Better Products

Despite technological advances, today's techniques for obtaining customers' reactions to new-product concepts are costly, time-consuming and not well integrated into the product-development process. Current Web-based methods of conducting customer research offer companies hope but have limitations. From a product-development perspective, notes Alex Cooper, president of the Management Roundtable in Waltham, Massachusetts, “The challenge is on the back end.” What matters most is how the rest of the organization responds and uses the information.

The Virtual Customer Initiative (VCI), a research program under way at MIT's Center for Innovation in Product Development, is working on prototypes of new-product-development tools and methods. The tools could help product-development teams obtain customer evaluations of new-product concepts, prototypes and preproduction models more quickly, accurately and inexpensively. By taking advantage of new computational algorithms, multimedia visualization tools and the interactivity of the Web, companies can apply the tools throughout the product-development process — exploring and identifying new market opportunities, improving the design phase, soliciting input during product testing, and gathering reactions from customers after a purchase.

“It's a quantum change. Normally, when you do a voice-of-the-customer or a conjoint-analysis project, it would take six weeks or more and cost from $20,000 to $200,000, depending on the complexity of the project,” says John Hauser, a professor of marketing at the MIT Sloan School of Management. “With the VCI, we will be able to do the same project more effectively at a fraction of the cost and time.” For example, a camera manufacturer could create in a few hours a Web site that would do consumer testing of more than 20 different design features, such as picture quality, ease of picture taking (one-step or two-step), picture removal, light selection, picture size and type, camera size, battery type and styling. The engineering team would need to focus only on those features that the consumer strongly desires. Indeed, one of the first commercial tests of VCI methods was in the design of a camera launched last December.

In a research paper titled “The Virtual Customer: Communication, Conceptualization and Computation,” Hauser and co-author Ely Dahan, assistant professor of management science at the Sloan School, review six interactive, Web-based methods of gathering customer input. The methods were developed by VCI faculty and students, including Dahan, Hauser, Dražen Prelec and Duncan Simester.

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