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CHAPTER TWENTY. Market Testing: Controlled Sale & Full Sale March 22, 2007. Controlled Sale by Informal Selling. Used for business-to-business products, also consumer products sold directly to end users.

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chapter twenty

CHAPTER TWENTY

Market Testing:

Controlled Sale & Full Sale

March 22, 2007

controlled sale by informal selling
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.
controlled sale by direct marketing
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.
controlled sale by minimarkets
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 it in its own flyers.
  • Can do shelf displays, demonstrations.
  • Use rebate, mail-in premium, or some other method to get names of purchasers for later follow-up.
controlled sale by scanner market testing
Controlled Sale by Scanner Market Testing
  • Audit sales from grocery stores with scanner systems -- 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.
minimarkets and scanner testing iri s behaviorscan and infoscan
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.

the test market
The Test Market
  • Several test market cities are selected.
  • Product is sold into those cities in the regular 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.
pros and cons of test marketing
Advantages:

Risk Reduction

monetary risk

channel relationships

sales force morale

Strategic Improvement

marketing mix

production facilities

Disadvantages:

Cost ($1 mill+)

Time (9-12 months+)

hurt competitive advantage

competitor may monitor test market

competitor may go national

Competitor can disrupt test market

Pros and Cons of Test Marketing
slide9

A Risk of Test Marketing:

“Showing Your Hand”

  • 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 Pop-Tarts 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 were busy test-marketing their 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.
the rollout
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.
types of rollout
Types of Rollout
  • By geography (including international)
  • By application
  • By influence
  • By trade channel
risks of rollout
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.
probable future for market testing methods
Probable Future for Market Testing Methods
  • Test marketing (“dinosaur”)
  • Pseudo sale (incomplete)
  • Minimarket (flexibility & variety)
  • Rollout (small, fast, flexible)
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