Rule Developing Experimentation: A Systematic Approach to Understand & Engineer the Consumer Mind

A key to business success lies in consumer-driven innovation. Rule developing experimentation (RDE) is a systematized solution-oriented business process of experimentation, which designs, tests and modifies alternative ideas, packages, products, or services in a disciplined way using statistical design. RDE uses either conceptual or physical prototypes. RDE applies to new product development, but can apply to more general social issues beyond the realm of products. RDE stems from the consumer-driven proactive approaches to structured experimentation, focusing on consumer preferences. RDE as implemented on the concept level uses so-called partial profile conjoint analysis. RDE’s test stimuli often comprise incomplete concepts or vignettes created according to a specific type of experimental design (isomorphic permuted experimental designs). RDE uncovers pattern-based latent segments, as well as revealing the nature and magnitude of explicit and implicit interactions between the pairs of stimuli that RDE studies (so-called synergism and suppression). RDE traces its origins to experimental psychology, as enhanced through the driving power of business and social science. When applied properly, the developer and marketer discover rules and patterns defining what appeals to the customer, even in situations when the customer can’t articulate the need, much less the solution.

The chapter deals with experimental designs used in conjoint analysis. The approach permutes the structure of the underlying fractional experimental design in order to create different sets of combinations. The resulting experimental designs, called isomorphic permuted experimental designs (IPEDs), create diverse sets of the variables and levels, producing an array of different designs that are statistically equivalent to each other. By creating an array of distinctive different individual designs (one design for each respondent), IPEDs reduce the bias caused by some possibly unusually strong performing combinations. IPEDs create the conditions for statistical analyses to detect and estimate interactions among variables. IPEDs also allow cluster analysis to identify pattern-based segments emerging from individual models of utilities. The chapter presents the theoretical foundation of the approach, formalizes the algorithmic implementation and shows a practical example its use.

The chapter introduces two approaches that identify the nature and magnitude of interaction between concept elements in a conjoint analysis task. Both approaches use main effects experimental designs, permuted to create hundreds of new designs that are isomorphic to the original design structure. In the first approach, the scenario analysis creates a distinct, mutually exclusive, exhaustive set of subgroups from concepts based upon the commonality of a specific element, runs a dummy variable regression within each subgroup and identifies the effect of the different elements on the dependent variable. When compared across the different subgroups in the regression analysis, the outcome shows the effect of one element on the impact values of the other elements. In the second approach, also using regression analysis, this time to understand the pairwise interactions, the analysis forces in all of the linear terms (single elements) and then allows significant pairwise combinations to enter if they contribute significant additional predictability to the model. The two approaches identify the existence of and then measure the impact of, one element on the performance of others (scenario) and the unexpected effect of mixing two concept elements (interaction analysis). We illustrate the approaches with a case history dealing with communicating the sensory and refreshment benefits of an orange beverage.

This chapter summarizes different consumer-driven approaches to new product development with their advantages and disadvantages. The analysis identifies opportunities for development in the field.

The chapter illustrates a practical RDE implementation for market research applications demonstrated with IdeaMap®.NET (http://www.ideamap.net) online RDE tool. Using a case study, the chapter follows steps of the RDE process with explanations of data and findings.

The measurement of consumers’ responses is the foundation of quantitative research. Selecting instrument(s) or scale(s) to measure responses is important and delicate, often confusing and politically sensitive. Researchers often find themselves in situations where they have to compromise but maintain the integrity of the study. To balance these tasks, the researchers’ responsibility extends beyond simply designing a study. They must communicate and persuade other stakeholders in the project to accept their choices of scales. Knowledge of clearly established objectives and the inherent properties of the scales are critical. Research objectives dictate the choices of scales because the target consumers, questions and conditions for the study are derived from those objectives. In this chapter, the authors will recommend the appropriate use of scales in different situations (e.g., screening/formulation-based experimental designs and discrete/final decision consumer studies). Besides clearly established objectives, the inherent properties of scales are very important in questionnaire design. The authors will present the latest development in hedonic measurements and the misuse of the 9- point hedonic scales in international studies. Moreover, the authors will review recent theories and evidence about ways in which “liking” and “disliking” are not diametrically opposed.

The RDE applied to products involves experimental design, either of discrete or continuous variables. The chapter presents the history of RDE and sensory modeling/optimization, the methods most commonly used, field implementation, analysis procedures and segmentation. The chapter closes with a brief review of how the RDE approach is used by today’s corporations.

The food and beverage industries are today facing an extremely competitive business situation. To the degree that the product developer or marketer, as well as general business manager, can understand the consumer and target efforts, the business will be more successful. This chapter introduces sensory optimization that could fill that need, for it provides both theory and case histories illustrating the types of issues, the nature of the thinking and the way the problem is solved in a practical format. Aimed toward all aspects of the industry, the chapter is especially important for those involved in the early stages of development, where there is much business opportunity.

The advantages and pitfalls of sensory optimization are outlined in this paper. The response surface design is presented in terms of application to optimization studies. These studies are done by research and development. They deal with issues such as the role of ingredients in a product formulation and the discovery of optimal combinations of these ingredients that generate the desired sensory properties. Contour maps developed from the experiment illustrate how to discover the best ingredient combinations and how to avoid extrapolating beyond the range tested in the actual experiment.

The RDE-based hotel study reported here shows that it is not the particular sense, but the experience that drives consumer interest and willingness to pay. A total of 315 respondents evaluated experimentally designed vignettes, comprising different combinations of positive, pleasant sensory experiences that a hotel might offer its guests as a point of differentiation. Each respondent evaluated a unique set of these vignettes. The ratings to the vignettes were deconstructed into the contribution of each sensory experience as a driver both of interest in the hotel and of relative amount of money one was willing to pay versus a standard one-night hotel cost. These experiences covered four different aspects of each of four of the five senses (seeing, touching, smelling and hearing). It is not the particular sense but the particular experience that drives interest and amount willing to pay. Three mind-set segments emerged: sensory seekers, fragrance and touch and design and relaxation.

The object of the study is to identify effective communication messages for consumers facing product/brand options, when the category is a packaged good, in a competitive and saturated category in different countries. The challenges facing multinationals include differentiating their brands from competitors and creating brand equity. Segmentation determines groups of individual consumers similar in preferences and in intended buying behaviors. These segments may transcend national boundaries. Identifying such segments simplifies the design of advertising messages that appeal to audiences regardless of their country of origin and reduces promotional costs. This chapter presents ways to identify effective communication messages for consumers in the toothpaste category for three developing countries with developed markets. The study determines whether traditional product segmentation strategy based on attributes (forms, flavors and ingredients) could be augmented by a mind-set segmentation. The results suggest three key segments that transcend the countries and provide a basis for a successful communication strategy. The study’s major contribution is the delineation of a framework for data assembly and identification of metrics measuring different aspects of consumption patterns in a highly competitive packaged goods category.

This chapter addresses the question of how to create a database of the citizen’s mind about anxiety-provoking situations in the face of terrorism. The approach is grounded in a combination of experimental design, psychophysics (a branch of psychology) and consumer research. The theoretical foundation is illustrated with a set of 15 empirical studies using conjoint analysis in order to understand how consumers respond to anxietyprovoking situations. The approach identifies the mind-set toward terrorism at the individual respondent level. By exploring responses embedded in a general study of anxiety-provoking situations, it becomes possible to understand the algebra of the individual respondent’s mind, how important the basic fear of terrorism actually is, how important it is to specify the type of terrorism (bombing versus contamination of the food supply) and the structure of what frightens the consumer. The chapter attempts to answer the question: what are the critical drivers of anxiety—the specific terrorist act, the location of the act, the feelings, or even the proposed remedies to reduce anxiety? The outcome of the research is both an empirical dataset and potentially a framework for a subdiscipline in social science. This approach looks at problems from three perspectives: as a scientist—to understand general patterns; as an engineer—to solve a specific problem; and as a clinical psychologist—at the level of a single individual (idiographic) as well as at the level of the general population (nomothetic).

The development of breakthrough, impactful advertising historically has been considered one of the business world’s more mystical creative acts—a belief that is protected and nurtured by many of the world’s leading agencies. Yet many of these same agencies were early proponents of involving the consumer in the advertising development process. Clearly, they recognized the contribution that consumer insight could have on the ultimate effectiveness of advertising. The dynamic tension between an overarching mystical creative or scientific-based research philosophy is resolved differently at various advertising agencies. This chapter reviews the major types of research frequently used to develop consumer insights during the advertising development and evaluation process. The reader will develop an understanding of how different approaches and classes of methodologies contribute to the end communications deliverable and develop an appreciation for both the creative and research-oriented schools of thought.

Our analysis of over 600 ads, campaigns, and ideas for ads for packaged goods, automotive, retail, telecommunications, financial services, and not-for-profits indicates that of all the variables and relationships examined the emotional connection with advertising—that is, how it makes consumers feel or how they want to feel—is the number one driver of purchase interest. This chapter examines how this finding might be expanded to measuring and understanding the importance of relationships consumers have with brands.

This chapter explores approaches to consumer-driven optimization of package design utilizing rule developing experimentation (RDE). The approach comprises dynamic creation and testing of a large number of design prototypes with consumers. RDE then uncovers optimal solutions, both on an aggregated, segmented (pattern-based latent mind-set segmentation) and on an individual-by-individual basis. Disciplined experimentation produces more targeted package designs, generating higher appeal to the consumers. The proposed steps describe a fast, parsimonious and actionable process, applying RDE to packages, providing in turn necessary input to designers about consumer preferences. The chapter demonstrates that systematic exploration using experimental design should be a central part of the initial, knowledgegathering phase in package design. The steps of fitting the research into the package design process are shown. These steps constitute a cost-effective and efficient way to include consumers in the early stages of package design.

Although widely recognized as important to increase a website’s conversion rate and overall ROI, landing page optimization (LPO) remained for a long time in the domain of IT. This chapter shows the development, classification, advantages and shortcomings of a very advanced form of LPO, multivariate landing page optimization. The RDE approach tests thousands of Web page prototypes with consumers and finds real optimal solutions on an aggregated, segmented and individual basis. The latter paves the road to individually optimized pages and one-on-one marketing.

This chapter explores one of the most advanced forms of landing page optimization: multivariate landing page optimization. The approach tests systematically varied prototypes of Web pages, working with consumers to identify the “rules” by which the Web pages drive specific responses. The approach, a subset of rule developing experimentation (RDE) generates indices of performance, which can translate into generalizations about consumer responses and thus “rules” about what might be done, either on an aggregated basis, on a segmented basis, or even on an individual basis. The last capability paves the road for individually optimized pages and one-on-one marketing in the near future. The approach described employs a new variation of multivariate landing page optimization based on RDE. The approach could help the marketers create better Websites that consumers like and which will help marketers to differentiate their respective Websites from their competitors.

Website customization is an innovative Internet concept to optimize consumer experiences. By pursuing three objectives, this study aims to increase our understanding of how and when site customization can be applied. First, we define the concept of Website customization as an extension of mass customization. Second, we identify the value drivers of Website customization from both a customer’s and a supplier’s point of view. Finally, we investigate how two companies, which operate in different environments, deal with these value drivers. The two case studies, concerning Amazon and Dell, focus on companies that are widely recognized as being successful in this area, but operate in significantly different environments. The case analyses show many similarities in the customization strategies of both companies, e.g., delivering substantial added customer value, automating the customization process, offering a stepwise process and the crucial role of trust. However, there are also distinct differences regarding the initial customer’s investment, the elements of added value and the knowledge on which customization is based.

It’s almost impossible to imagine the scale, cost and labor Involved in the human genome mapping projects. A similar scale effort to map the human mind would be even more complex, as people’s mind-sets are more individual. In this chapter, we discuss the new science called Mind Genomics® and how it can be employed in a number of subject areas.

This chapter presents our vision for a new science, modeled on the emerging science of genomics and the technology of informatics. Our goal in this new science is to better understand how people react to ideas in a formal and structured way, using the principles of stimulus–response (from experimental psychology), conjoint analysis (from consumer research and statistics), Internet-based testing (from marketing research) and multiple tests to identify patterns of mind-sets (patterned after genomics). We show how this formal approach constructs new, innovative ideas in business. We demonstrate the approach using the development of new ideas for an electronic color palette for cosmetic products that are to be used by consumers.

The evolution of human society leads to increased affluence and prosperity of certain populations, sometimes at the expense of well-established markets. Market leaders in products and services tend to be so focused on their current customer base that they are caught off guard with the changes in markets created by the evolution. These changes often go unnoticed until it is too late. The change in customer base often requires the repositioning of products and services through innovations, which address new and emerging markets. Some of these changes could potentially result in tectonic market shifts that force innovation managers to involve current and future customer bases in order to help understand the opportunities that can lead to innovation. The nature of these innovations could span the range from addressing the mundane needs of developing countries to meeting the wishful aspirations of mature markets. Firms are often at a loss on when and how to use customer-inspired insights in the goal to create new innovations. Innovation management takes on a new art form that engages customers, allowing them to reveal their unmet needs. Such a fuzzy front-end process demands new engagement styles and structures that are less obvious to those who use traditional tools such as surveys and focus group research. This chapter identifies the challenges faced by firms in responding to a less-traversed approach toward using customers to identify innovation opportunities, and suggests methods to manage such challenges.

The advances in neurosciences during the 1990s (the “decade of the brain”) made it possible for the marketer to use cutting-edge brain imaging equipment, such as functional magnetic resonance imaging and ultra-high-resolution electroencephalography, literally to “look into” the consumer’s brain and perhaps understand what physiological phenomena might be occurring. The first decade of the second millennium is characterized by an increasing media hype surrounding neurosciences as they are applied in marketing research (so-called neuromarketing). As often happens during pivotal moments of innovation in science and technology (the dot-com bubble being a recent example), some pundits of the sector run wild with speculations about the potentialities of neuromarketing. The neuromarketing promise can be summarized as follows: “Brain imaging and biometric techniques are capable of predicting the consumer’s behavior”. Regarding the neuromarketing promise, there are only a handful of peer-reviewed scientific research papers, compared with the number of pop culture publications. Even companies founded with the specific purpose of carrying out neuromarketing research are reluctant to give scientific references in order to back up their claims. Of course, they own proprietary methodologies that cannot be disclosed, but one might suspect that there is a lot of unfounded speculation and wishful thinking too. Therefore, it became critical to develop a scientifically based, rigorous method capable of discerning reality from myth, and of discovering new possibilities in neuromarketing. Rule developing experimentation (RDE), combined with EEG and eye tracking (treated in another chapter) turned out to be that method and worldview. This chapter describes the birth of the new science of RDE-based neuromarketing, and what it has told us thus far.

Design is a multidisciplinary field in rapid evolution. For the purpose of this chapter, we focus on the pragmatic reality of corporate design teams. How do corporate design teams cope with the challenge to bring research onto their radars? Firstly, by being more and more integrated in the overall branding, marketing, and research processes of their respective corporations. If industrial designers of the past were accustomed to be in a dialog with R&D scientists in order to be recipients of technological innovation, nowadays corporate designers engage in a vibrant ongoing discussion with more stakeholders, both internal and external, representing the customer’s voice within the company setting. In the past two decades or so, the role of research within corporate design processes has increased to the extent that entire departments were created almost by fiat. This was undertaken with the specific purpose to organically grow new competencies from within new portfolios of nontraditional and complementary design domains. Such approaches as ethnography, laddering, and future studies are among the specific approaches that have been increasingly integrated into the corporate design portfolio. The incorporation of these disciplines led to some exceptional cases of bottom-up excellence, as well as to some oddities in corporate portfolios and management directives. The new economic climate demands a rational approach to systematically anticipating people’s needs and wants. Given today’s drive toward fact-based decision making, the introduction of statistics and scientific methods appears to be the natural next step to streamline design skills. These methods should enhance innovation and delivery, and further encourage research competencies within the design portfolio of corporations.