IA observes effect of different information on customer attitudes; allows for testing of ... (iii) SERVASSOR : Virtual Acceleration for New Service Development.
Virtual reality techniques in NPD research
Philip J. Rosenberger III Department of Marketing Georgia State University University Plaza Atlanta, Georgia 30303 USA Professor Leslie de Chernatony Beneficial Bank Professor of Marketing Open University Business School The Open University Walton Hall Milton Keynes MK7 6AA Final Prepublication Draft: September 1995
Publication Reference: Rosenberger III, Philip J. and Leslie de Chernatony (1995) “Virtual reality techniques in NPD research”, Journal of the Market Research Society, Vol. 37, No. 4 (October), pp. 345-355.
Biography Philip J. Rosenberger III holds an MBA from the Rotterdam School of Management, Erasmus University. His publications include papers for The Cutting Edge IV 1995 and the 1995 TIMS Marketing Science conferences. His research interests include strategic aspects of branding, NPD, and international strategy. He is currently a second-year doctoral student at Georgia State University in Atlanta, USA. Leslie de Chernatony is the Beneficial Bank Professor of Marketing at the Open University Business School where he heads the Brand Management Research Group. With a significant number of publications in European and American journals on brand management, he is a frequent presenter at international marketing conferences.
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Abstract New product development (NPD) is risky, particularly when not supported by market research. Virtual environment research techniques such as Information Acceleration and Visionary Shopper hold much promise because of the way they cut the NPD timescale and enable consumers to evaluate really new ideas. When combined with new market research models, such as SERVASSOR, they quickly and reliably provide more insight about likely consumer response. Introduction Managers are continually seeking new products and services. Yet, failure rates vary from 80% (Clancy and Shulman 1992; Miller 1993), to 40% (Davidson 1976). These vary because of issues such as definitions of what constitutes a new product, the sectors investigated, criteria for success and the time frames over which assessments were made. While the numbers vary, the consensus is that success rates are low. From a database of over 1000 case studies, Cooper and Kleinschmidt (1993) have shown that new product success rates are higher when underpinned by market research programmes. However, undertaking market research extends development times, forcing managers to balance the risk of failure against adequate consumer testing (Urban et al 1990, Mahajan and Wind 1992). We consider why managers aim to drive down development times and consider some of the ways of achieving this. Delays can be reduced through the use of new developments in computer technology, in particular, virtual reality (VR) (Burke 1995). We review two early applications of virtual reality based testing techniques, Information Acceleration and Virtual Shopping. The paper also proposes a new VR based technique to evaluate new services, SERVASSOR, as a basis for stimulating more creative development of VR based techniques. Compressing the time to develop new products As technological development waves becoming shorter, new knowledge is applied faster, and a greater number of new products are introduced (Bayus 1994), the market is becoming ever more hostile. Organisations have become increasingly concerned with cutting new product development times, particularly as the estimated time to develop a new consumer product is 27 months (Urban and Hauser 1993). VR offers marketers the opportunity to shrink development times and enhances the potential for product improvement. Lengthy development periods increase the threat of being pre-empted by competitors. Zahra et al. (1995) argue that the advantages of cutting NPD development times are those derived from the first mover advantage, for example defining technical standards and achieving higher brand awareness. Other first mover advantages are shown by Buzzell and Gale (1987) to include better access to distribution channels, having a powerful and enduring image and the opportunity to rapidly drive down costs as a consequence of greater experience and scale. However, being first to market does not guarantee success (Zirger and Maidique 1990), as some have failed because they did not recognise that they lacked the financial or technical resources to exploit their new product's advantage (Zahra et al. 1995), while others did not fully test the new technology (Marquis 1994). In the race against time, VR simulations provide the benefit of concurrent
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engineering, whereby the usual process of solution formulation, design, component manufacture, development and testing, can all be explored in a virtual environment (Webster 1993). Millson et al.'s (1992) research, subsequently supported by Nijssen et al. (1995), identified five related ways of reducing development times. The first was through simplifying the process, for example, integrating related tasks. A second way was reducing, or eliminating, bottlenecks. A third involved eliminating unnecessary steps. Related to the second and third proposals was the fourth suggestion of speeding up operations, for example, by buying in CAD services. Their final suggestion was parallel processing. For example, not waiting to identify potential specialist manufacturers until a prototype drawing had been completed. Figure 1, adapted from Millson et al. (1992), helps to clarify the distinctions between the methods, as well as highlighting potential VR applications (the shaded areas), a theme which is next considered. FIGURE 1 HERE Mahajan and Wind (1992) found that group discussions, test marketing and concept testing were the three most commonly used techniques for testing new products and line extensions. However, for products that are totally new to respondents, concept testing has limitations (Burke 1995, Urban et al. 1994a). Respondents' assessments may be unstable because they lack a suitable frame of reference (Shocker and Hall 1989) and it becomes unrealistic to assume they can comment about their perceived needs for revolutionary products (Fusco 1994). Estimating demand for really new products and services based on traditional concept testing, where consumers need educating about new categories of products, is problematic (Olson 1994). One way of overcoming such difficulties is to use computer-based technology. This enables researchers to speed up test marketing and at the same time give respondents a fuller and more relevant array of information. In a world where desktop publishing, computer-aided design and digital production are common, marketing ideas are often created on the computer. Computer-based modeling avoids the expense and time required to create physical products. It also allows marketers to create many variations of the concept for testing (Burke 1995). Via multimedia technology customers can learn about products as if they already existed and thereby make informed product evaluations (Urban et al 1994b). Virtual Reality: Enhancing NPD Approaches Advances in VR computer techniques now enable consumers to be immersed in new environments and experience new products. Especially for really new products, consumers can learn more about the revolutionary ideas and through trial are able to overcome perceptual barriers created from traditional product categories. The term virtual reality was originally coined by Jaron Lanier in the late 1980s, but its origin goes back to Ivan Sutherland's 1960s work on interactive computing and head-mounted displays (HMDs). In the late 1980s, Lanier used the term to describe interactive, computer-generated 3D immersive displays and sound. Lanier and his colleagues put together the first fully-immersive VR system consisting of a stereoscopic HMD, body suit and glove to provide sensory input (Schroeder 1993). Respondents sense synthetic experiences that communicate physical and abstract components. The ultimate aim is to develop sensory systems that convey "experiences" indistinguishable from those in the
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(real) physical world. Early applications of VR in market research techniques are based on consumers interacting with a multimedia-based computer display, allowing them to use the mouse to click on information they perceive as being relevant to evaluate the new product. These are the early forerunners of fully immersive VR based approaches. According to Pimentel and Teixreira (1993), the power of immersion is its ability to focus someone's perceptual power on a specific problem or experience. Interactivity enables the VR experience to more closely replicate a particular environment, whether real or imagined. An advantage of VR is that ideas do not have to be converted into abstract symbols or concepts, with restrictive semantic and syntactic rules, and it can be shared with other people. Two current VR based market research techniques, Information Acceleration and Visionary Shopper, are attracting increasing interest, and will be discussed along with a new proposal, SERVASSOR. (i) Information Acceleration (IA) The conventional approach to concept testing can be subject to the problems of: - respondents reading the concept statements, often without any consideration of the future environment within which the new product will be used; - participants are usually presented with only a small amount of information; - for some new products, consumers prefer to learn through trial, rather than reading; These limitations can be restrictive when testing really new products (Hauser et al. 1993). Since different people follow different information processing strategies (Bettman and Kakkar 1977, Bettman 1979, Biehal and Chakravarti 1982), concept statements to some extent constrains respondents' information search and processing. To overcome these problems, the Information Acceleration (IA) technique was developed (Urban et al 1994a). Respondents are placed in a virtual buying environment in which they are first accelerated into a future time period and then allowed to choose information sources they wish to use to evaluate a new product. This has been used in a variety of situations, one of which is evaluating demand for an electric vehicle. Using a multi-media PC, respondents were first moved forward in time by reading on screen, future newspaper articles. They then assessed the electric vehicle by interacting with the programme, which was connected to a laser disk containing a full array of verbal, pictorial, video and text material. This enabled respondents to choose whether to visit a showroom where they could "walk around" and examine the car, talking with a salesperson, watch potential advertisements (TV and press), read car magazine reports and ask questions of different consumers. They were then able to drive a conventional car, whose petrol engine was replaced by an electric motor. Returning to the computer, respondents answered questions about likelihood of purchase, perceptions and preferences. This technique has been used to develop a new sports car, camera and home information system. For a medical instrument, it was adapted to cope with an organisational buying situation (Urban et al. 1994b). Adamjee (1994) identified five risks when developing really new products, which IA minimised, ie:
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Risk 1. Unfamiliarity with future context IA provides context; allows for testing of different scenarios. Risk 2. Unfamiliarity with products IA provides robust representation without prototyping; many variations can be tested early and inexpensively. Risk 3. Requirement for change in customer behaviour IA observes effect of different information on customer attitudes; allows for testing of messages, media and sequences. Risk 4. Long lead time from concept to introduction IA shortens and reduces the number of prototypes. Risk 5. Significant technology risks IA identifies the value of each feature, quantifying the value of each technology development (ii) The Visionary Shopper Creating a retail outlet for simulated test marketing purposes is time consuming and costly. With advances in 3-D computer graphics, Burke (1993, 1995) has developed a system, that creates the look and feel of an in-store environment on computer screens. Using a computer mouse, respondents can "walk" down shopping aisles, removing and examining particular brands, which they either replace, or put in the trolley. The advantages are that the store can be realistically created, the simulation can be quickly set up and it is flexible, allowing administration of complex experimental designs. Research conducted thus far has included investigating sufficiency of product variety for a major snack manufacturer and product display for a major frozen food manufacturer. It is estimated that for a version of this system, currently being tested in the UK, it will cost a fifth of the conventional simulated test marketing approach (The Grocer 1995). Finally, by providing process information on consumer decision making, it generates insights that would be otherwise difficult to obtain (Burke 1993). (iii) SERVASSOR : Virtual Acceleration for New Service Development IA and Visionary Shopper are product-oriented techniques which do not take account of the fact that it is difficult to evaluate a service until consumed. Howe (1993) outlines how VR can be used within a service envirnment, and thus when testing services, another virtual reality model, SERVASSOR is more appropriate. SERVASSOR draws upon the ASSESSOR pre-test market model (Silk and Urban 1978), but utilises virtual reality for a number of stages. Space constraints restrict a review of simulated test marketing models, but the interested reader might like to consult Clancy et al (1994). Through the use of VR, participants are better able to experience the multitude of "soft cues" of the environment, as well as interacting with the service. Though envisioned for use in the pretest market phase, SERVASSOR can be applied at the concept-screening phase. Using the example of a new financial service, telebanking, we will outline the SERVASSOR model, generally following the stages of the ASSESSOR model, in Figure 2, from which SERVASSOR is built.
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FIGURE 2 HERE 1. Subject Recruitment. Respondents could be chosen for participation using criteria such as, whether or not they use cheques or ATM cards, if they have a personal computer or have experienced VR already. The first two questions would indicate those who may be predisposed to considering telebanking. The latter questions are proxies for "openness to new technology". 2. Pre-exposure Measurement (PEM). Here SERVASSOR borrows from IA, entering the electronic stage. The participants would get "suited up", putting on the HDM or VR glasses and a VR glove for tracking, pointing and tactile feedback purposes. The PEM would help to familiarize respondents with the virtual environment, thus reducing the novelty of the technology (Burke 1993, 1995). 3. Information Exposure. This stage is analogous to the ad exposure and shopping-opportunity stages of ASSESSOR, in IA style. First, participants would be exposed to general news items, creating the feeling of being "in the future". Second, participants would have the option of selecting the information sources they wish to consult. A time constraint would be imposed to reflect the reality of search limitations people face (the constraint is set by the question(s) asked in PEM). The participant would then experience the telebanking service, receive a billing statement at their home or e-mail address, and experience a complaint-handling procedure. The user control and active search component of IA is built in, enabling the participant to visit any and as many of the information sources as many times as they like, within prescribed time constraints. As in IA, after each major information exposure, the participant is asked to indicate their preference and likelihood-of-purchase. 4. Purchase Opportunity. The participant would then be given the opportunity to order the firm's service for a specified period, the money to purchase any of the services having been given to the participant at the start of the Information Exposure stage (as in ASSESSOR). 5. Post-Purchase Measurement. A sample, or all the participants, would be contacted after four weeks, allowing them time to experience the service. They would be asked their views about the service, their satisfaction, and any shortcomings. They would also be asked their likelihood of repurchase, as in ASSESSOR. Other questions that could be asked at this time could pertain to model parameters (for fine tuning purposes), i.e., how many people (and whom) the participant had told about the telebanking service, and if a good recommendation had been given. 6. Repurchase Opportunity. Borrowing from Tracker (Blattberg and Golanty 1978), after 8 weeks another sample, or all of the participants could be contacted and asked their views about the service for the longer period, their satisfaction and any shortcomings. They would then be asked if they would like to extend the telebanking service for another period (at a discount), accept a voucher for a competitive service (which would equal the firm's discounted price) or discontinue use of any telebanking service no matter whom the provider. This would give an indication of participants' satisfaction with the concept as a whole and adoption probability, allowing more accurate forecasts to be generated.
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7. Forecasting. This step follows the same procedure of ASSESSOR and IA, except it would utilize the two-model convergent procedure of ASSESSOR (lab-simulation projections versus projections from the followup procedure), whilst incorporating the full categorization set in IA's full information arena. The two-model arrangement's convergent nature allows greater confidence in an outcome (projection) if both models yield the same result. A divergent result would serve as a built in check, signaling the need to review the original assumptions. As SERVASSOR uses the IA full information principle, it is a powerful technique. However, it does not take into account all environmental or marketing-mix variables in its base conceptualization, and setting model parameters remains a subjective process. This has not been a significant problem for ASSESSOR, which has a reliable record in use (Urban et al. 1983, Urban and Katz 1983). However, with the declining costs of computing and creating virtual environments, the added expense of incorporating a comparative competitor offering would be marginal and could be added if increased forecast confidence was needed. Appropriateness of virtual reality techniques VR offers many attractive possibilities to market researchers. Respondents are more involved as a consequence of the interactive and immersive nature of VR. Researchers can assess how respondents navigated through the myriad of data to make a decision. By not having to convert ideas into restrictive concept statements, the sharing of information is facilitated . To become more widely acceptable, VR-based market research techniques have to validly simulate preference or purchase decisions. While only a small number of validity studies have been published, their results are encouraging. Urban et al. (1994a) concluded from a study comparing the market forecasts for a new sports car, based on a conventional car clinic and the IA technique, that the IA technique is as reliable as the car clinic. They also found that the IA technique predicted a new camera's sales to within 10 % of actual sales. Burke et al. (1992) and Burke (1995) have reported the Visionary Shopper being able to accurately predict grocery brand market shares. A criticism of VR based techniques is that they generate an unusually high level of interest in shopping, due to their novelty. One way of reducing this problem is using respondents with VR shopping experience. Burke (1993) found that after about four virtual shopping trips, respondents reverted to lower involvement activity, approximating to in-store behaviour. More research is still needed to assess how these new techniques affect consumer behaviour. The external validity of any findings, after accelerating respondents into the future, can be questioned since the new product is being tested in an environment specified by the researcher. How good are the researcher's forecasts about the future environment? Furthermore, it also needs to be asked how relevant were the simulated newspaper articles to the respondents. A number of the weaknesses of simulated test marketing techniques noted by Shocker and Hall (1989) can be overcome to some degree by VR-based approaches. As regards potential problems in implementing marketing decisions (e.g., manufacturing and delivery), VR can help identify problems in implementation, especially in product design/manufacture and usage issues.
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Chrysler not only develops digital models of their cars and performs simulated crashes before assembling a prototype, as well as constructing a vitual assembly line to identify potential manufacturing bottlenecks (The Economist 1995). With regards to lack of realism, one study using VR to treat acrophobia (Hodges 1995) reported participants showing actual acrophobic manifestations of distress in the VR environment at first, yet ultimately reducing their discomfort after seven exposures to virtual environments suggesting successful treatment of their condition. A further barrier limiting VR acceptance is their high costs, due to programming costs, developing the simulation and producing advertisements. As with all new technologies, costs are likely to fall. Almost daily advances in desktop computer processor designs are continuously improving the performance/cost ratio to the point where many firms have the strength in their desktop PC to run basic VR programmes. Advances have also been made in the software, cutting programming time to create realistic VR simulations from months to days (Sullivan 1995). As such, we expect VR will change the nature of a large number of steps in the NPD process illustrated in Figure 1, where the shaded areas are those we believe would benefit most from the application of VR techniques. With the advent of the information superhighway and armchair shopping, consumers and researchers are likely to become more familiar with electronic shopping. Thus, we anticipate more interest being shown in VR-based techniques. Improvements in tactile sensors and feedback devices will help replicate sensory experiences and facilitate simulated test marketing of products and services with more tactile-dominant characteristics. Also, new research advances concerning MindTrack (Shermach 1995), a brainwave-to-computer interface that measures direct emotional response to virtually any communication medium, are likely to make VR techniques more attractive. MindTrack samples brainwaves hundreds of times per second whilst the consumer is exposed to the target message, thus precluding cognitive intereference. Conclusions Recreating the reality of the market place for the purposes of experimentation can a be difficult and resource-consuming process. For this reason, market researchers have turned to models and simulations. With the advent of VR, market researchers can model consumers' reactions to really new products and services. Information Acceloration and Visionary Shopper are two of the earliest VR techniques that are well suited for revolutionary products. It is likely that other techniques will evolve and, to stimulate ideas, we have outlined a potential technique, SERVASSOR. The strength of this new technique is that it builds on the experience of other simulated test marketing techniques and incorporates the advantages of VR principles. As VR is likely to attract more interest, technical advances will accelerate, making it difficult to predict the exact form that new models, such as SERVASSOR, will take. VR techniques offer many benefits to the NPD process, for example increasing customer involvement throughout the various NPD stages, speeding up the development and engineering phases, facilitating the manufacturing and assembly process and ultimately increasing customer satisfaction with the product or service. With advances in computer hardware and software, market researchers will be faced with the increasing attractiveness of creatively using VR techniques to assess the potential of new products and services. However this will come to naught if organisations are unable to effectively plan, integrate and co-ordinate their NPD activity across the various functions of the firm - a challenge market researchers need to address.
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We have presented SEVASSOR as an exemplar simulated test market model of the future, or as Hunt (1991, p. 92) might call it, an explanation sketch, which "probably belongs more in the context of discovery than in the context of justification, and is meant to suggest fruitful areas of inquiry for researchers exploring the phenomena in question". This summarizes the status of SERVASSOR at this time: conceptual and discovery-based in nature, serving to inspire further research in bringing to life a new class of VR market research models. References Adamjee, Hafiz (1994) "Information Acceleration: Pioneering Multimedia Market Research", And Now for Something Completely Different: "Really" New Products (Conference Summary), Marketing Science Institute Report Number 94-124, December, pp. 46-49. Bayus, Barry L. (1994) "Are Product Life Cycles Really Getting Shorter?", Journal of Product Innovation Management, Vol. 11, No. 4 (September), pp. 300-308. Bettman, J. (1979) An information processing theory of consumer choice (Reading: Addison Wesley). Bettman, J. and P. Kakkar (1977) Effects of information presentation format on consumer information acquisition strategies. Journal of Consumer Research 3 (March), pp. 233-240. Biehal, G. and D. Chakravarti (1982) Information presentation format and learning goals as determinants of consumers' memory retrieval and choice process. Journal of Consumer Research 8 (March) pp. 431-441. Blattberg, Robert and John Golanty (1978) "Tracker: a early test marketing forecasting and diagnostic model for new product planning" Journal of Marketing Research, 15 (May) pp192201 Burke, Raymond R. (1993) "Virtual Shopping: A New Tool of Consumer Research", September, Harvard Business School, unpublished paper. Burke, Raymond R. (1995) "Virtual Shopping", OR/MS Today, August, pp. 28-34. Burke, R., B. Harlam, B. Kahn and L. Lodish (1992) Comparing dynamic consumer choice in real and computer-simulated environments. Journal of Consumer Research. 19, 1, pp. 71-82. Buzzell, R. and B. Gale (1987) The PIMS Principles. New York: The Free Press. Clancy, Kevin J. and Robert S. Shulman (1992) "It's Better to Fly a New Product Simulator Than Crash the Real Thing", Planning Review, Vol. 20, No. 4 (July/August), pp. 10-17.
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Major New-Product Development Phases: Acceleration Methods
R&D
Manufacturing
Marketing
Simplify
Generate explicit R&D goals and Link with other groups
Reduce number of vendors and Simplify documentation
Focus product requirements and Minimize user education requirements
Eliminate Delays
Link R&D goals and Mfg. capabilities and Provide early product training
Reduce work-in-progress and Maintain equipment
Reduce marketing plan delays and Reduce launch delays
Eliminate Steps
Utilize “lead user” ideas and Reduce number of parts
Reduce assembly steps and Create more reliable products
Minimize formal market testing and Reduce marketing approvals
Speed-Up
Use small groups to generate ideas and
Install on-line product testing and Computer aided manufacturing
Reduce test market time and Create customer alliances
Provide collateral and/or Contingency facilities
Concurrent marketing and Plan customer service early
Initiate Computer Aided Design
Parallel Processing
Institute mutually exclusive research and Parallel known applied sciences
Figure 1 VR applications for NPD acceleration approaches (adapted from Millson et al. 1992, p. 57)
DESIGN O1 O2 X1 O3 X2 O4 X3 O5
PROCEDURE Respondent screening and recruitment (personal interview) Premeasurement for established brands (self-administered questionnaire) Exposure to advertising for established brands and new brand Meaurement of reactions to the advertising materials (self-administered questionnaire) Simulated shopping trip and exposure to display of new and established brands Purchase opportunity (choice recorded by research personnel) Home use /consumption of new brand Post usage measurement (telephone interview)
O = Measurement
X = Advertisement or product exposure
Figure 2 ASSESSOR research design (Silk and Urban 1978 p174)
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