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16 Cards in this Set
- Front
- Back
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6 marks of concept testing
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Comparing with analogous products
– Eliciting expert opinions – Elicit consumers’ purchase intentions – Multiattribute models (conjoint analysis) – Focus groups – Scenario analysis / information acceleration |
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3 points of prototype testing
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Alpha testing
– Product tested in the lab • Beta testing – At‐home use for a specified period of time • Gamma testing – Indefinite at‐home use |
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Test markets!
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Launching new product in small part(s) of the target
market • Helps firms rehearse marketing strategies under realistic market conditions • Particularly useful when products have a high risk of failing or jeopardizing firm reputation |
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4 hazards of test marketing
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• Costly
• Hard to find perfectly representative test markets • Competitors can disrupt test markets • Competitors can monitor performance, plan response |
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"ASSESOR" simulated test market
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A pre‐test‐market model
• Developed by MIT prof in 70s at the request of Gillette An inexpensive, structured method used to examine effectiveness of advertising, sampling • Developed for consumer packaged goods • Implements conditions that would normally be unrealistic – Everyone is exposed to an ad for the product – The product is accessible to everyone – Everyone tries the product actually quite predictive of test market outcomes |
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ASSESOR can help predict long term market share
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• A common task when launching a new product
• Estimate will rely on some assumptions – % of people who are exposed to ad – % of people who can access the product – % of people who will receive a free sample – % of people who try a free sample if they receive it • And data from the simulated lab – % of people who buy after seeing an ad – % of people who buy after sampling |
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Step 1 of assessor simulation
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Step 1: Ad Exposure
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Step 2 of assessor simulation
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Step 2: Simulated Shopping Trip
buy buillon or the over guy |
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Step 3 of assessor simulation
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Step 3: Everyone receives sample of BTB
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Step 4 of assessor simulation
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Step 4: Second Simulated Shopping Trip
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The proportion who buy after sampling does not equal
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EsƟmate of Long Run Market Share
ASSESSOR generates data that is part of the LRMS estimate – Trial by buying – Proportion who buy after sampling • But LRMS estimate also a function of assumptions – % of people who are exposed to ad – % of people who can access the product – % of people who will receive a free sample – % of people who try a free sample if they receive it |
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Recommended changes to big picture after assessor
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Change who we’re stealing share from
• If it’s sampling that’s really driving growth, how should our dynamic variable change? • Positioning changes… – From: “Less sodium than bouillon” |
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3 limitations of the pre-test market models
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• Do not shed light on potential implementation problems
– e.g., Retailer acceptance or support, mfg or delivery delays • Competitive reactions essentially ignored – e.g., how vigorously will competitors defend their turf? – e.g., will they cut prices? • If you test‐market, competitors can run their own Assessor |
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Stuff on breakeven analysis (examples online)
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Estimating how many units company would have to
sell to break even given price and cost structure • Total Costs = Variable Costs + Fixed Costs • Unit Variable Costs = Variable Costs Total Volume • Unit Margin = Price – Unit Variable Costs |
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Breakeven market share equation
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BEV/total volume (within category)
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Value networks
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• Retailer in previous example part of overall value
network (supply chain) – The system of partnerships and alliances that a firm creates to source, augment, and deliver its offerings • Retailer cuts into unit margin, but also adds value for the end user – Convenience |
