Optimization
Products can contain many features, but knowing which specific set of features should be offered is often a complicated and challenging marketing task. This is a special area in research and insights known as “optimization research”, or “trade-off analysis”, and the methods vary depending on the decision being made and your business needs. Optimization methods are especially useful in product design, and in optimizing the number of products in a line.
What features should you include in your product? What products should you include in your line?
Some features must be baked in; no reason to isolate them in testing. In other cases, features “compete”, but a manufacturer cannot include all features due to cost. For example, a company cannot offer its largest size at the lowest price: customers would love it, but the company would also go out of business.
Segment Optimization: if your business offers different products by segment, segment-level optimization may be needed (alternatively, a large study that is analyzed by segment). Here, “optimal” is the trade-off between demand and profitability by segment.
Assortment Optimization: a national chain will accept three SKUs from you, yet you offer 10. Which three should be chosen?
What is a feature really worth?
Optimization can be used with established brands (e.g., choose the best three of 10 possible flavors) or new products (e.g., pick the best design for an industrial product). As a group, these techniques identify which configuration optimizes demand and profitability, and isolate what is gained or lost when adding or subtracting a feature.
If you are a company struggling with decisions about which combination of features is optimal, please give us a call. We are experts in product optimization.