Using a Conjoint study to establish a beachhead market.
Can how a product is launched really produce hugely different results? Read on!
The R&D department of a medical device company developed a new version of an established product. Unfortunately, R&D neglected to ask the doctors what they wanted. R&D missed the mark so badly that in even though the product was launched with a big budget and great fanfare, it failed to catch on in North America and was soon withdrawn from the market. Customers just didn’t like it.
Thinking the same could happen in Europe, the European market manager decided to approach things differently. He conducted a Conjoint study to better understand who the product might appeal to. Only 8% of the European doctors showed interest in the product but those customers who were interested were “Really Interested”.
Based on the results of the Conjoint study the European marketing manager designed a sales campaign targeted only at the potential customers. Importantly, because the Conjoint study identified which customers were interested the sales reps were matched to each doctor and given a specific message to deliver. The result is that the same product that failed in the USA today represents over 80% of the European sales volume and sells at a 10% price premium. How did this happen?
Turns out the European doctors tend to work in clinics. Usually 4 or 5 doctors work in the same place so when one of them showed success with the new product the other doctors got very interested and wanted to try it themselves. By targeting the interested 8% of the market the Europeans developed a beachhead segment and thus established a market. Once the beachhead market was established it was much easier to take the product to the rest of the doctors.
When Launching a New Product:
- Do the Conjoint study: Find out who wants your product.
- Target only Interested Customers: This takes discipline but can have fantastic results.
- Tailor the message to each of these customers: A properly designed Conjoint study tells you what attribute each customer is excited about. Use this information to your advantage.
- Establish your beachhead market before moving to other customers: Use your target customers’ enthusiasm to fuel your move to the larger market!
- Never launch to the whole market and hope for the best!
Too often managers decide to skip the Conjoint study and save some money only to see their product fail in the market wiping out millions of dollars in development. When it comes to a new product launch Pennywise – isn’t very wise at all.