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Reformulation Opportunity Analysis Optimizes Product Formulation

Nufer Marketing Research, Inc. has often applied Reformulation Opportunity Analysis to give clients valuable, cost effective guidance on product formulation decisions such as:

Product improvements                Outperforming competitive benchmarks              Cost reductions

WHAT IS IT?

Reformulation Opportunity Analysis is a valuable tool to guide product development. Results indicate which changes in product dimensions have the greatest potential to improve overall consumer acceptance. It assesses the penalty paid in consumer acceptance of a product (via an overall liking or purchase intent score) by comparing the overall acceptance ratings of those who felt the product was  “just right “ versus those who felt it was not quite “just right”, across product dimensions.

In testing a product among consumers, researchers often rely on bipolar rating scales to diagnose areas of product weakness or strength.  Typical examples of dimensions:

 

Much too salty                                     Much too thick

Somewhat too salty                            Somewhat too thick

Just about right                                    Just about right

Not quite salty enough                         Somewhat too thin

Not salty enough at all                         Much too thin

A commonly used “rule of thumb” is that if the product attains at least an 80% “just about right” rating on a dimension, and the balance of the ratings are at least somewhat split above and below that rating, the product is considered adequate on this dimension.  Dimensions that receive less than 80% “just about right” are studied to understand if the product is polarizing (respondents dissatisfied with this dimension, and roughly evenly split as to the direction of the problem) or if dissatisfaction is loaded in one direction.  This provides product developers with some guidance as to what aspects of the product should be manipulated to enhance product satisfaction.

There is a downside: product developers don’t know how much various dimensions drive product satisfaction.  This is an important problem, since the cost to address product defects will vary greatly, and the product developer will want to focus on the most cost effective and important product revisions.  Some dimensions might be wildly off the “just about right” target, but have little impact on product acceptance.  Others might be quite important drivers of product acceptance.

Derived importance doesn’t work for bipolar scales, since the scale needs to be unidimensional and bipolars are not.

The Reformulation Opportunity Analysis delivers the clarity needed for product developers to focus reformulation efforts on those dimensions where reformulation will have the biggest payback in enhanced product acceptance.  This tool helps companies make trade-offs between the cost and feasibility of product reformulations and the payback they are likely to see in product acceptance.

There is another important benefit in validating dimensions that really are acceptable as is.  In some cases, respondents will give “socially acceptable” answers; it is more socially acceptable to say a product is “too salty” or “too sweet” than to say it is not salty enough, or not sweet enough.  This analysis can determine that even though respondents may skew towards a socially acceptable answer, this dissatisfaction does not translate into lower overall product liking or purchase intent.  This is an important learning, since otherwise a company might spend considerable efforts to reformulate a product, only to find that the revision does not enhance and may even depress product acceptance. 

HOW DOES IT WORK?

The analysis involves the following steps:

  1. We determine the mean overall liking score for all those who rated the product “just about right” on a certain dimension.
  2. For each person who didn’t rate the product “just about right” on that dimension, we calculate the difference between his/her overall liking score and the mean overall liking.
  3. These difference scores are aggregated across respondents, combining respondents into two groups: those who rated the product “too high” on the dimension, and those who rated it “too low”.  This identifies the impact on overall liking of not being “just about right”.  The magnitude of this difference is the deficit (or penalty) associated with being “too high” or “too low” on this dimension.  This calculation is done on each one of the bipolar dimensions.
  4. Comparing the scores across dimensions identifies which product changes are most likely to enhance overall liking.
  5.  We consider the sample size.  Revisions to a dimension might pay off in substantial gains in overall liking, but only for a small group of respondents.  Another dimension may not offer quite as much potential for enhancing overall liking, but if it affects far more respondents, it may be the better opportunity.  

WHAT DOES IT SHOW?

Both crunchiness and strength of vanilla flavor are well off the 80% “just about right” target.  The product is both too crunchy and too low in vanilla flavor.  While both of these characteristics are a problem, it may be easier, and more effective, to increase the amount of vanilla flavor than to make the product less crunchy.

 

 

JUST RIGHT

TOO HIGH

TOO LOW

 

 

%

Mean

Overall Liking

 

%

Mean

Overall Liking

 

%

Mean

Overall Liking

 

Crunchiness

60

5.63

32

-1.55

8

-2.42

 

Strength of vanilla flavor

64

5.71

10

-1.60

26

-2.55

 

 

SUMMARY 

Nufer Marketing Research, Inc. has extensive experience applying Reformulation Opportunity Analysis, and can help you decide if it is the right approach to meet your product formulation needs.

 

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