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How to use hypothesis-driven concept testing to innovate better

Market research should be at the top of all product innovator's lists. Product innovation ideas that score high in concept testing generate 30 percent higher Year 1 revenues than those with poor performance, says Nielsen.
 

The failure rate of product launches is very high. According to several sources (Nielsen, Clayton Christensen, Simon-Kucher): 80 percent of new product launches fail in their objectives, and 65 percent to 75 percent miss their revenue goals.

 

It turns out that “failing fast” is less important than “learning fast." According to evidence from Ross & Fonstad in their 2019 article in Sloan Management Review, most successful innovators today follow a four-step process: hypothesize, test, learn, and iterate. This process can be effective for many purposes, ranging from testing the right price point to deciding on the most attractive packaging design. 

 

Product innovation teams who run concept tests too late in their process, or not at all, are often missing out on valuable insights that demonstrably increase their chances of success.

 

What should they be doing instead? Hypothesis-driven concept testing.

 

What is hypothesis-driven concept testing?

Hypothesis-driven concept testing involves an iterative, systematic string of experiments that refine and improve an idea. It’s how smart, agile brands validate their product, ad, and packaging design ideas with real data—before they invest time and money into developing and launching it. Therefore it offers a great approach to product innovation. 

 

Cambri's market research tool has a few key benefits built in to make testing fast and easy: 

  • on-demand (conduct lean, focused tests when you need answers)

  • rapid results (often within 24 hours)

  • simple interface (you don’t have to be a market research expert to use it)

  • valid results (science-based best practices help you ask the right questions, in the right way, to get answers you can trust)

So, how does a product innovation team implement this method when doing market research?

  

4 steps to hypothesis-driven concept testing

 1. Define your hypotheses
 

A hypothesis is a clearly articulated guess based on the best available data. First, define your insight hypothesis, which describes your target market's values and challenges, from their perspective. 

 

For example:

 

“I'm reducing the amount of meat I eat because I care about the planet and my health, but I don’t want the taste of my food to change.”

 

This then informs a second hypothesis, your value proposition: which might be something like:

 

“Our product tastes and looks exactly like minced meat, the only thing that’s missing is the guilt.”

 

As you develop your hypotheses, ask questions like:

 

  • What do we assume about our target audience’s desires and challenges?

  • How does our value proposition address the tension between these desires and challenges?

  • How does our value proposition help our target audience get their job done?

Side note: Check out our best practices for designing a successful value proposition.

 

2. Test your hypotheses to see if they are true for your target audience

 

The next step is to see if your hypotheses can hold water.

 

With Cambri’s market research tool you design the appropriate questions and send them to people in your target group.

 

When you get your results back, you’ll have answers to questions like:

 
  • How well is our value proposition resonating with the people we’ve shown it to?

  • Does it fit with their lives?

  • Does it fit with their values?

  • How well does it help our target audience achieve their goals?

3. Learn from the results

 

With Cambri, your results will include KPIs that indicate commercial success (e.g., willingness to buy), key demand drivers, and the hottest target groups.

 

This data will allow you to answer questions like:

 
  • Are these results good enough to put a budget behind?

  • Is this idea ready to go to market?

  • Where do we need to focus to get better results?

4. Iterate

 

In other words: improve your concept before it fails.

 
 

Sources:

 

Christensen, C. (2016). Competing against luck.

 

Melgarejo, R. & Malek, K. (2018). Nielsen. "Setting the record straight on innovation failure."

 

Ramanujam, M. & Tacke, G. (2016). Simon-Kucher. "Your new hit product may be underpriced."

 

Ross, J. & Fonstad, N. (2019). Sloan Management Review. "Forget fail fast."

 

Scheiner, J. & Hall, J. (2011). Harvard Business Review. "Why most product launches fail."

 

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