Optimizing New Product Positioning to Increase Sales
ACNielsen BASES links brand attributes to sales volume

03/10/2003 -- Roughly 80-90% of the 30,000 new SKUs introduced in the US each year eventually fail, and are eventually withdrawn from distribution at tremendous cost to both manufacturers and the trade. All too often the positioning for new products does not address real consumer needs, focusing instead on less salient benefits that do not ultimately drive purchase decisions. At the VNU Consumer 360 conference in Phoenix last week Joe Willke, President of ACNielsen BASES, and Peter Fader of the Wharton School of Business at the University of Pennsylvania described a new technique designed to assist marketers in gaining deeper consumer insights into specific drivers of consumer purchasing, in turn leading to optimal positioning of their new brands. This new analytical approach links brand attributes to sales volume. Association data are used on many BASES tests to assess a test brand's positioning on the important dimensions in its product category, relative to competitive brands. Consumers are presented with a battery of dimensions or attributes and asked which brands they most closely associate with those attributes. Association data collected for the test brand across multiple dimensions can then be used to create a very descriptive profile of the brand. Because ACNielsen BASES also collects volumetric measures used in forecasting for the same consumers, such a profile can also serve as an indicator of the brand's volume potential. In the chart below, the dark blue line plots a test brand's association scores across 24 attribute statements as measured in a BASES test in the concept interview. The BASES test also provides a sales volume estimate for the brand. In this case, let's assume that the volume estimated for the test brand (blue) was $50MM in year 1. But which of these 24 attributes is driving sales, and which ones are less important? What would the test brand's volume be if it did better on the most important dimensions? For instance, what might its sales be if it were able to match the category leader's score of 60% on attribute 4? Or significantly improve its performance on attribute 10? Click on thumbnail to enlarge, or click here. The goal is to identify those attributes that matter most to volume, in order to optimize the impact of improvements to the positioning of the new brand. First, attributes with the most "room for improvement" are identified (i.e. lowest percentage of consumers who associate the new product with that attribute, assuming it is a positively-worded attribute.) Next, each attribute is studied to determine its potential impact on volume by examining the sales volume contributed by those consumers who associated it with the test brand, and the sales volume among those who did not. Attributes with smaller differences in volume contributed by these two groups are generally less important in driving purchase behavior. Opportunity for optimizing volume through positioning can then be quantified as the product of 1) room available for improvement, and 2) volumetric "bang for the buck." But not all attributes are equally important! Improvements in some attribute dimensions will produce a larger sales volume increase than improvements in others. By looking at both room for improvement and contribution to sales volume, those attributes representing the greatest opportunity for the marketer can be easily spotted in the upper right hand corner of the quadrant chart below: Click on thumbnail to enlarge, or click here. Once the marketer has determined which attributes to focus on, a revised sales forecast can be generated using the learning gained from the analysis. Additionally, careful study of those consumers who did not associate the brand with those key attributes offers specific direction for targeting strategies in order to reach them and improve their perceptions of the brand. This breakthrough approach tells marketers where the true "hot buttons" are for their target consumers. Armed with this deeper understanding, marketers can then focus their consumer communication on those product dimensions that drive sales - and not on those that don't. By focusing on what is truly important to consumers, marketers can minimize failures and introduce more new product opportunities that hit the mark. For more information about this analytical technique, please contact ACNielsen BASES at info@bases.com. ------------- Appeared in Facts, Figures, and the Future Magazine, © March 2003.