Stand out in the crowd

GSE medical imaging equipment was fast falling into the commodity race with other suppliers around the world. Sales were mostly based on low price and the ability to grant financing to the hospitals who forced suppliers to submit bids. Service contracts, where the real money was made were also eroding quickly. It seemed to be a race to the bottom for the world's medical imaging suppliers.

With GSE's financial performance declining there was immense pressure toget the next new imaging product "right". However, the R&Ddepartment, marketing department and sales teams couldn't agree on what customers would define as value. During one development meeting a team member had the audacity to suggest they find out. In what was at the time a total departure from development protocol, the medical imaging team contracted a Conjoint study to better understand the voice of the customer.

A key aspect of designing, developing and launching a new product orservice is to be sure of what the market really wants before committing scarce resources. However, in reality, managements' understanding of customers' needs is often derived from selected experiences, anecdotes and observations parsedfrom the sales team and client meetings. No wonder so many product development teams get it wrong!

In evaluating a product or service, customers will always make tradeoffs. By simulating those tradeoffs a Conjoint study, which takes customers five minutes to complete, reveals how they will likely react to changes in product attributes or service levels. In short, a Conjoint uncovers what a customer values and what they will pay to receive that value.

Conjoint studies help with:

● Product  development strategies: showing which attributes add value and which  attributes don't

● Price setting: the study reveals the price customers are willing to pay for a set of features and benefits

● Sales force guidance: A Conjoint shows which customers to target (and which ones to forget)

● Market segmentation: A study can identify customer groups to enable more focused product marketing and promotion

● Market share prediction: A Conjoint can accurately predict market share and thus can assist in setting production and distribution strategies.

Bridging the R&D and Marketing Gap

In the case of GSE, the customers who did the Conjoint clearly valued the superior image over other attributes like image processing speed and patient comfort. When the product with a superior image eventually launched GSE askedthe sales and marketing teams to price the new product. They came back with suggested list prices of $70,000 and $80,000 respectively. However the Conjoint study showed the hospitals would pay $150,000 to receive the sharper patient images the new machine could deliver. The sales team predicted zero sales at that price as did the marketing department but buoyed with the results of the study the product management team launched at $150,000. The new imaging machine sales took off gaining over 70% market share of new machines in just six months.

In short, a Conjoint Survey gives a glimpse into the future, accurately predicting potential market share and attribute and price sensitivity.

How will your company manage its next new product development and launch?Do the research and reap the rewards!