July 31, 197 0

TO :

Mr . H . C . Robinson

FROM : Ivan P . Kaima n

SUBJECT : NEW PRODUCT DEVELOPMENT RESEARC H

In follow-up of .our meeting of July 28, the purpose of this memo is to present means by which marketing research may be useful to you in the development of new products for market introduction .

As we are all aware, there are several activity stages involved in bringing new products to market, namely : 1 . The generation of new product ideas .
2 . The screening of potentially actionable new product ideas .

3 . The actual, physical development of product prototypes appropriate to those new product ideas .
The measurement of consumer acceptance of these new piodui:L ideas as represented by t ::6 product cOnccp .. a its prototype .

5 . The creation of effective advertising, packaging, etc . based upon marketing and copy strategems . As per our July 28 meeting, this memo addresses itself specifically to point (2) above -- the screening of potentially actionable new product ideas . Many manufacturers have found enormous cost savings by screening new product ideas to determine market viability before committing funds for product development to R & D . Generally speaking, the mor e aggressive the marketeer, usually, the .greater is the number of new product ideas which are created and investigated . In light of our emphasis. on new product development, it appears that a systematic program of product concept evaluation should prove to be quite useful . As we discussed previously, there are at least two very distinct types of concepts :
N (a) product concept s

(b) advertising concept s

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SUBJECT : NEW PRODUCT DEVELOPMENT RESEARCH

July 31, 197 0

To implement a program of product concept screening, it is essential that we understand clearly the differences between these two types of concepts .

Product Concept -- should deal with attributes, characteristics,and uses of the product .
Advertising Concept -- should attempt to get attention , to be persuasive in creating interest for trial and to foster and maintain continued usage of the product . "

(For example, "Now is the L&M moment" is an advertising concept ;

"the charcoal filter" of Lark is a product concept) . For some product categories, advertising campaigns may involve a . primary use of product concepts and only a secondary use of advertising concepts . On the other hand, in product-classes where differences (actual, physical) between brands are minimal, advertising may be only secondarily dPpenOPnt on product concept and heavily dependent on advertising concept . (In the case of cigarettes, the use of product concept s

in advertising appears to be less frequent than the use of advertising concepts--particularly for 'flavor" .brands) . At our meeting of July 28, you presented two product concepts : (1) *The Brown Paper Cigarett e (2) The 70 Millimeter Filter Cigarett e You also indicated that while you are most concerned about assessing the viability of these two ideas, you also have a number of other product concepts "in the hopper . "
In light of this, I recommend that "omnibus" concept research be performed in order to'provide a hierarchy of likely product success . In other words, a program of research can be undertaken which will --

(1) Indicate strength of consumer appeal to each of the concepts "in the hopper ." Having these relative "scores" can then help you in assigning priorities'for product development . .

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http://legacy.library.ucsf.edu/tid/tem67a00/pdf

SUBJECT : NEW PRODUCT DEVELOPMENT RESEARCH

July 31, 197 0

(2)- Indicate aspects of the product concept which should be altered in order to increase the value of the idea . In some cases it will be found that a given product idea is so lacking in generating appeal that it should be dropped altogether . In other cases, the product idea will be'so overwhelmingly attractive that immediate R & D involvement will be indicated . I n

essence, concept evaluation (and revisions reevaluated) is required until it has been determined that : (1) no further improvement is possible - i .e ., that the concept has inherent limitations which cannot be resolved or (2) that the concept is sufficiently good enough to proceed with the next steps of R & D
The method of study, involved in concept evaluation is rather straightforward : consumers receive a presentation of the product idea by means of a written characterizing statement (or physical representa- . tion in terms of a drawing, a "mock-up", a photograph, etc .) . Reactions to the idea are obtained in terms of :

(a) overall acceptanc e (b) specific elements of appeal/rejection (c) persualsive power (to use ) (d) product expectation s
Once the concept optimization level is reached, the next logical step is to match the product as closely as possible . to the optimized concept . This step is not a simple process--several . prototypes may be required for screening (particularly in the case, of the brown paper cigarette wherein color variations may be almost unending) . With small scale pilot studies, however, the costs of developing prototypes are minimized until a satisfactory product is available for large scale testing .

(Generally, the time involved in product concept testing as described here varies from four to six weeks per test and costs are dependent upon number of concepts, number of respondents and the difficulty which may be encountered in locating testers who mee t

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SUBJECT : . NEW PRODUCT DEVELOPMENT RESEARC H

- 4 . July 31, 197 0

certain management-determined criteria (e .g ., Tareyton smokers or Winston smokers, etc .) . ' In closing, the value of concept research lies in :

(a) providing information to Management'sufficient for structuring new product development prioritie s (b) reducing R & D development costs since only "promising" ideas are pursue d
(c) providing benchmark data against which to evaluite the "goodness" of proposed product prototype s

(d) assisting in the evaluation of test market activity Hopefully, we can get together to discuss this program within the next few: days .

IPK :dm cc : . Mr . P . Mr . D . Mr .' J . Mr . J . Knopf Neswald Ros s L . Southard

Tr__.

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