to that dropped
a soldering iron or a syringe of ink and didn't make anything of it.
He was the one that saw an idea there.
His first few years,
he was very much what I call a technology push.
He had this great technology.
He is pushing it, trying to find applications for it.
He's traveling around.
I asked him, "Why were you even at this conference in
Seattle that you met Schlumberger?", and they started talking about this printer.
He says, "I don't know why I was there."
I mean, you worked for Canon.
Why was he at this conference? So, anyway, I had a chance.
How I got to know Endo,
he was the CTO in 2002,
and he wanted to retire,
and he was asking me.
He invited me over from the United States to come
over and talk about new product development and idea generation.
And what is the process for idea generation?
Because he says, "I need to retire. I want to retire."
But the board of directors of Canon, a huge company,
will not let him retire unless he starts a process or another way.
They need one more bubble jet printer.
They want one more product.
They want one every 20 years.
It's enough for a company like that,
one big product like that.
But he had no idea what the process was.
He had no feeling for how that worked.
So I spent three days with him with translators up in
the board room of Canon on the top floor.
They're just outside of Tokyo.
And we talked about this process,
and I told him ideas,
my own experience as well, but I said,
"I came to ask you what the process was."
He says, "No, you are invited here to tell me what the process is."
So it took a day and a half for us to realize that we
came together to ask each other exact same question.
So it just says this idea generation and valuing it,
coming up the value, is a very complex problem.
It's not something that's easily done and can be easily explained.
The rest of the Endo-san story though,
which leads to success is,
by '86, he starts to think about markets.
One of the first things he thought about was he saw these portable PCs.
Portable, at this time,
there's a picture of a IBM PC.
I bought one of these when one of those first came out.
This was my computer.
It was called a luggable computer,
not a personal computer at that time.
It was quite heavy. But he saw this as an idea that people
will need a printer that would go with this portable PC business.
So he went to work and reinvented his technology yet
again and convinced his company to invest in this themselves,
whereas the developing the printers for the Schlumberger,
he had them pay for some of the development or pay for
the printers which covered the cost of developing those 100 printers.
Here, he had to convince his internal company to fund
this idea and put it out as a commercial product,
as a consumer product.
So the BJ-10 came out.
I bought, again, one of these when it first came out.
Here's the one I own as shown here as well as it in a later version,
which they look like today.
By 1995, 20 million of these printers had been sold,
20 million in five years.
Interesting thing about this story as well is
that the profit was not in selling the printers,
but it was in selling the ink.
So they licensed their bubble jet printer to any company that wanted it.
So you can see bubble jet printers are made under many different brands.
Let me tell you about another interesting invention or
idea that's caught my eyes and a little bit unusual one.
It was in 2004,
the United Kingdom did a survey and asked several thousand people,
"What has been the greatest technical innovation in the past 40 years?"
Well, wouldn't we think? It would be mobile phones?.
That was third. When we think it would be the worldwide web, that was second.
The first place, almost half of the people said it's something called the widget.
I had no idea what the widget was,
but I decided I have to go study this and figure out what this is.
So, it led me to a company called Guinness.
And as a result of that, I was invited by Guinness to
do work on this and now you can read about the story on
their web page about the invention of the widget and how it was done.
But they are just sort of put it on
the back burner and thought it was something that was done.
But as a result of that,
they've now become much more of a marketing company because of this invention.
The story begins with a gentleman by name of Tony Carey.
He was a brewing director in the 1960s,
and it ends with a gentleman by the name Alan Forage,
who became the brewing director in the 1980s and 1990s.
Tony, at first, invented this first concept and he'd taken out
some patents on it and Alan Forage found this idea,
basically, 20 years later and said,
we can maybe commercialize this.
But here was an idea,
that it kind of gone through a technical feasibility phase, but then,
it sat for 20 years before I went through
that market feasibility phase and became something you could commercialize.
So, in 68, Tony described his project as put draught Guinness in bottles.
And if you know about Guinness beer,
it's quite a famous stout type beer.
Stout beers are, by their nature,
are better at holding nitrogen than they are of carbon dioxide.
As a result, and this was first discovered when people were in
bars and they were trying to put foam on head on their beer,
they're just pumping a bicycle pump into the beer.
The process of doing that, it formed a tight little creamy head.
Well, people realized this was coming,
because air is 80 percent nitrogen.
So then, Guinness took on this activity to try to make
a brewing process that encouraged nitrogen to be held into the solution,
until you started to pull it out of the tap,
and as you did that, the nitrogen came out of solution and formed this creamy head.
Tony knew about this and he said,
I got to do this in a bottle.
In the draft, they have a way of putting nitrogen,
extra nitrogen container and being able to put this creamy head on.
But in a bottle, you open it up and you start drinking it.
So in 85, Alan Forage took this idea and then got another patent.
He filed all over the world with his patent,
but he got a patent for it.
And now, his trick was in 1988,
he had to convince the management to modify the canning process to include this widget.
If you ever been to canning processes,
especially beer, they go very fast.
So, you have to be able to put in this widget,
put in some liquid nitrogen, and then,
be able to put the beer in and put the cover on immediately.
So, it took some effort, and again,
this idea costs. What is the cost?
The cost of this widget.maybe is very small,
but the cost of manufacturing was,
technology readiness, wasn't there and needed to be invented.
So again, how do this works?
There's an example of a widget inside of a bottle and Guinness is quite
proud to say that no one has ever
choked on any of their widgets. They don't come back out.
They're a way of getting in both cans and bottles,
but they don't come back out.
You have to break the bottle to get it out.
Nitrogen into nitrogen gas-filled widget is inserted in there.
A drop of liquid nitrogen is put inside of this.
So, there's a small orifice in this plastic unit that you see here,
where nitrogen is inserted.
And because of the way the liquid nitrogen works,
and the size of that orifice,
some beer gets inside there when it's put inside the bottle and it holds
that nitrogen then inside that widget until you open up the pressure of the bottle,
which releases that pressure.
And now, the nitrogen comes out of that little widget.
Again, where is the word widget come from?
I think it goes back hundreds of years using
literature as something people didn't really know how to describe it.
So, I give Tony and Alan credit for coming up with this name,
widget, kind of clever, fun name.
How do you describe this thing?
Let's just give it a name and that name has now caught on.
I mean, it's a great branding concept to name this thing this way.
And then, nitrogen bubbles then lead to
more nitrogen bubbles that are a little bit caught in solution.
So now, you get this creamy head that Guinness says you can cut with a knife.
If you ever had this beer,
it's quite fascinating in this way.
An important pull that happened from all of this,
besides winning this award for this technical achievement,
which I thought was quite fascinating and then again in 2004,
still recognized as one of the greatest inventions in the last 40 years.
But what really changed was in 1995 and around the world, society was changing.
And there was more need for being socially responsible.
This idea of not drinking and driving and staying home with
their kids and being better family together and so on.
So, Guinness realized that the pub type of business was going to be limited.
The growth was going to be in their market.
Their customers we're going to need this taste of in heaven,
but they need to get it at home.
So, how do I get that pub taste at home?
Which was exactly the idea that Tony had in 1968.
As a result of that, in 1998,
Guinness grows their business worldwide.
And in fact, if you talk to Guinness,
I've been working with them for three or four years,
in the 2000 time frame,
they no longer are really even a beverage company.
They call themselves a marketing company and they've taken
this idea and they no longer even talk about this idea anymore.
It's perfected, it's gone, in fact,
they licensed it to other companies.
You can get this widget in many different brands of beer, it's available.
They don't think it's that important.
To them, what has been important is now,
they can take that taste and modify
it and make it fit any consumer need around the world.
So, if you get a Guinness in South Africa,
it tastes a little different but it meets that customer need.
Get a Guinness in Ireland,
it's really the original taste, taste the best.
You get a Guinness in the United States.
You get a Guinness in Japan.
Now, Irish pubs all around the world.
And in fact, they've taken this idea even further that they're sort
of what I want to call it reinventing St. Patrick's Day.
St. Patrick's Day is famous for going out and getting some Irish food or an Irish drink.
Now, they've started doing this six months separate from
that as having another day when you could toast around the world,
have 1 million people toast each other.
And you go by as the sun goes around the globe,
there's the Irish pub that's in there and that day you go and have an Irish beer.
So, they really are communicating.
It's much more of a marketing story,
but it was all enabled because of this idea.
This idea of the widget.
So, it's quite fascinating how your idea can
grow into a complete strategy for a business,
a worldwide global business.
So again, coming back to this,
if I were Tony filling out this form, I would again,
from a technology push concept as maybe a nitrogen gas injection device,
is a device that can be included with a single serving beer that will
create a perfect foam head when the bottle or can is opened.
And so, I draw a picture of a can being opened and
try and have some nitrogen gas coming out,
percolate into that can.
And now, as I pour that can into a glass,
I would get this perfect head, that's all of this.
So, what I'm talking about is the technical readiness was so nice.
It's very much available.
You need to be able to build of plastic ball,
which is very easy to do.
Form it with a small orifice.
You need to do some chemistry and understanding of
the pressures and the physics of this to size that orifice just right,
of how you get liquid nitrogen into it.
But this is an engineering activity,
it's not an inventing activity.
Is the product defined?
It's pretty well defined.
I think they don't know,
at this time exactly, how it was going to work.
How much head we are going to get?
How much head is needed by the customers?
How much nitrogen should I put out?
How long it's going to take? How much is it going to slow up the manufacturing time?
So, the product wasn't exactly defined,
but as a market forecast, yes.
They knew that their customers wanted to have this creamy head,
so they had to deliver it.
So, I think in this case, by the time they went to production on this,
they knew pretty well where this idea was
and that's why it was quite successful as a product.
So again, in summary,
what is your idea?
I want you to think about these activities, this technical feasibility.
The product is how was defined?
What's the market forecast?
And I want you to keep reassessing your idea as you're going through this module.
Writing some notes down.
Hopefully, as you're watching this video, you're taking note.
You're thinking about things, you're renaming ideas,
maybe a complete new idea comes up.
I want you to keep reassessing your idea because this is the inventing process.
This is the idea of generation process.
It's a constant activity of continue to rethink and rework things as new ideas,
new themes come in the process.
So, thanks for watching and we'll see you at the next lecture.
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