Maximize Market Share With Actionable Insights from The Stevenson Market Simulator
New products and services are the lifeblood of any company. As they are being developed, you’ll find that many questions can arise during the development process. The answers you choose will help guide decisions regarding the final makeup of the new product or service, as well as its associated pricing. Some questions that frequently come up for our clients have been:
- What is the appeal of each product/service feature I’m considering?
- Which products/service features are most important?
- What value do consumers ascribe to each product/service feature?
- What is the optimal set of features to offer?
- How does varying the set of features impact consumer interest in the product or service?
- How is this impacted by competitors’ offerings?
To help answer these questions in an actionable, data-driven manner, we have developed the Stevenson Market Simulator. This is a proprietary tool designed to enhance conjoint studies we run on behalf of the client. It answers these questions by allowing clients to perform their own custom modelling with any combination of features to assess the impact on consumer preference.
Let’s take a step back. How does this work?
The building blocks of the Stevenson Market Simulator come from having first performed conjoint research for our clients.
We specifically use a choice-based conjoint approach, where respondents will see multiple sets of a differently featured and priced product or service. They choose which they prefer, if any. This choice is used to determine relative price-value ranges for different features and feature levels. In other words, how many consumers will pay the prices associated with the different product features being tested? Conjoint exercises typically consist of 5-8 features, with 2-4 levels per feature. For example:
- For a walk-behind lawn mower, features might be: Brand, Fuel Type, Deck Width, Bag Location, Mulching Capability, Engine Brand.
- For a refrigerator, features might be: Brand, Freezer Location, Capacity, Type of Ice Maker, Number of Doors.
- For a checking account, features might be: Financial Institution, Charge per Teller Transaction, Check Stop Payment Fees, Credit Monitoring/ID Theft Protection Fees, Paper Statements vs Electronic Statements.
The approach provides simulations in which different feature bundles and prices of the product or service can be tested. Ultimately, this addresses consumer preferences for various configurations, as well as providing an understanding of potential market size, values associated with each feature/feature level, and direction for overall pricing. Feature values will identify the relative importance of different features and of their levels. Higher feature values indicate higher importance, and a greater willingness from consumers to pay for those features. These features values are the inputs for the Stevenson Market Simulator.
The Stevenson Market Simulator Tool
The resulting customized Stevenson Market Simulator, developed from the research and delivered to the client, allows the client to simulate the market dynamics that make up consumer preference. The deliverable is an Excel file that models product preferences. It provides maximum flexibility to instantly assess the impact on share of preference when:
- Adding/removing any product completely from the model
- Adjusting your product’s features (adding/removing/adjusting levels) and/or competitive product features
- Adjusting the price point for any features
By analyzing the results of “adjusting the levers”, clients get actionable insights that enable them to assess the optimal configuration and pricing for their product or service, ensuring they are not pricing themselves out of the market , but also not leaving money on the table (pricing too low).
If you are planning on a new product or service introduction, you will likely only have one chance to “get it right” by making certain it is featured and priced properly. Using The Stevenson Market Simulator to model the market, will help you do just that.