Welcome back to our course on quantitative customer insight techniques. I'm James Lenz with the University of Illinois. And this is the third lecture of part of module three on test marketing. This will be a little bit shorter lecture because I want to now launch you into collecting your own data and having time for you to run your focus group activity and then use that data and fill it into a spreadsheet that you can then make some decisions and some understanding about what had you learn about answering your question, about the marketplace. Again, all this whole theme about test marketing, is the bottom line is try and understand can your idea make money? We'll talk about that more in the next module as it comes up. Again our picture, we use quite often, this idea of what precedes the S curve. This management of innovation, what barriers are trying to get through? Test marketing is an important part. Anything around them understand the customer. As I said, there's market feasibility and technical feasibility, there are two major activities to understand about developing a new product. These are the themes of invention plus commercialization. And as I said before, I like these different methodologies, this focus group methodology is maybe more, where you've worked with a small group of people, you know what the context of what their answers are going to be. You're very familiar with them, very much this is why the customer kind of works this way regarding in fact do focus groups more than one on one with people to collect this type of data. And then of course the other type of test marketing which we've all been part of, is surveys of how happy were you with how you attended something or how you experience something. And these are done what I call mailings. They're going out sort of blindly, getting access to customers and getting information back from them by filling out surveys of some type. This type of data collection can be very large. But again, you're not sure of the context of the data is coming in. So you're not really sure. So you need more data. That tends to generate what I call very noisy data. It's not very clear what the answers exactly mean. And so you need much more data to take that noise out of the data. And hopefully, that's by adding more data that's related to each other, you can actually reduce the noise in the system. Before that, though I want you to think about as you do this testing, now you're going to face something that's very important, as we do anything with test marketing is called privacy, data privacy. So data privacy addresses how data is collected for one reason that can be shared with third parties. Most people expect that their personal information they have and their share will not be shared with anyone else without their permission. This is the people's expectations. And I think it's probably your expectations as well. So whenever you start to collect data, the easiest way to start to think about privacy is think about yourself. What is your own thinking about data privacy? What would you expect? What I tell people, this is not a new problem. This has been a problem that has been around for a long, long time. And in fact, the best example of data privacy is banks. Banks have had a policy for hundreds of years that they can have access to your data, and they can use this data, because they need to know how much money is in their bank, so that they can give out loans against it or use that type of data someplace. How fast you might be taking the money out? How fast that money is coming in? Where that money is coming from? When you think about it, bank can generate a lot of information about you, and knows a lot information about you from your data and where you are spending your money. And so they can collect very much profile. But I don't think anybody's ever been upset with banks. Because banks have a very clear policy that they can use your data, they have your data but they can use it for their own operations but they will not use it against you. And they have no mechanism to use it against you. And they will not share it with anyone else. As a result, we many times fear of the banks, people can hack into banks data systems now and get this data, because there is so much data about people. As a result of that, banks are probably become the most secure systems from an internet standpoint of really building firewalls on top of firewalls, of not allowing people access to this data. And a big part of that is they just don't share that data. So that allows them to build very good firewalls around their type of data. So there's three aspects when you think about data privacy, vulnerability, transparency, and control. So think about vulnerability, what that means is talks about how much information of people given are collected from you. In the case of your focus group survey, you might just be collecting their name and how they prefer three or four different products, these two different products that you're testing against for a couple of different parameters. So it's a very small amount of data. So the vulnerability there is not very high because you've collected just very small amounts of data from them. And maybe that data then doesn't have much value for anybody else actually either. So the transparency activity then talks about, clearly states how that person or how they will manage your data. You should tell people I'm going to use this data but I'm going manage it and I'm going to provide it as part of a spreadsheet but their names are not going to be included, but I'll use it to determine the value of this activity, but I am going to be using their data as part of an analysis. But there's no other reason to use it for anything else other than that activity, and so it will not be shared with anyone else. So it's just being clear, transparent of how you're going to use the data that you collect. Being clear with the people that you are getting the data from. And the third here, control, what you want to say to them is, they have control over their data. If they completely disagree with any of this, then they have the right to not allow it to happen. Since you're not really using the data for anyone else, but if you were going to use this data from anyone else, they would have the right first to allow you to do this. So this is this aspect of control. So when you think about data privacy again, you want to think about from that person's perspective, what's their vulnerability? What's the transparency that you as an organization are providing to those people that you are collecting their data from? And then how much control are you making it clear that they have over their data that if it's being shared or used in another way. So it gives just a basic approach to data privacy. The bottom line about data is the data from your perspective now, not from the organizations perspective, from your perspective, that data is owned by you. It's your data. So if people tell you that it's not your data, it is your data. When I fill out that form on what cookies I like, that's my data. Now I give rights to use that data for managing operations and improving overall business. In the case of this conjoint analysis, I'm going to provide the person doing this survey a chance to use that data so that they can learn something about their question. So I'm going to give them the rights to use the data for that activity. And that data will not be shared with anyone and cannot be used against me. That person can't use it to say, "Hey, that George is a very popular person. Everybody likes him. But he doesn't like this cookie." But lastly, you should understand that organizations are legally bound to share their data for criminal investigations. So if there's something that's not fair and if the police and the FBI and the CIA and KGB and whoever feels they have some rights and some understanding about that there's data that's related to crimes or criminal investigations, the organizations are legally bound typically around the world to share this type of data. So if you're doing something wrong it's not that the organization can protect you, this still is open to criminal investigations. So let's start the survey. Hopefully, again by this time, you've populated this format and you have now got a form. You know how many samples you're going to have. You know what two parameters in the case, let's show here as appearance and taste. You have a very simple form of how people are going to be able to rank these. Or what scoring mechanisms you'd like to do, I can suggest that ranking be the one. And I've got a spreadsheet based on ranking methods for these two different parameters, we're trading off these two different parameters. So the first step is collect your data. Get your focus group together, four or five people I think would be great. If you want to bring them all together at the same time, you can do it individually as well if you need to. Still the focus groups can be done individually, could be in groups of two, or groups of five. If you're confused about this again, go back and watch the video. You can see there I did it with five different people. And you can collect the data from this all-in-one group. But try not to have them talk too much with each other. But you can come up with some rankings. And it makes it more fun, discussions about what they like, what they don't like about them. And the second thing is then you will download a spreadsheet here that you can do analysis with. So I've already got a template put together. You of course can create your own template or your own spreadsheet, is fine too. But I'd like you to use this one because it'll be easier then for you to post it as part of this activity, where I want just not only you to fill this in, but then to post it. So there'll be peer reviews from your colleagues of looking at, is the assumptions right? Did the tests get run properly? Does it seem like there was good results from this? Or there's some sort of assessment that went on that you can show with your colleagues, get some feedback from them of what could have been done better, or was this really a good result. So now, there will be a short, little example. I want to show you about filling in this spreadsheet, if you're not familiar with Excel spreadsheets, probably most of you are. I'll just show you very quickly how to fill in the spreadsheet that you can download, and then you repost it. And then again, once you see the data, you'll be able to look at this. Welcome back. We've downloaded this Excel spreadsheet and it's set up for a conjoint analysis between two different parameters. In the case, I've shown here is appearance and tastes. So the first thing you want to do is, if you have two different parameters that I've shown here, appearance or taste, you want to change those. You can click on them and change them. I'll just leave them here the same. And then I want to put the name of my cookie company, or whatever product it was. I got to make up one. I'll just put in here X, and the next one I'll just call it Y, the next one I'll call it Z, and W. So I've changed the names. So you'd see it populates down and changes everything in the columns as well as in the graphs. And I'll be watching these graphs as this goes on. So, now I have my taster one. I'm just going to maybe give them a code name again, because of data privacy. You said you can share the data but certainly they probably don't want their name shared. And one thing I do is, I'll just put maybe their first initial and whether they were female or male it's just some distinction. What's going on? And so, then they filled in their data on X, Y, Z, and W. And I'll say they maybe rank this one second, maybe Y first, Z third, and W fourth. So I can just leave those in the same. The next taster is maybe H, is male just as a code. And you can come up with any code you want, I'm just coming on that I suggest. And maybe they rank this two, and three, and one, and now it's still four. So you can see the graph is starting to change automatically as I change this first graph appearance. And so, I can continue down through that. Same thing with taste, now I have my first taster here, J and F. And I'll say how they did this? Maybe they did this one, and did Y as ranked them three, and did Z as four, and W as two. My next taster was H from my form that you've got, you're filling in this datum. Maybe they made this two, made this one three, this one one, and this one four. Leave it there. So, again you can see the graphs are starting to change automatically, and you populate this out. If you don't have a taster, then just blank those columns out. So if I say we don't have a fifth taster, I'll just backspace through those numbers and it'll vote them out. But I would prefer that you have five people if you can for your focus group, I think it gives you more statistics, it will be more fun to have. So your goal should be try to develop five people as part of this testing. Again, as you fill out this worksheet, you will be able to watch your data being done and now, again in your analysis of just a partial of this. But now I start to see some differences between the cost of that product. And here I have to fill in the cost by the way if I haven't done this right, I can put it in any units that I want. So two, I've got it set up for dollars but please change it. Or it doesn't matter if it's dollars or whatever, I just want it to be money of some type. And 1.8 so I've put in the cost of these different products. And so, it calculates plots that cost as well and calculates this normalized values. You start to see which products tend to be overvalued and which ones tend to be undervalued. And hopefully from that, you can make some analysis yourself of what you think that company is trying to do. What is their purpose? What is their goal? What type of market are they trying to address, and are they being successful at trying to address this type market? Hopefully, you understood this Excel spreadsheet activity. I think it's pretty straightforward. You can see as you enter the data, the charts will automatically change and you will get some analysis. As what we said, is looking at this added value as one parameter, one methodology to make decisions about your products. So I hope you've had fun with your focus group. And I really want you also think about is, do you agree with the focus group results? Because as I said, as you collect data, the important part of the data is that it's your decisions, it's your thinking about using the data. The data doesn't give you answers, it's your interpretation, your insights that come from using the data to drive the right decisions in business. So that concludes our module three lectures, and we will see you again at the next module, module four.