The secret of success, experts say, is discrete choice modelling
Michael McCullough
Vancouver Sun
Thursday, August 07, 2003
(Iridium Satellite Phone.)
(Sony Minidisc (MD).)
(Pepsi Blue.)
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If only they knew.
Some of the biggest flops of the past decade -- the Iridium satellite phone, the Apple Newton, the Sony MiniDisc, Pepsi Blue -- would not have happened had the companies involved understood a practice known as discrete choice modelling, a Montreal management consultant says.
"The science of customer choice modelling has evolved into perhaps the most important tool that marketers have," said Lippincott Mercer partner Eric Almquist, the author along with Martin Kon and Wolfgang Bock of a research paper titled Economics' Gift to Marketing, published by Mercer Management Consulting Ltd.
The organization has developed a method called Strategic Choice Analysis that it claims can estimate demand for products that do not yet exist, thereby spotting unsuccessful product launches before they happen.
The modelling method evolved out of psychology and transportation economics and permits companies to estimate demand and know exactly how and why customers will make decisions, according to the paper.
Working on behalf of clients including credit-card, funeral services and interactive television companies, Mercer asks respondents to participate in interactive simulations of future product or service offerings that "depict the future market, the alternatives and competitors available, and how the product may fit into the lives of consumers," the firm stated.
"Over time, economies seem to evolve to more consumer choices in terms of more products, more services and more providers hoping for some market share," Almquist said in a release. "To keep growing organically, companies must not only introduce new products and services at an increasing rate, but the success rate must improve as well."
To view the paper, visit www.mercermc.com and click on "Perspectives."
IT SEEMED LIKE A GOOD IDEA:
Marketers are rightly concerned with whether new products will meet with success in the marketplace. Some notable flops:
PEPSI BLUE: Clear Pepsi failed to find a market a decade before but the company didn't learn the lesson: Pepsi Blue attempted to imitate the lurid hues of Gatorade but nobody over the age of 10 was interested.
SONY MINIDISC (MD): Japanese consumers loved this portable music medium, but North Americans shunned it.
In the end, MP3 players came to dominate the niche.
IRIDIUM SATELLITE PHONE: A brilliant concept -- a satellite network delivering wireless phone service everywhere on the face of the earth. But it was too costly and a disaster for investors.
Source: Vancouver Sun
