Product optimization is one of the most important decisions any organization will make. For instance, a bank may try to determine the features to include in a new rewards-based credit card, a consumer electronics manufacturer may face design decisions for a new device, or an association may seek to create the best benefits package for members. In each case, managers must assess trade-offs between cost, pricing and consumer acceptance. The ideal product includes features that provide the greatest impact on demand relative to their cost. In short, it optimizes profit.
Product optimization requires knowing the precise impact a feature has on demand. Such information is best derived from a trade-off (i.e., conjoint) study that produces an economic decision-model based on asking prospective buyers to evaluate trade-offs. An abundance of methodologies exist, including full-profile conjoint analysis, adaptive conjoint analysis, choice modeling and max-diff.
Rockbridge helps its clients design and optimize their new (or updated) products with MaxProduct™, a solution based on a hybrid-conjoint methodology that offers unique benefits to two important audiences: the product manager and the consumer (survey respondent). The product manager is focused primarily on making a decision, and MaxProduct™ provides an easy to use, Excel-based simulator that allows her or him to examine the impact of different product feature combinations on demand. The manager can assess the demand potential of a given product combination and/or can compare the “lift” relative to a base case, such as an existing product configuration. Rockbridge can also build financial models into MaxProduct™ simulators so that managers can identify what product is truly “optimal,” taking into account the trade-off between feature costs and their impact on demand; ideally, the cost impact of including a feature should be offset by its impact on demand.
Product managers also have other needs that MaxProduct™ easily addresses. For instance, they often wish to assess a large list of features in the product design. MaxProduct™ can also assess the impact of brand, develop demand/revenue curves and look at the impact of design on qualitative variables such as loyalty.
Finally, MaxProduct™ readily provides managers results for different market segments. These could be breakouts determined a priori, such as customer versus non-customer, level of usage, life cycle, etc.; though the MaxProduct™ system can also identify benefits segments, consisting of groups of consumers with similar product feature needs, and provide simulations for each segment.
The other stakeholder who benefits from MaxProduct™ is the survey respondent who can be a consumer or a b2b purchaser. Compared to most trade-off methodologies, MaxProduct™ is relatively easy for respondents, who typically evaluate no more than three to nine individual product scenarios. To the respondent, the evaluations seem straightforward and interesting, and every respondent is exposed to the full range of product features, brands and prices considered for decision-making purposes. A shorter questionnaire leads to better quality and lower cost, and causes less friction when the respondents are important customers. While most studies are fielded online, MaxProduct™ is one of the few conjoint approaches that can be conducted over the telephone. MaxProduct™ studies can also be accessed by respondents on their smartphones or tablet computers.
A research approach is only as good as its scientific foundation. Rockbridge originally developed its methodology 25 years ago, and has tested and refined the approach over scores of applications since that time. MaxProduct™ has been used for a wide variety of products in the financial services sector (e.g., credit cards, checking accounts, lending products), travel (e.g., loyalty rewards), digital services (e.g., social media products, advertising services, cloud storage), communications (e.g., triple play packages), and consumer technology (e.g., mobile devices, entertainment devices, appliances). The basic models upon which the solution is based are cited in the literature, although the complete process behind a MaxProduct™ study is proprietary and carefully documented to ensure consistency and quality for Rockbridge clients.
MaxProduct™ is truly unique as a tool to design or update a new product. It delivers maximum value to the research user, while providing a positive experience to the survey respondent. And like other Rockbridge research solutions, it is based on rock-solid science and years of practical testing.
Written by: Charles Colby, Chief Methodologist, Principal and Founder