Tech Tip: Monadic vs. Sequential Exposure

by Rick Mason, Project Director

As Ken mentioned in our last newsletter, we do a lot of concept tests. We also do a lot of positioning tests – which are very similar to concept tests. It used to be that our clients had already narrowed things down to one concept or positioning by the time they approached us to test it. But in these days of tighter budgets and accelerated timelines, many clients skip the once traditional early stage research (usually focus groups or concept screens) and come to us with multiple concepts or positionings to test.

The natural temptation is to do a sequential design, where each respondent sees all concepts or positionings in a randomized order. This is usually less costly than a monadic design, where unique cells of respondents only see one concept or positioning. More often than not, we recommend against the sequential approach. It’s not that we want to do more interviews. Rather, there are several potential design flaws with the sequential approach.

• No matter what you think, respondents will judge each concept or positioning relative to the ones they have already evaluated (see our article on this in last month’s newsletter). Too frequently, we are forced to do most of our analysis based on the concept or positioning they saw first.
• The more subtle the differences in the concepts or positionings, the more difficult it is for respondents to differentiate between them. This is typically a bigger issue with positioning research than it is with concept testing.
• The sequential approach necessitates fewer questions per concept or positioning in order to contain the interview length and avoid respondent fatigue.

This is not to say we feel a sequential design is never appropriate. If the purpose is a concept screen, with additional concept testing planned for later, we almost always recommend the sequential approach. We also recommend it when concepts are fairly unique and only limited evaluation is needed for each, and we frequently use the sequential approach for menu tests. We rarely recommend it for positioning tests.

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Pricing Research

by Ken Roberts, President

Pricing research seems to confuse and bewilder many seasoned researchers. When someone wants to test a concept or product, or measure advertising effectiveness; they generally know what they want to do and just need to work out the specifics. But when it comes to pricing, they are frequently stumped. To be fair, pricing research is less common than many other types of marketing research, so they just may not have enough experience.

When the call comes in for a pricing study, we usually hear something like “I need to conduct a study to determine the best price for my XYZ product (or service).” As soon as we start asking questions to help decide the best approach, most of these people are surprised that it is not as simple as they thought. So here’s a brief primer to help you the next time you have to do pricing research.

• First, stop thinking like a marketer and think like a consumer. Price does not exist in a vacuum. Your research will fail if you think you can just test price. Respondents are smart. They quickly figure out your game and will lead you to a lower price than is really necessary. You must test price as part of the marketing mix such as brand halo effect, product features, and competition.
• Decide what you mean by “best price.” Is it the price that maximizes sales, optimizes margins, enhances brand imagery, minimizes cannibalization of other company brands, or what?
• Is it a standalone product or is it part of a good/better/best product line?
• Are you in a category where consumers have a general understanding of prices? For example, most consumers know the acceptable price range for a tube of toothpaste or a meal at a casual restaurant, but they may not know the typical price range of a seldom purchased item such as a new furnace or newer technologies such as an iPad or solar panels.
• Remember that a lower price is not always the best price among consumers. If the price goes too low, perceived quality and value drops and interest in the product disappears.

Once you have thought about the above items, your next step is to decide the best approach to the research. Listed below are the most common study designs. They are generally in order from the lowest cost approach, but also the least effective, to the more expensive, but also most effective design.

• Concept test where everyone sees the product at one price and they are asked purchase interest. Those not interested are then asked interest as the price goes down in 2-3 steps. Those who were interested in the product are asked interest as the price increases by 2-3 steps.
• Van Westendorf approach – where respondents are asked four pricing questions, ranging from “so low they would question value and not buy it” to “so expensive that they would not buy it”. Price elasticity curves can be developed using this design.
• Monadic concept test where several cells of the same concept are tested among unique groups of respondents, but for each cell, the price is different.
• Discrete Choice Exercise – this form of Conjoint Analysis simulates the consumer decision process. The emphasis is on the entire product and not artificially focused on price. They see a choice of fully profiled (brand, price, features) products and are asked which one, if any, they would select. This is repeated numerous times. The analysis on the back-end allows choice modeling to help determine the optimal product configuration – including price.

While the outline above gives a brief synopsize of each approach, they each warrant their own newsletter article. Some have been covered in previous issues and can be accessed at our website.

If you want to discuss the pros and cons of each approach to help decide which might be right for your pricing research, please send us an email or visit our website.

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Forwarded... "Life on Powerpoint"

This quarter we take a look at the lighter side of marketing research and the use of PowerPoint with the help of Avalaunche Blog and Graph Jam.

Without further ado, we present "Life on Powerpoint"...

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