In 2017, Tesla conducted an experiment where participants were presented with the idea of the new Model 3 car. The experiment compelled volunteers to evaluate the idea of the new electric vehicle and leave their feedback. During this experiment, Tesla invited those who were enthralled with the concept to put down a deposit for the new car. And voila! Tesla generated nearly $400 million through this research experiment.
Tesla’s research experiment is a great example of what we call concept testing.
An integral part of market research, concept testing is nothing but getting feedback from your target customers on an idea for a product or service that you are planning to launch. it allows you to measure the pulse of your customers and if they would be willing to buy your soon-to-be-launched product.
The feedback you receive from your customer through concept testing will allow you to make critical decisions about your offering to accommodate customer expectations better.
And the best part is that concept testing need not be limited to a product or service. You can use it to test out advertising campaigns, websites, company names, and so much more. It is an effective way to measure how well customers are likely to receive whatever it is that you are planning to introduce into the market.
In this article, we cover everything you need to know about the importance of concept testing in market research.
Why concept testing is important in market research
Concept testing allows you to direct focus to better ideas
- Gartner’s research shows that poor operational decisions can cost companies more than 3% of their profits.
Fortunately, this is where concept testing becomes important.
It allows you to understand what will work and what won’t from customers themselves. This way you will save time, effort, and resources and you can direct your focus on those ideas that are bound to sit well with the market. This is quite important from both an operational as well as a financial perspective.
- Concept testing allows you to identify what matters to customersMultiple factors surround the launch of a new product. From the product itself to marketing campaigns, to positioning, to pricing, there is a lot at stake.Concept testing allows you to work towards optimizing all of these factors in the best possible way. You can conduct multiple experiments to determine the likelihood of success and also understand what customers want from your offering. This will help you to build innovative products that meet customer demands.
- Concept testing allows you to narrow down your audienceNot all products are designed for everyone and that’s okay. What’s more important is to launch your product to the right audience.
Concept testing allows you to carefully select your audience based on how different segments of the market react to your concept. This way you can ensure that when you launch your product, you are well aware of who is likely to be availing of your offering.
- Concept testing allows you to improve your offeringsIf you’ve already launched your product and have a target audience, concept testing is a great way to upgrade your product. You can easily identify areas of improvement by gauging the feedback from your existing users. This can boost user engagement and increase the success of your product.
- Concept testing allows you to fix critical issues before the launchEven if everything seems to look good at the outset, concept testing can help you identify glaring issues and fix them before you go ahead with your market launch. You can optimize your offering and cut down the risk of excess costs.
You can enlist the help of focus groups, and use concept testing surveys, and a variety of other methods to understand any chances of failure, misinterpretation, or inefficiencies.
- Concept testing allows you to gather data to back up a conceptIt is quite common for stakeholders to disagree on the merit of an idea. This could be an idea for a product, a campaign, or even a brand revamp. In such cases, concept testing is a great way to gather solid data from your target audience.Conducting a simple concept testing survey will help you to infer how your idea is likely to fare within a segment and if it is likely to fail or succeed.
- Concept testing allows you to understand how much users are willing to spendThere’s a huge difference between people loving your product and people buying your product. And it hinges on your pricing.
Concept testing allows you to identify the number of people who are willing to spend money on your product. A great example of this is how Tesla conducted their concept testing and managed to generate half a billion just from a single experiment.
Understanding the if your target audience intends to purchase your offering is a very critical metric in determining the success of your product as well as your ROI.
- Concept testing allows you to test out your messaging and positioningLaunching a new offering is not just about the product or service you offer. What might seem like a great idea to you might just be the opposite for your customers. While it is important to develop good products it is equally important to ensure that your messaging and positioning is sensitive to the sentiments of your target audience. At times it may so happen that your product is robust but your messaging is not robust enough to compel your customers to buy your product.
Concept testing enables you to develop multiple messaging and positioning statements from different perspectives and angles. You can test these with pre-defined parameters to figure out what’s the best way to appeal to your target audience.
As you can see, concept testing is a critical measure in market research. It allows you to collect relevant feedback and gather highly valuable inputs. The most important thing to note is that concept testing can be carried out irrespective of what stage of development your product is in. Concept testing can and should be done at every stage of your product lifecycle so that you can create and launch a product that meets the needs of your target market.
All you need to do is figure out the best practices and methodologies for testing out your product and you will be able to make strategic decisions that drive successful business growth.