How to use hypothesis-driven concept testing to innovate better
Product ideas that score high in concept testing generate 30% higher Year 1 revenues than those with poor performance, according to Nielsen.
And the failure rate of product launches is very high. According to several sources (Nielsen, Clayton Christensen, Simon-Kucher): 80% of new product launches fail in their objectives, and 65% to 75% 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.
Innovation teams who concept test 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 ideas with real data—before they invest time and money into developing and launching it.
Here at Cambri, our hypothesis-driven concept testing tool has a few key benefits built in:
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 an innovation team implement this method?
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.
“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 cooks exactly like mince 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 their true for your target audience
The next step is where you see if your hypotheses hold water.
With Cambri’s concept testing tool, this means designing your questions and sending them to people in your target group.
When you get your results back, you’ll ask 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 aims?
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 budget behind?
Is this idea ready to go to market?
Where do we need to focus to get better results?
In other words: improve your concept before it fails.
Marketing science shows that hypothesis-driven concept testing will demonstrably increase your product's chances of success.
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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