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Customer Analytics for New Product Development

Final Exam
______________________________________________________

Instructions:
This exam is an open book, open notes exam. However, you are expected to
complete the exam on your own, without help from classmates or others.

Please type your answers in this document. After completion, submit this document
to LMS.

There are 8 pages in the Exam Booklet.

You have two hours for the exam.

The total points for this exam is 100, and this exam is worth 30% of your final grade.

All the best!

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Question 1 (30 points)
Focus on any product or service.
(1a) Describe the product or service in terms of benefits to the customer.
Product: Virtual Lab management solution for test automation
Benefits to customer: Developers and Testers building software products have a huge wait
time getting the machines prepped up before they can use to run their development and
testing for their applications. The questionnaire helps to find out if there is a segment
available with such a need and if yes, what are the characteristics.
(1b) You are asked to conduct a segmentation study for this product or service. Construct
a survey (questionnaire) with 10-12 questions, clearly specifying what the basis and
descriptor questions are. No open-ended questions are allowed; all questions must be
given in a form so that when data are collected, tools like Cluster Analysis can be used.
Please do not use questions seen in your assignments or from MeXL
Base Variables

Answer as [Yes, No, Not Sure]
1. Is availability of environments for testing and development an issue in your organization?
2. During your current or last release cycle, did developers experience delays waiting for availability
of an environment?
3. During your current or last release cycle, did testers experience delays waiting for availability of
a test environment?
4. Do you perceive operations (or the team responsible for delivering new environments) to be a
bottleneck in provisioning development or test environments?
5. Does the deployment team have access to a production equivalent test environment or sand
box to prepare, verify, and test deployments?

6. Rank your organizations software priorities. (1 is top priority)
Cost
Quality
Schedule

7. How long have you been using virtual lab management technology?
We do not use the technology but are investigating it
Less than 1 year
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
3

Greater than 5 years
Not sure


8. Do you prefer an on-premise or cloud based virtual lab management solution?
Cloud
On-premise
Hybrid
Not sure
Other
Optional comments: Why?

And more
Descriptive Variables
1. In what vertical segment is your organization?
a. E-commerce / Internet
b. Hardware
c. Networking
d. Service Provider
e. Software
f. Telecommunications
g. Wholesale / Retail / Distributor
h. Others

2. What is the total number of employees in your organization?
a. Under 100
b. 101 500
c. 501 1,000
d. 1001 5000
e. 5001 10,000
f. 10,001 50,000
g. Above 50,000

3. Is your organization classified as:
a. Fortune 100
b. Fortune 500
c. Fortune 1000
d. Global 2000
e. Small business
f. Government
g. Privately held
h. Other

4. What is your organizational role or function?
a. C level executive
b. QA Vice President
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c. Development Vice President
d. Operations Vice President
e. QA Director
f. Development Director
g. Operations Director
h. QA Manager
i. Operations Manager
j. Development Manager
k. QA / Test Engineer
l. Developer
m. Program / Project Manager
n. Marketing
o. Product Management
p. Technical Writer
q. Process Improvement / Process Quality
r. Consultant (individual)
s. Professional services
t. Other

5. Where is your company headquartered?
a. United States
b. Canada
c. South / Central America
d. Europe (including UK)
e. China
f. Japan
g. India
h. Rest of Asia (excluding China, Japan, and India)
i. Australia / New Zealand
j. Middle East
k. Africa

Question (2): 30 points
Design a Conjoint Study, with 3 attributes, with Price being one of the attributes. List 2-
3 levels for each attribute. Use MeXL to create bundles for data collection. Act as a
respondent in this Conjoint Analysis, and estimate your partworth utilities. (Hint: you
have done this in your Kirin Beer assignment).
I did it for a Tea vendor with the following options:
Attributes / Levels Level 1 Level 2 Level 3 Ordering
Tea Regular Lemon Ginger Increasing
Biscuits Regular Osmania Karachi Increasing
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Price 10 20 30 Increasing

(2a) Provide graphs to illustrate your utilities for each attribute
Respondents' Preference
Partworths


Respondents' preference partworths. The most preferred profiles sum
up to 100, the least preferred to 0.


Respondents /
Attributes and
Levels
Regular Lemon Ginger Regular Osmania Karachi 10 20 30
Respondent 1
0 0 62 0 22 29 0 0 9



(2b) Explain/describe your results (i.e. the partworth utility graphs in above question),
drawing relevant insights for each attribute.
1. Spread of Tea is 62, Spread of Additions is 29 and Spread of Price is 9
2. If product is [Ginger, Karachi] charged at 30/-, then changing Ginger to Lemon has no
change in Price; where as change from Karachi to Osmania has an attribute change of 29
22 = 7 points
3. The customer prefers the Ginger tea and nothing else and also willing to pay premium
for it even if Regular/Lemon are offered at lesser price
4. Definitely, would wait for more respondent data here before doing any conclusion, but
with reasonable set of respondents data, I should be able to compute the following:
a. The spread of each attribute
b. The monetary equivalent of each attribute (or unit) change
c. Estimated preferences for various tea combinations
0
10
20
30
40
50
60
70
Regular Lemon Ginger Regular Osmania Karachi 10 20 30
Respondent 1 PartsWorth Estimate for Tea Shop
Respondent 1
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Question (3): 25 points
The following questions deal with Ideal Points and Ideal Vectors (or preference
vectors) in a perceptual map.

(3a) Define Ideal Point in 1 sentence:
Ideal point is the location on the perceptual map where the customers ideal product would
be located.

(3b) What specific steps would you take in Perceptual Mapping analysis to get an Ideal
Point?
To generate Ideal Point in the map, add a hypothetical ideal brand among the set of
alternatives that customers can rate. Customers not only rate the available brands but also
indicate where their ideal brand would fall, if existed, in terms of the different attributes.
The perceptual map thus includes these averaged perceptions of the ideal brand; the farther
away an existing brand is from the ideal brand for the segment, the less it would be
preferred by these customers.
Source: Principles of Marketing Engineering, 2nd Edition, By Gary L. Lilien, Arvind
Rangaswamy, Arnaud De Bruyn
(3c) Define Ideal Vector(or Preference Vector)in 1 sentence:

Ideal Vector represents the preferences as an additional attribute for all brands and is
displayed along with other attributes in the Preferences map

(3d) What specific steps would you take in Perceptual Mapping analysis to get an Ideal
Vector (or Preference Vector)?
Continuing from 3(b), if a preference attribute appears in the set of attributes or if the
market share of each brand is a surrogate for preference, the associated vector in the
resulting perceptual map indicates the direction of increasing preference. Again, the farther
a product appears along this vector, the more it is preferred, and other attributes closely
aligned with this preference attribute can be interpreted as drivers of or explanations for
customer preferences.
Source: Principles of Marketing Engineering, 2nd Edition, By Gary L. Lilien, Arvind
Rangaswamy, Arnaud De Bruyn
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Question (4): 15 points
Explain a step-by-step process as to how you would use Conjoint Analysis to estimate the
incremental price to be charged for a product with a new feature, such that its market share
remains constant. In other words, how much more can you charge for a product with a new
feature so that the market share before the addition of the new feature, and after the
addition of the new feature stays constant?

By using Decision Calculus model with the goal: How much should the company charge for the
additional feature addition without losing existing market share?
Assume the current market share of the focal product is 20% and price is P and the feature in
question is A; Let the incremental change in the feature be denoted as A+ and let all the other
features that arent changed as B
1. Using Expert judgement, identify the ceiling price and the floor price for the product post
the incremental addition
2. Estimate the demand for the product at 3 price points between the floor (P), mid-range
(P1) and high-range (P2) with P<P1<P2 and create bundles with the following combination:

Price: P, P1, P2
Feature: A, A+ (ignore B as it is invariant in both cases)

Run conjoint analysis to identify the trade-off in price that customers are planning to do for
taking A+ in place of A and still purchase the product.

3. Compute the preference share of all customers planning to take A+ at the original price
point P. If this value is greater than the current market share, then the delta % increase is
due to those customers who are willing to pay for the new feature set A+ that got added.
So increase the price to P+ equivalent to this delta % increase.