newproductmanagement.docVIP

New Product Management B Pretest Market Testing Marketing Plan * Physical Product * Ad Copy * Packaging * Price * Budget Pretest - Market Analysis Market Share * Sales Forecast * Diagnostic Information Pretest Market Testing Purpose: 1 Screen poor products and marketing plan. 2 Improve marketing mix(product; ad copy; etc.) Criteria: e.g., Quantative Accuracy: +/- 25% Long-run sales/75% of time Time: 3 months to complete pretest Cost: $25,000 to $100,000 Expected Gain: $1,000,000+ Pretest Market Testing 1 Alternative Approaches a.) Managerial Judgment Past Experience i. Identify critical factors affecting * Awareness * Trial rate of new product * Repeat rate ii. Regress on historical data of similar product class (e.g., Black and white TV for color TV) * Estimate parameters for model(s) iii. Set input level of each critical factor. iv. Use model(s) from (ii.) to predict consumer responses Produce ===== Sales forecast Pretest Market Testing 1 Alternative Approaches b.) Trial Repeat (Parfitt Collins 1968) Mkt. share = t x r e.g., t = 40% r = 50% LAB TEST: Observe Consumers Trial and repeat behavior Step 1. FORCE AWARE: Expose consumers to ads. Step 2. TRIAL RATE: Observe buying behavior in a simulated store. Step 3. REPEAT RATE: Follow-up telephone interview - one week later. Advantage: Direct observation of response. Disadvantage: No lag time. Pretest Market Testing PRETEST MARKET MODELS I. Simulated Test Market (STM) A. Run in Shopping Malls B. Requires Marketing Plan 1. ad expenditures 2. Gross Rating Points (GRP) estimates 3. projected target market awareness 4. projected availability levels 5. price 6. volume forecast 7. promo plan 8. packaging, labeling, etc. C. Sample Size Approx 400-600 Pretest Market Testing PRETEST MARKET MODELS D. Design - example ----- TIME O1 X1 O2 X2 O3 O4 Where: O1 = pre-ad interview X1 = advertising exposure O2 = post-ad interview X2 = shopping t