Concept Generation and Evaluation
Module 2
Introduction to New Product Opportunities
The development process requires identifying opportunities and evaluating strategic choices. Organizations must remain alert to changing demographics, lifestyle shifts, and emerging technologies. Continuously studying competitor offerings and collecting feedback from existing customers also provides critical insights.
The Lego Case Study
Lego faced near bankruptcy in the late 1990s and early 2000s due to complacency, new action figures, and a digital onslaught from video games. The company lost touch with its community, resulting in complex and expensive products. Revival was achieved by conducting focus groups with children to understand the core appeal, creativity and simplicity. Lego launched the LEGO Ideas platform engaging fans as co-creators (e.g., MOCs, "My Own Creations") and leveraged Adult Fans of Lego (AFOL) as brand ambassadors. By partnering with Star Wars and Harry Potter, Lego merged communities and revived growth.
Opportunity Identification Methods
Buyer Utility Map
The buyer utility map is a strategic tool used to analyze product positioning and identify market gaps. The horizontal axis lists stages of customer experience (purchase, delivery, usage, supplement, maintenance, disposal). The vertical axis lists utility derived (productivity, simplicity, convenience, risk, image, environmental impact). This creates a 36-cell matrix to plot offerings against competitors.
| Market Space | Definition | Characteristics |
|---|---|---|
| Red Ocean | Cells where both the company and competitors have offerings. | Highly competitive, margin-bleeding pricing wars. |
| Blue Ocean | Blank cells representing unmet customer needs. | Open fields providing pricing power without competitor tracking. |
Product Frustrations
Studying frustrated customers yields significant insights for new product opportunities.
| Frustration Category | Description | Examples |
|---|---|---|
| Customer-Related | User cannot operate the product, or it is too complex and irritating. | Complex digital shower panels, hard-to-locate car buttons. |
| Design-Related | Flaws stemming from the organization's design choices. | Products lacking durability or with inappropriate shapes and sizes. |
User Research and Feedback
Lead Users
Lead users experience product needs months or years ahead of the general market and are highly open to experimentation. Lead user projects typically span four 5–6 week phases: project planning, trend identification, preliminary concept generation, and final concept generation.
| Lead User Category | Definition | Case Example |
|---|---|---|
| Target Application Area | Heavy, early adopters who use the target product extensively. | Tailors and barbers providing ergonomic feedback for scissors. |
| Analogous Market | Users in a related market with similar applications. | Grass cutters or industrial blades inspiring scissor modifications. |
| Specialists in Problem Areas | Users with refined, highly specific requirements. | Publishers needing ultra-sharp alignment cuts. |
Because lead user samples are inherently small, organizations must supplement lead user research with conventional market research.
Peter Morville's Honeycomb
A superior user experience can be measured using Peter Morville's Honeycomb model. The central question is whether the product is valuable to the user. Surrounding metrics determine if the product is useful, desirable, accessible, credible, findable, and usable.
Market Research Strategies
| Research Type | Focus | Sample Size & Execution |
|---|---|---|
| Existing Product Research | Direct feedback on current usage. | Large sample sizes (sales/marketing teams). |
| New Product Research | Identifying missing desires and hidden needs. | ~30 users to reach data saturation (design teams). |
Product Modeling and Planning
Kano Model
| Feature Category | Customer Expectation | Impact on Satisfaction |
|---|---|---|
| Must-Have | Bare minimum (e.g., sharp scissors). | Causes total dissatisfaction if absent; presence doesn't increase satisfaction. |
| Attractive (Delighter) | Unexpected features (e.g., extreme battery life). | Significantly increases satisfaction; commands a price premium. |
| One-Dimensional | Linear: more is better (e.g., RAM, processor speed). | Satisfaction scales linearly. |
| Indifferent | Customer does not care. | No impact either way. |
| Reverse | Customer actively dislikes (e.g., an ugly color). | Causes irritation; dealbreaker. |
Product Variety Matrix
Plots basic features (minimum satisfiers, upgrades) on the horizontal axis and premium features (delighters) on the vertical axis, generating a grid mapping base models against heavily configured models.
Quality Function Deployment (QFD)
QFD is a documented, diagrammatic process originating in the Japanese automobile industry that ensures consumer needs remain the focus throughout development. The primary visual tool is the House of Quality.
| House Component | Function |
|---|---|
| Left Side | Lists the "Whats", customer requirements gathered from surveys. |
| Right Side | Planning matrix detailing competitive assessment. |
| Middle Section | Maps relationships (strong/moderate/weak) between customer needs and technical requirements. |
| Top (Roof) | Maps technical correlations (positive or negative). |
| Bottom | Calculates relative importance weightages. |
QFD cascades down through multiple organizational levels: System → Parts → Process → Production Planning.
User Tool Kits
When customer demand is highly heterogeneous, organizations provide user toolkits allowing customers to configure their own products via trial and error. Examples include paint shade cards, airline flight connection tools, and customizable laptops.
| Effective Toolkit Requirements | Business Benefits |
|---|---|
| Adequate library of modules and design options. | Sustainable, hard-to-copy competitive advantage. |
| User-friendly with simple design skills. | Reduces development time and cost. |
| User designs easily executed without revision. | Provides organic insights into emerging trends. |
Concept Evaluation and Testing
Risk-Payoff Matrix
- AA (No Error): Stopping a project that would have failed.
- BB (No Error): Continuing a project that succeeds.
- BA (Go Error): Continuing a project that ultimately fails.
- AB (Drop Error): Stopping a project that would have succeeded (opportunity cost).
| Risk Handling Strategy | Definition | Execution |
|---|---|---|
| Avoidance | Outright elimination of the risky project. | Incurs opportunity cost but bypasses failure risk. |
| Mitigation | Reducing risk to an acceptable threshold. | Redesigning or adding backups (online + offline launch). |
| Transfer | Moving responsibility to another entity. | Joint ventures, subcontractors, franchise models. |
| Acceptance | Dealing with risks as they materialize. | Active (contingency plans) or passive (react later). |
Concept Testing Techniques
Concept testing prescreens to eliminate poor concepts and estimate buying intentions. Organizations focus on respondents who state they will "definitely buy" or "probably buy." Test formats include verbal descriptions, visual sketches, and interactive prototypes.
A major debate is whether to include a price tag:
- Pro-Price Tag: Argues consumer choices are dictated by cost.
- Anti-Price Tag: Argues price biases the consumer, distracting from judging quality and utility.
Conjoint Analysis
Conjoint analysis maps products onto a joint space map, identifying which benefit segment the product appeals to (e.g., performance seekers vs. safety conscious users) and pinpointing direct competitors within that cluster.
ATAR Forecasting Model
| Metric | Definition |
|---|---|
| Awareness (A) | Percentage of the target market aware of the new product. |
| Trial (T) | Percentage willing to make an actual purchase (not free samples). |
| Availability (A) | Physical or digital reach via distribution channels. |
| Repeat (R) | Frequency of recurring purchases or word-of-mouth recommendations. |
Evaluation Dimensions and Product Protocol
Concept evaluation analyzes four fit dimensions:
- Strategic Fit, alignment with corporate vision.
- Customer Fit, meets unmet consumer needs.
- Technical Feasibility, hard-to-copy and protectable.
- Financial Returns, breakeven and projected profitability.
The output is the Product Protocol, the final package articulating definition, target market, competitive positioning, and core attributes.
Strategic Management and Execution
| Strategic Approach | Description |
|---|---|
| Top-Down | Centralized; corporate leadership dictates strategy and allocates funds. |
| Bottom-Up | Decentralized; project teams use corporate mission criteria to filter ideas organically. |
Leading organizations combine both, using a 7-point scoring model: management interest, customer interest, sustainable competitive advantage, technical feasibility, business case strength, core competencies, and profitability.
Case Studies: Rubbermaid and Chipotle
Rubbermaid: Achieved a 90% success rate by driving non-technological functional innovation (foot levers on trashcans). When acquired by Newell, Rubbermaid's manufacturing was separated to preserve its distinct innovation culture.
Chipotle: A fast-casual restaurant designed as a cash cow. Success driven by execution, simple made-to-order menu, open kitchens highlighting freshness, "food with integrity" vision. Relied on product quality and word-of-mouth rather than preachy advertising.
Ultra-Quick Revision (Exam Essentials)
Key Concepts & Distinctions
| Concept A | Concept B | Core Distinction |
|---|---|---|
| Blue Ocean | Red Ocean | Blue = open, unserved spaces; Red = highly competitive, margin-bleeding. |
| Must-Have | Delighter | Must-haves cause dissatisfaction if missing; Delighters drive premium pricing. |
| Target Lead Users | Analogous Lead Users | Target: use the product heavily; Analogous: similar concepts in different industries. |
| Top-Down | Bottom-Up | Top-down: centralized funding; Bottom-up: team-driven filtering. |
| Go Error (BA) | Drop Error (AB) | Go Error = executing a failed project; Drop Error = abandoning a winner. |
Must-Know Terms
- Buyer Utility Map: 36-cell matrix for finding competitive blank spaces.
- Peter Morville's Honeycomb: Useful, usable, desirable, findable, accessible, credible, valuable.
- QFD: Visual planning system using the House of Quality.
- User Toolkits: Modular systems for customer self-customization.
- Joint Space Map: Conjoint analysis output mapping competitor benefit segments.
- ATAR Model: Awareness × Trial × Availability × Repeat.
- Product Protocol: Final pre-development definition document.