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Case Study: Market Forecasting for High-Tech Products

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Market Forecasting for high-tech products: living with limited data

An interview with Adam Borison, Ph.D.

BRG consultants advise on the potential and value of technology features for different consumer segments and emerging markets.

 
What was the business context?

Our client was a well-established high-tech firm with a strong R&D group. The R&D group had developed new consumer chip technology that did not fit with its existing industrial and military business. Technology that might be very successful in emerging, high-growth—and unfamiliar—markets. The Research and Development group wanted to understand the potential for this new technology, and the firm wanted to understand its value. The basic decision for everyone was whether to continue to pursue development of this technology and how.

 
What was the primary challenge?

The real challenge in this effort was that the potential markets for this technology were both new and unfamiliar. There was very little available purchase data on which to build a credible and reliable market forecast and, of course, no data at our client. Very little to go on for determining which features of this new technology—if any—would be most attractive to which consumer segments. So it was difficult to develop a data-driven estimate of the technology potential and value.

 
How did you address this challenge?

Our approach was to develop a market model that combined the limited purchase data with two other information sources: survey research and expert judgment. Effectively, using “Big Survey” and “Big Judgment” to go with “Big Data.” For example, purchase data for older related technologies could help quantify the impact of consumer characteristics, and survey research and expert judgment could help quantify the impact of the specific features of this new technology. Perhaps not as good as comprehensive purchase data, but the only possibility under the circumstances.

 
What was the result?

The model results showed which technology features were most important for different consumer segments and allowed the client to estimate the technology potential and value, all with credibility and rigor. The results showed the R&D group, and the firm as a whole, that development of the new technology should be pursued. It also provided clear guidelines for that development—which segments and features to target. Ultimately, the firm decided that the best way to obtain maximum value from the R&D group was to spin it off as a separate entity and allow flexibility in licensing with other market participants. This technology was a major piece of the spin-off entity’s value.