Views from the Hills by R. E. Stevens, GENESIS II (The Second Beginning) E-Mail

Test Markets

I got a call from a friend, Rich Glass, a Vice President of A.C. Nielsen Market Decisions.  Rich said he was surprised that I was not more of a proponent of Test Markets, considering my dedication to the concept of "Assessment in Context."

Somehow and somewhere along the line, Rich got the impression that I did not like Test Markets.  First of all, that is not true.  I think Test Markets are a valuable tool.  I have been involved in many over the years and found them to be helpful in correcting problems before expanding nationally and helpful in quantifying consumers behavioral responses to a new brand (or new version).  The type of test market (controlled market or sell-in) and the learning from each (production and distribution issues, trade acceptance or sell-in success, and most importantly consumer viability) may vary but the critical question answered by the test market is:
Will people in the "real world" with "real needs" purchase the new product?
(Note the use of the world "REAL."  I am not a fan of simulated test marketing.)

While the objective is "Assessment in Context," it is assessment of real world conditions.  Care must be taken in conducting the research to ensure realistic assumptions are made within the marketing plan.  I have been involved in Test Markets where the conditions were not realistic.  We spent more money per household than was ever possible in a national environment.  Also, competitors might do something in a test market that they would never do or could not afford to do in a national market.  For instance, in one of the last sell-in Test Markets where I was involved, two weeks before we were to open the market, a major competitor had a "buy one, get one free" sale of their brand.  They literally took a major portion of the market "off the table" for us for the next four to six months.

I just completed a meeting with Rich to discuss our different points of view pertaining to "Test Markets."  Rich answered my concerns with a couple of good points.  First, while I believe if the manufacturer says, "this is the funding we plan for the introduction, these are the promotions we are planning and this is the market penetration we will achieve year one," we are obligated to conduct our research and analysis utilizing their commitment.  Rich believes that if the plan put forward is unreasonable, it must and is challenged so that the plan is executed in the same manner as the national plan will be executed.  Secondly, if a competitor interjects a bias within the Test Market, the manufacturer will know and take corrective action.  Rich believes this to be low because competition knows they will receive "retaliation" if they themselves go to Test Market in the future.

I believe Rich and I are very close in our thinking when it comes to the use of Test Markets.  For perspective, I would (almost) never suggest moving forward to a national roll-out without Test Market Data.

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