When it comes to new product development, the level of purchase interest in a product or concept frequently gets more weight than it deserves. Yes, purchase interest matters. But it’s not the only measure of success, and it doesn’t guarantee success on its own. There are a variety of factors that have a role to play and understanding the ‘why’ behind the claimed buy is where the true potential of an idea is revealed.
Purchase intention results are invariably strongly tied to price reactions. A price out of step with expectations quickly dooms a purchase intent score. This factor is particularly relevant at the moment. With the world and New Zealand recovering from a recession, shoppers are more price conscious than ever. A recent Sapien and Perceptive study found 9 out of 10 Kiwis have changed their spending habits, while 50% were conscious of their spending and 34% were cutting back. In a time when shoppers are more price sensitive than usual, they are predisposed to seeing many NPD concepts as too expensive. This is something Sapien is seeing more frequently in products we’re testing.
If purchase interest doesn’t guarantee the success of a product launch, what does?
No one factor reveals whether a new product will succeed or fail. Concept testing for a new product may return a strong purchase interest score but, unless that new product is priced right, meets users’ needs—and expectations—and is sufficiently different from existing solutions in the market, it’s probably going to flop somewhere along the line.
Let’s explore the other factors that can reveal a product’s true potential.
Read more: How to find the right price for your new product
Relevancy
When a customer sees an idea, you hope that they can find a role for it in their lives; is it relevant to needs or occasions they have or does it neatly slot into an existing behaviour? This is central to success. If someone says they’ll ‘probably buy’ it, but the product doesn’t have an active (or frequent) role in their lives then it is unlikely to actually translate into meaningful market share.
Using category entry points (i.e. the occasions or buying situations associated with your category) can shine a light on the scale of the opportunity, highlighting the needs consumers believe it will meet and the occasions or moments when they would use it. As a brand, this is powerful as it identifies when a new product opens up new occasions and new reasons for purchase, offering incremental brand growth rather than simply share trading.
When testing, we’re looking for a product that ticks a lot of needs and occasions, and ideally ones that occur regularly or often. Every one of the CEPs achieved represents an opportunity for the product to be bought, strengthening its true potential.
Read more: Understanding category entry points (CEPs) and how to use them
Differentiation
It’s one thing to have the right product at the right price, but what sets it apart from existing solutions? Is it better, greener, faster, cheaper than other products on the market? At its core, differentiation helps create reasons for a consumer to choose your product over a competitor's. In the NPD process, differentiation can be about identifying what strengths the consumer perceives in your idea, what does it do better than existing brands? What can it do that no-one else does? Does it tap into an emerging need or trend? What opportunities exist to set it apart from the competition, for example, low-carb beer means you can have beer without the ‘dad bod’. This in turn ties back into relevancy, for example, is having a healthy body relevant to your customer?
Differentiation can emerge from a range of product attributes, it could be in the price, it could be your business model (i.e. buy outright versus subscription), it could be flavour if your product is consumable—whatever you choose, it needs to not be something you or your competitors do not already have available. For example, say you developed a new non-alcoholic ready-to-drink gin. As part of your research, you might look at what flavours your competitors already have available and opt to launch your product with unique flavours or a different benefit, such as organic or local.
Want to scope out your new product idea? Talk to us about Ideascope
The importance of balancing purchase interest, price, relevancy, and differentiation
It is critical to note that purchase interest, price, relevancy, and differentiation are all interconnected. Success doesn’t come from just focusing on one, but on all of them. When it comes to NPD and product launches, all these factors need to be in balance to get a true measure of success.
One more challenge: Distinctiveness
Once a product achieves a balance in price, relevancy, and differentiation, it has a further hurdle to overcome if it’s to succeed: distinctiveness. This is about helping your customers discover your product or service once it is available.
Some great products make it through their launch but fail to deliver the sales volumes a brand hoped for. In these situations, we often discover that shoppers are unaware of the product or don’t see it on the shelf. In short, they simply don’t know about it and therefore can't buy it.
While differentiation helps, distinctiveness is about cut through and whether your brand stands out and noticeable on the shelf.
3 tips to building insight beyond purchase interest
1. Understand your audience’s price thresholds
This point comes first and foremost. We recommend doing some research to understand whether your new product has hit the mark on price—and, most importantly, if it hasn’t. Ideally, you also want to gain a good understanding of the extent to which price is constraining demand for your product.
2. Ask: Who is most interested in this product?
Who is your audience? If your new product appeals to the same audience as your other products, you will likely see sales of your first product cannibalised by your new product. In some situations, this can be a good thing, we see it in the fashion industry all the time with new seasonal wear replacing the outgoing season’s wear. However, if you intend to keep selling both products, you need to ensure they are not competing too closely with each other.
In a similar vein, we believe it is important to gauge interest beyond your current customer base. By only researching your current customers, you’re limiting your idea to one audience—i.e. people who have already bought your first product or service. By exploring appeal more widely you make unlock new audiences, new opportunities, and more growth.
3. Identify your category entry points (CEPs)
Part of your concept testing should include some exploration of what your NPD's CEPs are; do potential buyers see your idea as similar to existing products you or your competitors offer, or does it open up new buying or consumption occasions? By understanding your CEPs, you’ll not only gain a better understanding of your consumer needs, but you can use it to build awareness by targeting those occasions through your communications and marketing.
Summary
Overall, the purchase interest metric has its place, but it shouldn’t be focused on exclusively given the other elements that can make or break a new product or service. By broadening your focus, you gain a richer understanding of your idea's potential, which can open new horizons and audiences.
See distinctiveness in action in our Sealord case study.
