EVLN(Charged in 1990 with analyzing the sales potential of GM's EV1)-long

[Bruce {EVangel} Parmenter <BruceDP@iname.com>]

EVLN(Charged in 1990 with analyzing the sales potential of GM's
EV1)-long
[The Internet Electric Vehicle List News. For Public EV informational
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 --- {EVangel}
>From shelf to cyberspace Kendra L Darko 09/01/1999 American
Demographics 42 Copyright UMI Company 1999. All Rights Reserved. 
Copyright PRIMEDIA Intertec Sep 1999

Dr. Urban is applying his forecasting models to the Internet, where
the balance of power has shifted to consumers. BY KENDRA L. DARKO

Ask consumers to name some of life's top time-wasters and chances are,
tasks like shopping, car repair, and home maintenance rank high on the
list. From standing in line to waiting for a repairman to arrive, it's
the little annoyances that take time away from more pressing concerns
like work and family. Although Internet sites promise to cater to busy
consumers by offering services such as grocery delivery and bill
paying, up to now there's been no such thing as one-stop shopping for
Internet surfers.  

That may soon change, thanks in part to the work of Glen L. Urban,
former dean of the Sloan School of Management and currently professor
of marketing management at Massachusetts Institute of Technology. The
marketing research pioneer, who has made a career of developing
forecasting models to help companies evaluate sales and launch new
products, believes that the Internet is going to have far-reaching
effects on the development of new products and services, as well as on
the way consumers shop.

Urban envisions a virtual world where artificial intelligence
"advocates" give consumers information and advice and scour the
Internet for the best deals. "Your advocate would be out there
fighting for you," Urban explains. It would filter your e-mail for
spam and guarding your computer's security. Acting as a trusted
advisor, virtual advocates would serve as a concierge, set up medical
appointments, or arrange to have your car repaired while you're at
work.

If all this sounds more futuristic than the Jetsons, it's nothing new
to Urban. Throughout his career, he's been one step ahead of the crowd
in market research and product development, and now he's applying his
vision to the virtual world. Since the advent of the Internet, Urban
points out, the balance of power has shifted from manufacturers to
consumers, who are becoming more demanding and more discriminating,
empowered by what the Web has to offer. 

"They have less time, they want exactly what they want when they want
it, and they don't want to spend a lot of time looking for it," he
explains.  In addition, they don't want to have to give up their right
to privacy to get it.  Third-party agents like Urban's advocates will
serve as guardians of consumers' information, as well as handling the
time-consuming details of everyday life.

Individual companies, too, will be able to profit from consumers' lack
of time and overload of information, according to Urban.  Corporate
Web sites that develop relationships and offer valuable insight and a
sense of community, rather than simply pushing products, will gain
consumers' trust-and loyalty-when it comes time for them to open their
wallets.

A history of success
This month, Urban joins the ranks of David Ogilvy, Arthur C.  Nielsen,
George Gallup, and Daniel Yankelovich as the latest recipient of the
American Marketing Association's Charles Coolidge Parlin Marketing
Research Award, to be presented at AMA's Marketing Research Conference
in San Diego. From his early research in the 1960s using marketing
science models to track the impact of information, marketing, and
consumer response on sales, to his seminal work in the '70s with
friend and colleague Alvin J. Silk, developing a new product
forecasting model known as the Assessor, to his latest Web-related
research identifying opportunities for new product development, Urban
has a long history of making life easier for both companies and
consumers.

The packaged goods Assessor model was introduced in 1978. Urban and
Silk, currently a professor of business administration at the Harvard
Business School, set out to develop a forecasting equation for The
Gillette Co. that could reduce the risk and costs associated with
new-product failures, using models of consumer behavior and a
combination of research methodologies applied before the product was
introduced to test markets.

Test consumers were first shown advertising and other communications
materials, and then let loose in simulated stores, complete with
shelves of new products currently under development by Gillette, as
well as existing, on-the-market products, and told to go "shopping."
The data collected throughout the buying decision process -how the
customers gained awareness of the product, whether they made a
decision to shop, to whom they talked about products, and finally,
whether they made a purchase-was then statistically manipulated to
determine whether the product would sell in an actual store. The
Assessor model, which is still being marketed commercially, proved to
cut the new-product failure rate by half, Urban says. He later applied
it to forecasting the sales of durable goods such as automobiles.

In the mid-1980s, Urban developed Prodegy, a system to identify
strategic market opportunities. Although research showed consumers
often switched between products within specific segments in a market
structure, they would rarely switch between segments. That is,
consumers might choose only certain substitutes if their preferred
brand is not available. By examining the coverage and duplication of
product lines, Urban demonstrated how such consumer data could be used
to formulate and test alternative product line strategies. At the same
time, in a project that grew out of his work on the Assessor model,
Urban analyzed the effects of order on products entering new markets,
demonstrating that, if all factors-including price, product preference
and promotional spending-are equal, the first movers in a category
would garner the largest market share.

Urban's applications have been used by numerous companies, including
Noxell, BellSouth, Polaroid, and General Motor's Buick Division.

Charged in 1990 with analyzing the sales potential of an electric
vehicle from GM, Urban and his colleagues expanded the Assessor model.
The new version, called Information Acceleration, used interactive
multimedia to create a virtual auto market before the car was built.
Potential consumers were given extensive information about the vehicle
and placed in a virtual showroom, which included test drives in a
laboratory prototype around a shopping mall parking lot.

Urban recalls that although most test subjects said they'd like a
quiet, environmentally friendly electric car, their attitudes changed
quickly upon learning all the facts through the simulation.  Being
eco-friendly wasn't enough. Even though the car performed better than
people expected it went 0 to 60 miles in eight seconds -it was only big
enough for two and not as reliable as a standard car. "People were
afraid they'd] run out of power," says Urban. And it came with a hefty
price tag-$30,000. In order for consumers to sustain interest, he
says, the car had to be available at the same price, with the same
reliability and the same style as the average car.

Consumer data from various stages in the decision-making process, as
well as assumptions about the estimated future price of gasoline and
possible tax credits, was statistically manipulated within the
Information Acceleration model to determine market feasibility before
the production commitment was made. Consumer misgivings and a limited
battery technology and recharge infrastructure caused Urban and his
colleagues to deem the car a no-go, at least on a large scale. "Our
basic recommendation to GM in 1991] was that they shouldn't invest
billions of dollars] until the battery technology improves," Urban
recalls. "And they shouldn't be building a sports car, but more of an
econo-van." When the results of the study were later published, Urban
forecast sales for 1999 at 1,000 units. In 1998, GM sold only 300.

Even if the news was bad, the model worked with the electric car.  But
what about the misses? "We were pretty good at picking [products that
paid off," Urban says. But, he admits, some products that his models
indicated would die actually turned out to have pretty bright futures.
One, a telecommunications device that attached to the telephone and
allowed consumers to buy groceries, make dinner reservations, or
purchase airline tickets remotely, just wasn't feasible when tested
nine years ago. "It was almost impossible for people to get good
information [electronically," says Urban. "It was not so much that we
didn't evaluate what was there, but we didn't think the technology
would change so quickly." Now, with the Internet, everything has
changed, except consumers' need for information fast.
 ...
 http://www.umipub.com/  editorial@umipub.com
UMI Publications, Inc., PO Box 30036, Charlotte, NC 28230
(800) 747-9287
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