Concept testing

Abstract: Lead users have been shown to be a highly promising source of innovation for generating radical new product ideas. According to lead user theory, these users are defined as being ahead of an important market trend and experiencing high benefits from innovating. There is strong empirical support that these users tend to come up with commercially attractive user innovations. Other than that, however, there is hardly any knowledge available which helps to describe and differentiate this "species" of user from more "ordinary" users. The present article aims to fill this gap and extends lead user theory by exploring some antecedents and consequences of consumers' "lead userness". As regards antecedents, it is argued that a consumer's leading-edge status will depend on field-related as well as field-independent variables. First, it is hypothesized that a consumer's basis of knowledge and use experience gained in the underlying field will help explain one's lead userness. Second, it is hypothesized that the two general personality traits of "locus of control" and "innovativeness" will be related to users' leading-edge status in a given domain. As regards consequences, this article develops a link between individuals' lead userness and new product adoption behavior. It is hypothesized that lead users will demonstrate innovative behavior not only by innovating on their own, but also by adopting new products faster and more intensively. These tenets are tested in the course of three studies on extreme sports communities (sailplaners [n=129], technical divers [n=193], and kite surfers [n=139]). Overall, findings are throughout affirmative. First, it is found that the proposed antecedents (both field-related as well as both field-independent variables) are strongly related to consumer's lead userness. These findings have important implications: One major challenge of the lead user method has been the reliable and efficient identification of leading-edge users in the first place. Findings related to antecedents suggest that these variables might be employed to improve the lead user search process - they might be used as a proxy to identify the rare "species" of lead users. Second, also the proposed consequence of being a lead user finds strong empirical support: Lead user tend to adopt new products faster and more intensively than other users. These findings suggest that lead users might be highly valuable to companies beyond the fuzzy front end of generating radically new product ideas. Lead users might also be relevant to more general product development and marketing issues. For example, they might be integrated into new product concept testing methods and "lead userness" might serve as an additional positioning variable for the marketing of new products.

Abstract: We model concept testing in new product development as a search for the most profitable solution to a design problem. When allocating resources, developers must balance the cost of testing multiple designs against the potential profits that may result. We propose extreme-value theory as a mathematical abstraction of the concept-testing process. We investigate the trade-off between the benefits and costs of parallel concept testing and derive closed-form solutions for the case of profits that follow extreme-value distributions. We analyze the roles of the scale and tail-shape parameters of the profit distribution as well as the cost of testing in determining the optimal number of tests and total budget for the concept phase of NPD. Using an example, we illustrate how to estimate and interpret the scale and tail-shape parameters. We find that the impact of declining concept-testing costs on expected profits, the number of concepts tested, and total spending depend on the scale/cost ratio and tail-shape parameter of the profit distribution.