I’m thrilled to have Brett Jarvis be my guest blogger this week. During a recent visit to California, Brett Jarvis and I unexpectedly met each other, discovered professional similarities, and traded business cards. To our amazement, we discovered that we were already following each other on Twitter. What a small digital world!
Since then, I’ve had the pleasure of additional discussions with Brett and found him to be an extraordinary resource in the world of Product Management. I’m sure you will enjoy his post as much as I did. Thanks Brett!
As a product manager, you know the value of conducting market research at various points of the product lifecycle. For example, you might do a segmentation study to determine a winning target market or you might get input from your channels or conduct focus groups to identify ideas for potential new products.
But, are you making the most of some of the advanced research techniques that have become more accessible over the last decade? Do you understand your market’s preferences for specific features or messaging? Do you know how various segments will react to price changes? Can you conduct robust competitive what-if analysis?
To help you identify how you can benefit from some of these techniques, we’ll give an overview of three of them and how they’ll help you as a product manager. The three that we will focus on here are: Conjoint analysis / discrete choice analysis, maximum difference scaling (“MaxDiff”) and perceptual mapping. These techniques are equally valid for products and services, though we refer simply to “products” in the descriptions below.
Conjoint / Discrete Choice Analysis
Conjoint or Discrete Choice Analysis elicits your market’s preferences for the components that make up your product, including product features, service levels, brands, prices, etc. Although there are differences among the various conjoint and discrete choice techniques, for our purposes here we will consider them as a group and refer to them as conjoint. As a product manager, you can leverage conjoint to:
- Understand your market’s requirements
- Determine your business case and the market feasibility of your product
- Scope and define your product offering
- Create a differentiated product
- Price your product
- Plan your product and extensions to optimize your objectives
- Assess possible responses to competitive actions
Anytime you need to make tradeoffs among different aspects of an offering, you should consider using conjoint analysis. A conjoint study forces respondents to make tradeoffs and, therefore, uncovers their hot buttons. With conjoint you can understand which features, services, and brands are most important to your target market, the level of price elasticity, how likely your market is to purchase your product, how preferred your product is versus the competition, whether there are attractive preference-based segments for your product, how you can drive an increase in preference for your product, whether you should consider product line extensions and the extent to which multiple product offerings might cannibalize one another.
In short, conjoint helps you uncover a wealth of information. You will be better equipped to make the tradeoffs you need to as a product manager by getting respondents to make the tradeoffs for you.
Maximum Difference Scaling
MaxDiff elicits your market’s priorities when considering a single list of items. Whereas you use conjoint to evaluate and trade off a complete product or service offering based on product features, you use MaxDiff to evaluate the value of a list of items. So, for example, you can use MaxDiff to narrow a large set of features and then conjoint to determine the actual “best” product combination. The list MaxDiff helps you evaluate could be a list of possible features, but it could also be of anything else, such as messaging options or logos or slogans or names or anything that you would like your market to help you prioritize. As a product manager, you can leverage MaxDiff to:
- Gather market requirements
- Prioritize your market’s needs
- Prioritize product plans
- Determine which features to include in your product
- Determine the most effective product messaging
Any time you are looking to prioritize a list of items, especially once that list is approaching or exceeds double digits, you should consider using MaxDiff. And anytime you are looking to evaluate a similar list of items using ratings, rankings or constant sums, you should consider using MaxDiff instead. Whereas with ratings scales, respondents often indicate that everything’s important, and with rankings, they can’t indicate how much they prefer one item over another, MaxDiff uncovers both the order and the level of differentiation between the items. And although it uses complex math behind the scenes, MaxDiff is straightforward for both the respondent and the researcher.
MaxDiff is a powerful technique that is relevant for a wide variety of decisions you face as a product manager.
Perceptual mapping uncovers how the market perceives your product in relation to your competition. It gives you a visual representation of the market, helps you determine what is most important to your market, and helps to uncover opportunities for your brand by seeing gaps along those important factors. As a product manager, you can leverage perceptual mapping to help you:
- Differentiate your product offering
- Position your product or brand
Anytime you’re trying to understand how the market perceives your position in the market place, you should consider perceptual mapping. To position your product effectively, you need to know what’s important to your market, how your customers perceive your performance in those areas and how they perceive your competition’s performance. Perceptual mapping helps you uncover those perceptions so that your product’s strengths, weaknesses, opportunities and threats become evident through the proverbial picture that’s worth a thousand words. The end result is a winning, sustainable positioning for your brand.
Making Your Product a Success
As a product manager, you have a complex job that requires sophisticated decisions at every step of the product lifecycle. You need to be ready to apply the right technique at the right time to ensure your product’s success. Understanding and accessing advanced research techniques such as conjoint analysis, MaxDiff and perceptual mapping can help you at each stage of the lifecycle, from developing your product portfolio, to successfully launching new products, to product positioning, to responding effectively to competitive threats. As you use them, you will make more informed and effective decisions that will increase the likelihood of achieving your market objectives.
Brett Jarvis provides marketing strategy consulting services with Sawtooth Technologies Consulting Group, whose expertise in conjoint analysis, MaxDiff and other market research techniques leads to insights that strengthen clients’ market positions. You can follow Sawtooth Technologies Consulting on Twitter at twitter.com/sawtoothconsult or you can reach Brett at email@example.com.