Rule Developing Experimentation and Its Use in Marketing - Research Paper Example

 Rule Developing Experimentation and It’s Use in Marketing Research Abstract The motive of any organization is to make profit. Nobody runs an organization for charity. An ideal management makes profit producing and selling products beneficial to the man kind. The consumer does not mind paying a little more for the items which make him more comfortable, happy and healthy. To make a long story short, he needs those that improve his living conditions. Obviously, such products are always welcome and will catch the market. RDE helps in determining, manufacturing and selling such products. It gives all clear ideas about the strategies to be made use of in the expedition. And surprisingly, the steps are not Herculean. They can be understood even by common man with basic education. It means with a very little effort a huge target can be achieved. There need be motivation and interest to adhere to it. RDE helps in yielding high dividends. RDE can be implemented for not only consumer good companies but also B2B companies. RDE is nothing new, but Alex Gofman and Howard R. Moskowitz, have exhibited the essence of it very nicely in their book. Importance is given to the development of items that are not yet well known in the market, but that will be highly acceptable. Key Words: Rule Developing Experimentation, Business to Business RDE Use in Marketing Research RDE is a solution oriented learning experience. The customers help the manufacturer to design and create a new product, which have come to the market after it is produced through rigorous research and development programme. “It is systemized solution oriented business process experimentation that designs, tests, modifies alternate ideas, packages, products or services in a disciplined way using experimental design, so that the developer and marketeer discover what appeals to the customer, even if the customer articulate the need, much less the solution.”(Alex Gofman & Howard Moskowitz, 2007) At the outset it was made use of for product optimization and then message optimization for advertising, promotions etc. Applications of RDE are there in any field that involves human choices and decisions, for example, social science, public policies, stock market, crisis communication management etc. The three roots of RDE are: 1) Experimental Psychology: RDE is created on the concept that Perception and Behavior are interlinked. Its statistical basis is conjoint analysis. 2) Driving power of business: Creation of products and services of people’s choice and liking, which they can do fast and with minimum expenditure. 3) World view of Social Sciences: RDE is in connection with Adaptive experimentation. (AE), which deals in projects in Ecology, Theoretical Science or Sociology. AE does not make rules. The seven steps of RDE are: 1) Identify the free offer that accompanies the main product. For example, take the case of credit card. The offer may be with respect to Annual Percentage Rate (APR). In the case of others, there may be rewards, monetary benefits or discounts. 2) Match the elements to invent a set of prototypes. 3) Involve the customer and get their feedback on their interest to buy a particular item. 4) Analyze the response of the customer. Make use of a regression module for the purpose. 5) Discover the optimal product. Look for the best combination with the highest sum of utilities. 6) Identify those who show similar patterns of the utilities. Concentration must be on unique products for the selected people than making normal products for the common people. 7) Apply the generated rules to invent fresh items, offerings and so on. (Ashbacher, Charles, 2007) Advantages of RDE: The structure of RDE grants higher success than any other method. It is accepted that the seven steps given above clearly make the consumer understand the problem and arrive at the proper solution. Individual models provide rich and valuable data. The advantages of individual modals include: 1) Pattern based discoveries to create rules for attitudinal segmentation. 2) Going deep into market share and choice analyses. 3) Finding out all meaningful inter actions between elements. 4. Studying ‘how one element ‘drives’ responses to another element using scenarios’ A variation of dummy variable regression is used by RDE to estimate the values of utilities which help in data basing the moods and mind of the customers and thereby compare the utilities among the categories of people. Marketing Research: It is the systematic gathering, recording and analyzing of data about issues relating to marketing products and services. Marketing is concerned mainly about marketing processes. It is subdivided into Consumer marketing research and Business to business (B2B) marketing research. Methodically it can be approached as Qualitative marketing research and Quantitative marketing research. In a way Consumer marketing research is one form of Applied Sociology that deals with understanding of preferences, attitudes and behaviors of consumers. Its objective is to understand the effects and success of marketing campaigns. Another way to describe marketing research is as a systematic identification, collection and analysis of information for assisting the management in making decisions with respect to identification and solving of problems in marketing. It pinpoints and assesses how the changing elements of marketing affect the customer behavior. Role of marketing research: Marketing research provides management with relevant, accurate, valuable, current information. Competitive marketing environment and high costs due to poor decision making necessitate that valuable information be made available by the research. It must be understood that sound decisions are not based on intuition and gut feeling. The marketing manager is able to link the marketing variables with the consumers and the environments with the help of the research. The role of marketing research in managerial decision making is further illustrated in “DECIDE” model, which constitute: D: define the problems in marketing E: enumerate all decision factors, whether controllable or not C: collect all relevant information. D: develop a marketing strategy and implement it E: evaluate the decision and the related processes. Characteristics of marketing research: It is systematic and well planned. The data are collected and analyzed scientifically. It throws light on accurate and true information. It is objective, impartial and unbiased. The processes involve identification, collection, analyses and dissemination of information. All these are very important. The findings, implications and recommendations are tabulated for decision making by the management. Classification: The purpose of research is to identify the problem and then to solve it. That means, it can be split into problem identification research and problem solving research. Problem identification research is undertaken to know the problems which are existing, but not apparent and also the problems which are likely to occur in future. Examples are – market potential, market share, sales analyses, short range forecasting, long range forecasting, business trends research etc. The outcome of problem solving research will help in making decisions that can solve the marketing problems. There are two main sources of data- Primary and Secondary. Primary research is conducted from the beginning. It solves the problem at hand. Secondary research is on data published previously, which is already there. Business to business research is more complicated than consumer research. First of all decision making is not easy. Second, the products and their applications are more complex. Thirdly, personal relationship matters much in business to business markets. Finally, Business to business marketers have to deal with a small number of customers, but their consumption of products is much larger. Irrespective of the size of the establishment the analysis should be based on ‘What, When, Where, Which, Who, Why and How’ questions. RDE is comprised of internet based designs in combination with automatic analyses. RDE segments people their mindsets. Using their responses to messaging, segmentation is made actionable. It is necessary to work with mindsets that differ radically from one another. Then it is necessary to interpret these mindsets. Thirdly, discover that mindset which a customer has and address that mindset. Though RDE cannot replace the creative involvement, it allows for the creation of new and attractive packages. RDE makes people feel good even they pay more. It systemizes the process of discovery and development. To know RDE and use it one need not be a Master in Statistics or Psychology or Social Sciences. For example, a driver may be an expert in his job, but he may know nothing about the difference between diesel engine and petrol engine. He is not expected to know either. His job is to drive the vehicle efficiently. In the same way though RDE designed and invented by highly qualified people it can be easily made use of by the present common business community for their own good. More and more companies are making use of them not only to survive in the present day high competitive market but also to substantially progress in the path for business success. The development of new tools has made RDE easier to use and that too with lot of fun. As already mentioned perception and behavior go together. For example, if a soft drink is added a little more sweetener, it will taste better. Consumer starts preferring the sweeter drink. Then it becomes the normal, standard drink. The simple form of RDE based on this is: Change the essence or constituent, watch the consequent response, determine the pattern or rule, manufacture the items as per the new requirement of the users, then there is success in the business. This shows that RDE is a part of experimental psychology. The objective of any business is to offer something new and useful to the customer, which simultaneously brings profit to the organization. Business is based on rules. The rules tell what to make, how to win the heart of the customer and how to do marketing such that the product is sold like hot cakes. RDE concentrates on performing each of these tasks efficiently. Whenever it is used, the result is almost immediate. Speed and accuracy will do a lot for the organization. As already mentioned, RDE is related to Adaptive experimentation, which solves ecological or social issues through trial and error method, often using the feed back from the customer to determine the next step. In stead of generating rules, AE tries to go for solutions using the process of experimentation. RDE uses experimental methods to understand the algebra of people’s mind. Stimuli are laid with the help of experimental designs, helping the developer and marketer to find out mindset of the customer. The customer may neither be able to explain the need, nor the solution. RDE is based on conjoint methods that have grown rapidly in the past. Conjoint measurement pertains to a class of research and analytic procedures that make use of people’s reaction to determine how much individual elements of any item can contribute to a total concept. RDE is used to understand the existing products, product categories and packages and to create future offerings with respect to the process of new product development (NPD) RDE is the foundation for Mind Genomics, a combination of genomics and informatics. RDE is becoming increasingly popular among scientists and business magnates. In fact everyone wants to learn RDE. History of RDE: RDE was formalized by Alex Gofman, Howard R Moskowitz (editors of the book “Rule Developing Experimentation”) and Prof. Jerry Wind of Wharton School of Business at University of Pennsylvania. The principle was originally formalized in their book “Selling Blue elephants”, which became so popular that it was translated into 15 languages. RDE at present: Currently it is being taught in various universities throughout the world. All major establishments in the world including Fortune 500 companies are making best use of it in various forms. RDE ensures higher success rate than any other method. Many are of the view that merely by preparing a RDE project, the problem is clearly understood even the correct solution is arrived at. It is not claimed that experimentation could replace design and technicalities of product design. It confirms the fact that RDE improves the process of discovery and development. The book makes a mention of the well known establishments that benefited by the book. Next it gives an idea of the use of RDE in innovation and design. Then it examines its use in all walks of life. RDE is the tool which illustrates the value of a scientific method to fulfill the need of the customer. Apart from that the book exhibits that experimentation is not only the spices of life, but can also spice up lives of all individuals. The book is funny and informative. It can be thought of as a book on Psychology as much as a Science of Marketing. Let us evaluate what we understand from the book: 1. Find out “how the world works” in the local market. 2. Disclose the rules that define the next product likely to come to the market. 3. Produce prototypes that give immediate answers to the right questions. 4. Get the truth from the customers, which they hesitate to tell the customers. 5. Streamline the processes with automated tools. 6. Streamline the research such that the customer gets the answers to take action without Any delay. 7. Take care that RDE is implemented through out the enterprise. (Ashbacher, Charles, 2007) It is firmly believed that Asian countries, particularly China and India, are taking RDE seriously. India needs to take full advantage of RDE with its large population, with many religions, regions, traditions, languages and innumerable political parties. They are interested in developing new products which can be sold in quick time throughout the world and domestically, against stiff competition from other countries. Also Asia wants to get an idea of the mindset of its customers of other countries as well. Getting an answer is quite easy. With RDE the job is too simplified. The affairs in any foreign country can be handled within the local office without any waste of time and with minimum expenses (Hipple, Jack, 2010) With the help of RDE the interest of customers in the whole world is understood easily- may it be the new features of any popular item, its appearance, its packing, promotion or advertisement and so on. The products of the competitors can also be studied and compared. That will give an idea as to what the market trend is with any product. RDE helps in getting more information about the competitors and their strategies. There is no doubt that a combination of modern marketing and selling techniques based on thorough research call the shot today. RDE can be easily accessed with a number of tools including Ideamap.NET. There is no mathematical skill required to use it. When asked, the people may not be able to give an answer about their need, but if they are shown a number of options created, it becomes easy for them to choose. (Murali.D. Kalidas.V, Ready, 2008) The so called focus groups are too expensive for the Asian companies. In addition they are not quantitative. On the other hand RDE solves all sorts of problems. In business, packaging plays an important part. Even the best product will not be sold if it no packed to a particular standard. Packaging is indeed an art. RDE involves in this also. The need for packaging is 1) Safe storage of the material. 2) Protection from pests and spoilage 3) For convenient transportation. Apart from all these, the packaging should be eye catching to the consumer, with proper text or graphics. This will even help the sales personnel to identify the items easily among the many products on ‘shelves’. There are some companies which manufacture products of use to the society. But at the same time, the management wastes plenty of time on discussion and on further discussion without arriving at any concrete decision or plan. In a nutshell, the management fails to do the ‘homework’. ( Onufrey , Stephen , Howard Moskowitz 2008) Doing homework amounts to three factors: 1) Creating lots of combinations of test stimuli, just any one will not do. 2) Testing these among the consumers to determine which wins and which loses and why. 3) Creating better and modern stimuli based on the studies and re-test for further improvement. That is to say, the policy of testing, discovering, re-engineering and validating will surely succeed. (David martin, 2007,) Conclusion RDE is a systematic way of doing experiments, tabulating the results, analyzing them and introducing new rules for product development and subsequent marketing. The method saves lot of time and money. The greatest advantage is that it can be implemented with very little effort. For any company to flourish there are two ways. The first one is to sell more of its existing products. Secondly, introduce new products of interest to the customer and then sell. The second option calls for great ability, and here comes the role of RDE. References: Alex Gofman &Howard R. Moskowitz (2009)Structured experimentation in package design? retrieved from http://www.ftpress.com/articles/article.aspx?p=1334083 Alex Gofman, Moskowitz , R, Howard. & What is RDE?, retrieved from, http://www.sellingblueelephants.com/what_is_RDE.html Ashbacher, Charles ,Learn how to turn your old products (pink elephants) into new products (blue elephants), (2007), retrieved from http://www.amazon.com/Selling-Blue-Elephants- products-people/dp/0136136680 Chair, Stephen Kosslyn, Professor of physchology Harvard university, How to make great products that people want before they even know they want them, retrieved from http://www.pearsontechnology.ca/features/elephants.html David Muscovite, Alex Gofman, Johanna Fyrbjörk, Tönis Mets,  Howard R. Moskowitz(feb 2010) Exploring Perception of Food Packages with Rule Developing Experimentation and Eye Tracking, Retriev from,http://www.whartonsp.com/articles/article.aspx?p=1552770 David, martin,(2007), in the absence of money, retrieved from http://davemartin.blogspot.com/2007_06_01_archive.html Ed, uyeshima,(2007), Quantifying Blue Oceans and Long Tails in Stepwise Fashion, retrieved from http://www.amazon.com/Selling-Blue-Elephants-products-people/dp/0136136680 emerald group publishing(2009) , Integrating science into web design: consumer-driven web siteoptimizationlimited, , retrieved from http://www.emeraldinsight.com/10.1108/07363760910965882 gupta, praveen,(2007) Teaching innovation, retrieved from, http://www.triz- journal.com/commentary/archive/teaching_innovation.html#568 Hipple, Jack(2010) look up and down for innovation, retrieved from ,http://www.triz- journal.com/commentary/jackhipple http://www.mindgenomics.org/methodology/rdeprimer.html Moskowitz , R, Howard. & Alex Gofman, (april, 2007) , How To Make Great Products That People Want Before They Even Know They Want Them Retrieved from http://www.mji- designlab.com/index.php?id=39&L=0 Murali.D. Kalidas.V, Ready for RDE? retrieved from http://www.thehindubusinessline.com/catalyst/2008/01/17/stories/2008011750120400.htm Onufrey , Stephen , Howard Moskowitz (2008),Rethinking segmentation, retrieved from http://www.ababj.com/retail-banking/rethinking-segmentation-oct.-08.html Professor Subrata Sen , How to make great products that people want before they even know they want them, retrieved from http://www.pearsontechnology.ca/features/elephants.html RDE, retrieved from http://en.wikipedia.org/wiki/Rule-developing_experimentation The roots of RDE, Retrieved from, http://www.sellingblueelephants.com/RDE_roots.htmlu The short term strategies are they replacing the long term strategies,(2008) retrieved from http://www.richandforts.com/blog/ Upcoming book on the high end (2009), retrieved from http://www.experientia.com/blog/index.php?s=marzano&x=0&y=0 Using RDE to Identify What Works in Package Graphics, retrieved from http://www.ftpress.com/articles/article.aspx?p=1334083&seqNum=2 vranicar,(octo 2007) Informative but blatantly self-serving, retrieved from http://www.amazon.com/Selling-Blue-Elephants-products-people/dp/0136136680 Read More