MaxProduct™ Case Study: A Leading Financial Service Firm Ventures into a New Market with a Tailored Product

Challenge:

A client in the financial services sector was in the process of designing a new product outside of their traditional offerings and needed to identify how brand, pricing, and features affect consumer decisions. The new product targets a variety of segments so the features could potentially end up being completely different for each target. The client approached Rockbridge for a study with the objective of developing a lending product with the optimal set of features and evaluate the precise impact of each feature in interest and intent to apply in its new market.

Solution:

In order to provide guidance and address the client’s objectives, Rockbridge used its MaxProduct™ solution to gauge the reaction of consumers to brand, price, and feature combination by having them complete a series of trade-off tasks where they reviewed  hypothetical products and indicated their interest and intent to apply for the new loan offering. Compared to other methods, MaxProduct™ allows the design to include a large number of features for consideration and avoids overwhelming customers by presenting a limited number of scenarios to evaluate.

For this financial services client, a large survey sample of prospective customers was sourced from a reputable online panel.  In the online survey, respondents were presented with 4 different scenarios, each with a different brand and the following features:

  • Interest Rate
  • Type of Rate
  • Discount for Qualifying Applicants
  • Fee
  • Expedited Approval Process

Consumers also rated the desirability of each feature, determining how important these are in this kind of lending loan product. The process mirrored a simulated shopping experience because it helped consumers familiarize themselves with the features, their meaning, and what they should be looking for in a real-world product search. The feature combinations in each scenario were configured scientifically to avoid bias and represent real life scenarios. Consumers rated the interest and intent to apply for 4 different loan products with varying features and pricing, therefore forcing them to make trade-offs.

Rockbridge analyzed the trade-off tasks and integrated them with the individual scale rating of the perceived desirability of features to see how consumers behaved in response to different brand/price/feature scenarios. The client was able to identify the best possible combination of features for each segment of interest and the impact on the intent to apply (See example below).

In addition to identifying the optimal combination of features for each segment of interest, the client was able to precisely determine the dominant features driving decision and their value:

Result:

Rockbridge identified the features that drove intent to apply for the loan product. Features like “Expedited Approval Process” and “Discount for Qualifying Applicants” did not have a great impact, even though the client hypothesized these features were going to set them apart from other financial institutions.

In addition to providing guidance on the product, Rockbridge also provided an excel-based simulator that the client used to analyze the results and test different scenarios. The simulator allowed the client to vary the features of the product and obtain real life simulations on interest and demand.

This study provided the client with the tools to design a product in a market that was previously unexplored. By using our MaxProduct™ solution the client was not only able to find the impact of the features being considered for the new loan offering, but to tailor their offering and communications to optimize strategy for different segments.