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CHAPTER TWENTY

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

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  1. CHAPTER TWENTY Market Testing: Controlled Sale & Full Sale March 22, 2007

  2. 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.

  3. 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.

  4. 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.

  5. 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.

  6. 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.

  7. 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.

  8. 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

  9. 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.

  10. 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.

  11. Types of Rollout • By geography (including international) • By application • By influence • By trade channel

  12. Patterns of Information Gained During Rollout

  13. 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.

  14. Probable Future for Market Testing Methods • Test marketing (“dinosaur”) • Pseudo sale (incomplete) • Minimarket (flexibility & variety) • Rollout (small, fast, flexible)

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