120-1
McGraw-Hill/Irwin
© 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.
220-2
CHAPTER TWENTY
MARKET TESTING CONTINUED:
CONTROLLED SALE
AND FULL SALE
320-3
A-T-A-R and the
Market Testing Methods
Figure 20.1
420-4
Controlled Sale by Informal Selling
• Used for business-to-business products, also
consumer products sold directly to end users.
• Train salespeople, give them the product and
the selling materials, and have them make calls
(in the field or at trade shows).
• Real presentations--and real sales--take place.
520-5
Controlled Sale by Direct Marketing
 More secrecy than by any other controlled sale
method.
 The feedback is almost instant.
 Positioning and image development are easier
because more information can be sent and more
variations can be tested easily.
 It is cheaper than the other techniques.
 The technique matches today's growing technologies
of credit card financing, telephone ordering, and
database compilation.
620-6
Controlled Sale by Minimarkets
• Select a limited number of outlets -- each store
is a minicity or “minimarket”
• Do not use regular local TV or newspaper
advertising, but chosen outlets can advertise
product in their own flyers and windows
• Can do shelf displays, demonstrations, etc.
• Use rebates, mail-in premiums, or some other
method to get names of purchasers for later
follow-up
720-7
Controlled Sale by Scanner Market Testing
• Audit sales from grocery stores with scanner
systems (and perhaps humans) -- over a few
markets or national system
• Sample uses:
– Can use the data as a mini-market test
– Can compare cities where differing levels of sales
support are provided
– Can monitor a rollout from one region to the next
820-8
Minimarkets and Scanner Testing: IRI’s
BehaviorScan and InfoScan
• Cable TV interrupt privileges
• Full record of what other media (such as magazines) go into
each household
• Family-by-family purchasing
• Full record of 95 percent of all store sales of tested items from
the check-out scanners
• Immediate stocking/distribution in almost every store is
assured by the research firm.
Result: IRI knows almost every stimulus that hits each individual
family, and it knows almost every change that takes place in
each family's purchase habits.
920-9
The Test Market
• “Several” test market cities are selected
• Product is sold into those cities through the
regular trade channels and advertised at
representative levels in local media
• Once used to support the decision whether to
launch a product, now more frequently used to
determine how best to do so
• The best data to offer potential resellers
20-10
10
Pros and Cons of Test Marketing
Advantages:
Disadvantages:
• Risk Reduction
• Cost ($1 mill+)
– monetary risk
– channel relationships
– sales force morale
• Strategic Improvement
– marketing mix
– production facilities
• Time (9-12 months+)
– hurt competitive advantage
– competitor may monitor
test market
– competitor may go
national
• Competitor can disrupt
test market
20-11
11
A Risk of Test Marketing:
“Showing Your Hand”
Figure 20.2
•Kellogg tracked the sale of General Foods' Toast-Ems while they were in test
market. Noting they were becoming popular, they went national quickly with PopTarts before the General Foods' test market was over.
•After having invented freeze-dried coffee, General Foods was test-marketing its
own Maxim brand when Nestle bypassed them with Taster's Choice, which went on
to be the leading brand.
•While Procter & Gamble was busy test-marketing its soft chocolate chip cookies,
both Nabisco and Keebler rolled out similar cookies nationwide.
•The same thing happened with P&G’s Brigade toilet-bowl cleaner. It was in test
marketing for three years, during which time both Vanish and Ty-D-Bol became
established in the market.
•General Foods' test market results for a new frozen baby food were very
encouraging--until it was learned that most of the purchases were being made by
competitors Gerber, Libby, and Heinz!
20-12
12
The Rollout
• Select a limited area of the country (one or several
cities or states, 25% of the market, etc.) and monitor
sales of product there
• Starting areas are not necessarily representative
– The company may be able to get the ball rolling
more easily there
– The company may deliberately choose a hard area
to sell in, to learn the pitfalls and what really drives
success.
• Decision point: when to switch to the full national
launch?
20-13
13
Types of Rollout
• By geography (including international)
• By application
• By influence
• By trade channel
20-14
14
Patterns of Information Gained
During Rollout
Figure 20.4
20-15
15
Risks of Rollout
• May need to invest in full-scale production
facility early
• Competitors may move fast enough to go
national while the rollout is still underway
• Problems getting into the distribution channel
• Lacks national publicity that a full-scale launch
may generate
20-16
16
Probable Future for Market Testing
Methods
Figure 20.5
• Test marketing
• Pseudo sale
• Minimarket
• Rollout
(“dinosaur”)
(incomplete)
(flexibility & variety)
(small, fast, flexible)