Issue

A Fortune 100 technology firm wanted to estimate demand for a consumer portable web access device, using different price points and competitive mixes. The client's product was not a PC but could conceivably compete directly with PCs as a way to access the internet. One significant challenge in estimating demand was determining whether PCs should be included as part of the competitive set. Market Strategies recommended strongly that PCs, as the predominant internet access point now and in the foreseeable future, should be included.

Process

We developed a custom product development methodology, using discrete choice-based conjoint analysis, which was administered via standardized interviews of potential buyers. Because the product was new, we brought consumers to central locations so they could demo the product before answering questions. Shortly after the interviews, we contacted a subset of likely and unlikely buyers for a qualitative, online discussion to delve into purchase motivations, pricing issues and possible feature additions.

Result

In the final analysis, PCs accounted for more than half of preference share. Anticipating a broader context by including PCs allowed us to accurately calibrate forecasts for the client's web access product. In addition to the choice analysis, we worked with the client to aggregate secondary sales-out data for similar products in related categories. By applying weights to account for availability, promotion and time in market, we were able to develop a consensus estimate for first-year sales volume. These estimates confirmed the notion that likely volumes were not sufficient to support a profitable business without significant changes in pricing and marketing strategy.

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