Configuration: A New Approach to Product Development

Research

Rajan Sambandam

Chief Research Officer - TRC

May 3rd 2011

How we buy

Make Choices

Build Stuff

Make Choices Conjoint

Build StuffConfiguration

Research Approaches

Conjoint

Configuration

How Configuration Works

Building block approach

Price constraints

Product evaluation

Example – Communications Package

TV Internet

Phone

15

Which home services are most often chosen?

Video service High-speed Internet service Home phone service

0

100

0 50 100 150 200 250 300

Cu

mu

lati

ve %

of

ho

use

ho

lds

Spend ($)

100

Median value: “build-your-own”

Median willingness to spend (pre-build)

Low-spenders (bottom 15%)

85

215

High-spenders (top 15%)

150

How much will people pay for video, voice, and data?

161

16

Where is the money spent?

Xtra boxes

Avg. video spend ($) Avg. Internet spend ($) Avg. phone spend ($)

Core TV

Premiums DVR

HD Core Internet Datacard

Modem

Core Phone

Xtra lines

17

How well can people build for others?

Let’s speculate….

20

Which home services are most often chosen?

Self Other

Overall Services

$ S

pe

nd

ing

TV Premium TV

% C

ho

osi

ng

Internet

% C

ho

osi

ng

Phone

% C

ho

osi

ng

Total Spending

$

When to use configuration

Yes, this really is the last slide

Rajan SambandamChief Research Officer – TRC

@insightologist