Price Kills: Standard NPD routes killing 38% of excellent new ideas

Having tested thousands of concepts in the past three years, we have examined the impact of price in the NPD decision making process.

At an early stage of development, at the time of a concept test, price and pack size are usually an unknown quantity. At The Oxford Research Agency, we always test the idea unpriced first; measuring the strength of the idea, then introduce the price. It allows us to separate the power of the idea from price, and then identify the power of the idea with price.

We analysed our databases to identify what would happen if standard priced concept tests were used as the decision making process, and whether great ideas would be killed off.

The results showed that 38% of Top Quartile database ideas would have been killed off using a priced concept action standard.

Worryingly, standard concept testing techniques would have recommended 24% of below average database ideas to be launched, when the idea itself was not powerful enough to last in market.
 

Developing a great piece of NPD relies on an excellent consumer insight, a great reason for consumers to believe in your product as a solution, fantastic packaging, a superb product and a competitive price point.

By testing the power of the idea separate from price, we can advise clients on the ideas to progress which have real strength with consumers, and also provide guidance on price, without price contaminating the idea itself.

Our approach has led to some of the most successful pieces of NPD to be launched in Food and Drink in the last few years. It has also helped our clients to charge a premium for their products, as they develop their new products based on the strength of the idea and not price.

Over the past 27 years, this has enabled our success rates in NPD to hit 60%, four times the average success rates identified by Nielsen as the number of products which stay in market three years after launch.

Price is an extremely important part of the development of a new product. However, it is critical that clients understand whether the idea being tested is viable without the influence of price. This opens doors, as if a great idea is identified, R&D can be instigated to bring the idea to market, and target a specific price point.

Excellent NPD begins with a great idea, brilliantly researched. To make sure you make the right decisions with your NPD programme, call The Oxford Research Agency today on +44 (0)1865 72 82 72 or contact Chris Sinclair (chris.sinclair@tora.co.uk) or Andrew Tharme (andrew.tharme@tora.co.uk). We help you identify the best ideas to take forward which have strength above the price of the product.