Preference Markets in New Product Development

Ely Dahan 1 , Arina Soukhoroukova 1  and Martin Spann 2
  • 1 Assistant Professor of Marketing, UCLA Medical School, Los Angeles, CA USA,
  • 2 Ludwig-Maximilians-University Munich, Germany

Abstract

Preference markets address the need for scalable, fast and engaging market research in new product development. The Web 2.0 paradigm, in which users contribute numerous ideas that may lead to new products, requires new methods of screening those ideas for their marketability and preference markets offer just such a mechanism. For faster new product development decisions, a flexible prioritization methodology for product features and concepts is tested. It scales up in the number of testable alternatives, limited only by the number of participants. New product preferences for concepts, attributes and attribute levels are measured by trading stocks whose prices are based upon share of choice of new products and features. Benefits of preference markets include speed, scalability, flexibility, and respondent enthusiasm for the method.

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  • Dahan, Ely and John R. Hauser (2002), The Virtual Customer, Journal of Product Innovation Management 19 (5): 332 - 53.

  • Surowiecki, James (2004), The Wisdom of Crowds, New York: Doubleday.

  • Spann, Martin and Bernd Skiera (2003), Internet-Based Virtual Stock Markets for Business Forecasting, Management Science 49 (10): 1310 - 26.

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