Managing New Products: Development to Commercialization 167
example, customers of a proposed truck may want a certain acceleration rate (CA).
Engineers turn this into the required horsepower and other engineering equivalents
(EAs). QFD allows firms to measure the trade-offs and costs of satisfying customer
requirements; it also improves communication among marketing, engineering, and
manufacturing.^11
Next, the firm uses QFD to develop one or more physical versions of the product
concept. The goal is to find a prototype that customers believe embodies the key
attributes described in the product-concept statement, that performs safely under nor-
mal use, and that can be produced within the budget. The rise of the World Wide Web
has driven more rapid prototyping and more flexible development; prototype-driven
firms such as Yahoo! and Microsoft cherish quick-and-dirty tests and experiments.^12
When the prototypes are ready, they are put through rigorous functional testsand
customer tests. Alpha testingmeans testing the product within the firm to see how it per-
forms in different applications. After refining the prototype further, the company moves
tobeta testing,enlisting customers to use the prototype and give feedback on their expe-
riences. Beta testing is most useful when the potential customers are heterogeneous, the
potential applications are not fully known, several decision makers are involved in pur-
chasing the product, and opinion leadership from early adopters is sought.^13
Consumer testingcan take a variety of forms, from bringing consumers into a labo-
ratory to giving them samples to use in their homes. In-home placement tests are com-
mon with products ranging from ice cream flavors to new appliances. For example,
when DuPont developed its new synthetic carpeting, it installed free carpeting in sev-
eral homes in exchange for the homeowners’ willingness to report their likes and dis-
likes about the carpeting.
Market Testing
After management is satisfied with functional and psychological performance, the
product is ready to be dressed up with a brand name and packaging, and put to a mar-
ket test. The new product is now introduced into an authentic setting to learn how
large the market is and how consumers and dealers react to handling, using, and
repurchasing the product. For example, idealab! is in the business of launching new
Internet ventures (eToys was one). Before starting CarsDirect, a Web-based car buying
service, idealab! put up a live Web page and monitored on-line market reaction. In just
one evening, the site sold four cars—results that hinted at the product’s potential for
strong market acceptance.^14
Consumer-Goods Market Testing
In testing consumer products, the company seeks to estimate four variables: trial, first
repeat purchase, adoption, and purchase frequency. The company hopes to find all of
these variables at high levels. In some cases, however, it will find many consumers try-
ing the product but few rebuying it. Or it might find high permanent adoption but low
purchase frequency (as with gourmet frozen foods).
The major methods of consumer-goods market testing, from the least to the
most costly, are:
➤ Sales-wave research.Consumers who initially try the product at no cost are reoffered
the product, or a competitor’s product, at slightly reduced prices, as many as three
to five times (sales waves). The company notes how many customers select its
product again and their reported level of satisfaction.
➤ Simulated test marketing.Up to 40 qualified buyers first answer questions about brand
familiarity and product preferences. These buyers are invited to look at