Passing Grades

More Vendors Are Putting Product Through Consumer Testing Before Launching at Markets

"You can leverage technology to get as much input as possible on the new product development process," said Nathan Cressman, senior vice president of merchandising and marketing. "If we learn something even three weeks before Market, we can make a change—we're getting feedback and opinions all along the process.

"We're looking to validate product even at the sketch level. If something comes back a loser, you don't spend all that time and effort on creating samples—if you fail, you fail fast."

Working with Atlanta-based Impact Consulting, Magnussen took existing collections with a retail track record through the process to develop benchmarks for the program, and created an overall 1-5 scale. The same scale is used to gauge consumer reaction—gathered through 800 to 1,000 online responses—to a new collection's overall appearance, perceived quality, finish/color and style, using the same 1-5 scale.

Magnussen also asks consumers what they'd be willing to pay for a queen bed, dresser, mirror and nightstand.

"What's interesting is that we're able to slice and dice the responses by consumers' style awareness, income and age bracket," Cressman said. "Say a group tested at 3.5 and it's a contemporary suite. We can narrow it down to see that among style-aware consumers it's 4.02. Anything we see over 4 translates for us into a heck of a selling story for that particular consumer group. We share those specific target groups for a collection with retailers."

Furniture Brands International (FBI) began working on incorporating consumer research into the product development process in 2008.

"The first launch of products that benefited from the process was with Broyhill and Lane at the Spring 2009 High Point Market," said Debbie Beers, FBI's director of consumer research by e-mail. "At the fall 2009 Market, all new products from Lane and Broyhill had been through the 'stage gate' process."

Beers was referring to a five-step stage-and-gate approach in which a product concept has to pass all five gates in order to be launched at Market.

The first stage is opportunity analysis, that is identifying which product category a brand wants to "attack and grow" for its overall portfolio.

Step two is idea generation, in which FBI's merchants and designers gather inspiration from multiple sources—including consumer insights/research, dealers, style and trends, etc.—that can be applied to new furniture designs.

The third stage is concept development and consumer testing: "Artist renderings and/or CAD drawings of the furniture concepts are developed and shared with brand product managers and sales representatives as well as key dealers," Beers said. "Concepts are revised to reflect the feedback and are then integrated into detailed product descriptions that include features and target pricing. The product descriptions are tested with hundreds of recent and prospective furniture shoppers through an online process managed by a division of A.C. Nielsen. Correlating the consumer test results to projected sales performance requires the use of a proprietary algorithm that (FBI) developed."

The fourth stage, technical and financial assessment, assesses the manufacturing feasibility and projected costs of the product.

Market launch is the fifth and final stage in this product development process, and timing of the introduction of the product into the marketplace is dependent on a particular brand's overall product portfolio and marketing schedules.

After starting with Broyhill, FBI has begun implementing the new product development process at Lane, Thomasville and Drexel Heritage, all of which launched product at the Fall 2009 High Point Market that benefited from this process, Beers said.

"Our other brands serve a different consumer base which will require a modified approach," she said. "Development and implementation of this approach will happen in a later phase."

A DIFFERENT MINDSET David Corbin is co-president of bedding manufacturer Southerland. He came to the furniture industry from Proctor & Gamble, where he gained an extensive background in marketing and new product development from his experience in brand management. At Pulaski, he led the development of several licenses including Build-A-Bear Workshop, which included a consumer-centric attitude toward product development.

At Southerland, Corbin and Co-President Stephen Russo also will focus on consumer-focused product development for bedding, and work to bring the company's supplier and retail partners into the process as well.

"We'll have permanent consumer innovation panels, one for boomers, another for Gen-Y'ers, for first, idea generation; and second, to ask 'What are your needs, and how can we help?'" Corbin said. "We'll do that with them personally, and also on the Internet through online focus groups. The consumer will be there to develop products all the way along.

"Second, we'll have an immersive approach, working with consumers in their homes, product tested in homes, finding out about their lifestyle," he continued. "Focus groups can be fairly antiseptic. ... We'll put a bed in someone's home for 30 days and monitor their reactions. Third, it will be a collaborative process, and we'll involve suppliers and our dealers. ... Companies in our industry tend to do their own R&D. ... A dealer council will participate in some of this research. ... We'll get creative inputs from different sources: suppliers, dealer base, consumers."

He added that one supplier criterion at Southerland will be a willingness to collaborate on research.

The process is based on the Kaizen concept of continuous improvement, starting with online concept testing and gauging price sensitivity; leading to a concept prototype; then concept testing using focus groups; and on to concept development with recurring focus groups. Measure the results, and then start the process again.

"We'll create less product, but more focused product, which leads to lower product development costs," Corbin said. "You ultimately get less product, but it's going to be more meaningful and impactful. ... If you can drop a retailer's non-productive SKUs, you can increase their GMROI."

Corbin's convinced that if other industries can benefit from consumer involvement in product development, so can home furnishings.

"The key to product development innovation is listening to the consumer and involving her in product development, and virtual integration and linking of research with your partners," he said. "You run product development the way you'd run a factory. The consumer's actually involved in the development of the product."

Southerland expects to begin incorporating consumer testing into its development over the summer, so that product emerging from the process should start showing up early next year.

When he was at Pulaski, the Build-A-Bear development team recruited kids to "help create the perfect bedroom." Parents were utilized to create ideas.

Page Wilson, president of Pulaski, said the upfront research got Build-A-Bear off to a great start, and that Pulaski has renewed the license for another three years. While there's no new research going on, he believes the collection still reaps the benefit.

Consumer research could be a part of product development at Pulaski going forward.

"We'll do it where it's appropriate—if we're looking at a new category, for example," he said. "Before we jump in, we can look around and see if we should be there."

Wilson isn't sold on consumer research as the be-all, end-all of product development—there's a bit of a chicken-and-egg factor, he believes.

"I don't know whether moms were jumping up and down saying we need a minivan before those were developed, but they liked them when they were brought out," he said.

QUALITATIVE, QUANTITATIVE Chuck Mattina is president of Quixote Group, the Greensboro, N.C., market research firm that assisted Lea with the product development and launch of the Nickelodeon Rooms collection, which expanded at last month's High Point Market after making waves in October.

"We used a combination of qualitative and quantitative techniques to assist us in the overall development process," he said by e-mail. "The qualitative was used to gain insights into what the Nickelodeon brand meant to moms and kids in the different age (groups). We got input from moms on their kids' bedrooms so we could know more about what pieces are being used and what kind of storage and display spaces are needed—and for what."

The qualitative aspect also helped developers get a better feel for the types of graphics, features and pieces that would be relevant to each age gate.

"In addition, we learned where not to go with the brand, which was as important as learning where we could take it," Mattina said. "The quantitative helped give us the confidence that we translated the power of the Nickelodeon brand appropriately for each age (group). We were able to quantify the uniqueness and appeal of the concept as well as specific features, which helped us to make final tweaks and selections for the lineup that we presented at the October Market last year."

The companies contacted for this article said they need to get at least a couple of years' data in hand before they can quantify consumer testing's full effect on how product performs, but they like what they see so far.

"Utlimately, we'll measure the success of our process through improved sales, lower inventories and through less discounting," said Beers at FBI. "Given the early stages of having our tested products in the market, we use dealer floor placements and turns as a measure. ... We don't provide operating data by brands, but we've been very pleased with the dealer reception to our new Lane and Broyhill products."

Magnussen Home has had consumer-tested product on retailer floors for almost 18 months now, and the company's still looking at how well groups that perform well at the testing stage translate into retail best-sellers.

"That's something we're trying to develop as more information comes in, and we're getting close to that," Cressman said. "We've already had some successes that tell us it's worth doing ... but it's still early in the game. By the time product from this Market reaches the floor, we'll have 24 months of data we can use for some very meaningful measurement." HFB

Furniture's Challenge

Furniture Faces Some Distinct Challenges in Consumer Testing of New Product

By Powell Slaughter

Richard Babick, president of custom market research company Design Research in Lawrenceville, N.J., concentrates on home furnishings, but has exposure to other industries through his clients in sectors including pharmaceuticals and communications, among other industries.

He notes that furniture faces a couple of particular challenges relative to other categories when it comes to testing product with consumers during the development stage.

One is that consumers don't look at furniture's design the way the industry does, nor can they articulate style points in typical industry-speak.

"The first challenge is, you have to understand consumers don't have a language to define your product for you—they just know whether they like it or not," Babick said. "If you ask them what's wrong with it, they probably won't be able to tell you specifically. It's important to know what to ask."

Second, as a big ticket item, furniture is an infrequent purchase for most consumers.

"Price can be complicated as a research issue—if they haven't bought a bed in 15 years, they don't know how much it costs now, and you can see some sticker shock," Babick said. He added that Design Research has some proprietary processes to offset that possibility at the consumer research stage.

A third challenge for testing products such as furniture is the "touch" factor.

"A lot of research is done online—we use the Internet ourselves—it's cheaper and faster than doing it face-to-face, but there comes a point that you have to ask yourself how well a six-foot product comes across on the screen," Babick said, adding that questions about an item's pricing can be an issue in online research. "A $500 product can look about like a $5,000 product online. You can show a picture of a nice dining room, but if you want me to get into consumer perceptions of price and quality, you have to do more.

"There are so many companies out there and so much product," he added. "My perception is that companies (that) have a better sense of who they are design- and style-wise do better—they aren't trying to be everything to everyone. Look at the influx of designer names in the industry. They come in with a brand identity they bring to the company."

For Further Reading

David Corbin, co-president of bedding manufacturer Southerland and a former brand manager with Proctor & Gamble, suggested these titles for those interested in consumer research and testing's potential benefits to product development.

• The Game Changer: How You Can Drive Revenue and Profit Growth with Innovation

by A.G. Lafley and Ram Charan

Driving revenue and profit through "game-changing" innovation. Lafley is former CEO of Proctor & Gamble.

• Execution: The Discipline of Getting Things Done

by Larry Bossidy and Ram Charan

Why robust dialogues about people, strategy, and operations result in a business based on intellectual honesty and realism, and driving profitability with research.