The case of the test market toss-up Bill Horton sat alone in the office late Friday afternoon

anxiously leafing through computer printouts, even though he could recite their contents from memory. Horton was waiting for his boss bob !urphy, to report back the decision on a sub"ect the marketing committee had been debating for more than fur hours. The issue whether paradise food should authori#e national rollout of a new product, sweet dreams, to complement its established fro#en specialty desert, $a Treat. Horton was product manager for sweet dreams and !urphy was the group manager responsible for all new products in paradise%s desert line. &'%m glad you are sitting(, bob )uipped uncomfortably as he entered bill%s office. &The news isn%t good. The committee decided not to go ahead.( &' don%t believe it,( bill protested. ' started to worry when the meeting dragged on, but ' never thought they%d say no. damn. *ighteen months down the drain.( &' know how you feel, but you have to understand where the committee was coming from. 't was a real close call- as close as ' can remember since '%ve had this "ob. But the more carefully they considered your test results, the more it looked like the returns "ust weren%t there.( &+ot there, all they had to look at was appendix B in my report- the data from mudland and ,ittsfield. -weet dreams got a ./ share after 01 weeks. 2 trial rate of 34/. 2 purchase rate of 54/. 'f national performance were anywhere close to that, we%d have our launch coasts back in 35months. 6ho can argue with that7( &'%m on your side here, but ' only have one vote,( bob said defensively. &6e both knew what Barbara%s position would be- and you know how much weights she carries around here these days.( Barbara !ayer was the paradise group manager responsible for established desert products. -he became a grouper in 3894, after two enormously successful years as $a Treat%s first product manager. &2nd to be honest, it was tough to take issues with her(, bob continued. &6hat%s the point of introducing sweet dreams if you end up stealing shares from la treat7 'n fact Barbara used some of your data against us. -he kept waiving around appendix : griping that ;4/ of the people which tried sweet dreams had bought la treat in the previous four weeks. 2nd purchase rates were higher among la teat heavy users. <ou know how the fourteenth floor feels about la treat. Barbara claims that ad"usting for lost la treat sale means sweet dreams doesn%t recover its up-front costs for three years.( $aunched in 389., la treat was the first &super premium( fro#en desert to enter national distribution. 't consisted of ..4 ounces of vanilla ice cream dipped in penuche fudge and covered with almonds. 2n individual bar sold for under "ust =0 and package of 5 was =;. >nlike la treat, which came on a stick, sweet dream resembled an ice cream sandwich. 't consisted of sweet cream ice cream between two oversi#ed chocolate chip cookies and coated with dark Belgian chocolate. 'ts price was comparable to la treat%s. >nder Barbara !ayer, annual sales of la treat soon reached =5? million and it began making a significant contribution to desert group profit. 't accounted for almost 4/ of the market despite a price about 4?/ higher than standard fro#en food specialties. $ately, however, competition had stiffened. $a treat faced tough challenges from three direct competitors as well as several parallel concepts like sweet dream at various stages of test marketing. The total fro#en specialties market had grown fast enough to absorb these new

entrants without reducing la treat sales, but revenues had been essentially flat through 3891 and 389;. Bill understood the importance of la treat, but he was not the type to mince words. &<ou and ' both know things are more complicated than Barbara would have people believe(, he told bob. &There wasn%t the same cannibali#ation effect in !arion and :orvallis. 2nd we never did a test in midland and ,ittsfield where Barbara%s people were free to defend la treat. 6e might be able to have it both ways.( Bob interrupted. &Bill, we could stay here all night on this. But what%s the point7 The committee%s made its decision. <ou don%t like it, ' don%t like it. But these aren%t stupid people. 't%s hard arguing with the desert group%s batting average over the last five years. This may ring hollow right now, but you can%t take this personally.( &That%s easy for you to say(, bill sighed. &<ou know how this company works,( bob reminded him. &6e don%t hold withdrawal of a new product against the manager if withdrawal is the right decision. Hell it happened to me ten years ago with that dumb strawberry topping. 't made sense to kill that product. 2nd ' was better off at the company for it. The fact is, the committee was impressed as hell with the research you did- although to be honest, you may have overwhelmed them. 2 5?- page report with .? pages of appendixes. ' had trouble wadding through it all. But that doesn%t matter. <ou did a great "ob, and the people who count know that(. &' appreciate the sentiments, but that%s not why ' think this is the wrong decision. -weet dream is a go on the merits(. &@o home, play some golf this weekend(. Bob counseled. &Things won%t seem so bleak on !onday(. 6hen bill became pro"ect manager for sweet dream, he promised himself he would do a state-of-the-art research "ob. The plan was to compare the performance of sweet dream in two test markets exposed to different advertising and promotional strategies. The campaign in midland, Texas and ,ittsfield, !assachusetts struck an overtly self-indulgent tone- &go ahead, you deserve it( and used limited price promotion to induce trial. The campaign in !arion, 'ndiana and :orvallis, Aregon emphasi#ed superior )uality- &taste the goodness(- and used promotion aggressively. -unday newspapers in the two cities fre)uently carried 4?-cents-off coupons, and sweet dream boxes included a ;4-cent rebate voucher. Bill used two computer based research services- infoscan and behaviorscan to evaluate sweet dream performance and long term potential. 'nfoscan tracks product purchase on a national and local basis for the packaged- goods industry. 't collects point-of-sale information on all bar-coded products sold in a representative sample of supermarkets and drug stores. 't generates weekly data on volume, price, market shares, the relationship between sales and promotional offers and merchandi#ing conditions. Bill subscribed to infoscan to monitor competitive trends in the fro#en specialties segment. Behaviorscan is used in marketing test to measure the effects of marketing strategies on product purchases. 'n a typical behaviorscan test, one group of consumer panelist is exposed to certain variables Bi.e., print or television advertisement, coupons, free samples, in store displaysC, while other participating consumers serve as a control group. :ompany analysis use supermarket scanner data on both groups of consumers Bwho present identification cards to store checkout clerksC, to evaluate purchasing responses to marketing campaigns. 2 typical behaviorscan test lasts about one year.

An !onday bill arrived at his office a few minutes late. He was surprised to find Barbara !ayer waiting for him. &-orry to drop in on you first thing.( -he said. &But ' wanted to let you know what a fantastic "ob you did on sweet dream test. '%m sure you were disappointed with the committee%s decision, and in a way ' was too. 't would have been great to work together on the rollout. But the data were pretty clear. 6e didn%t have a choice(. &6ell, ' thought the data were clear too- but in the opposite direction( &:ome on bill, you can understand the logic of the decision. The midland and ,ittsfield numbers were fine, but they were coming at the expense of la treat. There wasn%t so much cannibali#ation in !arion and :orvallis, but the sweet dream numbers weren%t as great either. Trial was acceptable, but repurchase was low. 6e might make money, but never meet the hurdle rate. &*very so often a product "ust falls between two stools(. &-o well do more tests,( bill countered. &6e can play with the positioning in !arion and :orvallis. Ar we can start from scratch somewhere else. ' can have us wired to go in three weeks.( &6e%ve already taken eighteen months on sweet dreams%. Barbara said. &The committee felt it was time to try new concepts. ' don%t think that%s so unreasonable.( &<ou are forgetting two things(. Barbara replied. &First, with free#er space as tight as it is, the longer it takes to come up with another product, the harder the stores are going to s)uee#e us. -econd, other people are going to find out how well sweet dream did in midland and ,ittsfield. 6ere the only ones who get the behaviorscan numbers, but you know the competition is monitoring our tests. 6hat do you think 6eston and 6illiams is going to do when it sees the results7 't%ll have a sweet dream clone out in a few months if we don%t launch(. 6eston and 6illiams B6D6C was a leading supplier of household products that was diversifying into foods, including deserts. 't had a reputation as a conservative company that insisted on exhaustive prelaunch research. But the trade press recently had reported on 6D6%s decision to rush pounce- a combination detergent, colorfast bleach, and fabric softener- to the market on the basis of every preliminary tests and data from a competitor%s test markets. 6D6 had thus become the first national entrant in the &maxiwash( category. &Bob made that argument Friday(. Barbra said. &But you can guess how far he got. The guys upstairs have a tough enough time taking our own computer data seriously. They don%t buy the idea that someone else is going to "ump into the market based on our test. ,lus that would be a huge risk. ,ounce may have given 6eston and 6illiams all the grey hair they can stand for a few years(. &From what ' can tell, Barbara, the only issue that counted was cannibali#ation(. Bill%s voice betraying a rekindled sense of frustration. &' understand the company wants to protect la treat. But it seems to me were protecting a product that%s getting tired(. &6hat are you talking about7( Barbara ob"ected. &,rofits aren%t growing as fast as they used to but they are not dropping either. $a treat is solid(. &:ome on Barbara, your people have really been promoting it in the last two )uartersshifting money out of pint and TE into coupons and rebates. Total money hasn%t changed, so profits are ok. But la treat has gotten hooked on promotion. <ou%ve got people

accelerating future purchases and priceF sensitive types "umping in whenever la treat goes on sale. 6ho needs that7( &6here are you getting this stuff7( Barbara demanded. &' didn%t see it in your report(. &' spent the weekend running some more numbers,( bill replied. &Take a look at this(. Bill punched a few buttons on his computer keyboard and called up a series of graphs. The first documented the growing percentage of la treat sales connected with promotional offers. The second graph disaggregated la treat%s promotional-related sales by four buyer categories bill had created from behaviorscan data. &$oyalists( were long time customers who increased their purchases in response to a deal. &Trial users( bought la treat for the first time because of the promotion and who seemed to be turning into loyal customers. &2ccelerators( were longtime customers who used coupons or rebate to stock up on products they would have bought anyway. &-witch-ondeal( customers were non users who bought la treat when they were promotions but demonstrated little long-time loyalty. Bill%s graph documented that a ma"ority of la treat%s coupon redeemers fell into the last two categories, with &loyalist( accounting for a shrinking percentage of sales. Finally, bill called up his ultimate evidence- a graph that ad"usted la treat%s sales to eliminate the effects of promotions. &'%m ama#ed you spent your weekend doing this.( Barbara said, &but ' am glad you did. 't%ll help us think through future marketing strategies for la treat. But it doesn%t change what the committee decided. 't%s time to move on(. &'%m not so sure(. Bill replied. &' hope you don%t mind, but ' think ' should show these data to Bob. !aybe he can convince the committee to reconsider. 2fter all, if la treat is weakening, it%s going to show up in your profit figures sooner or later.( &Gata don%t make decisions, bill people do. 2nd the people on the marketing committee have been in the industry a lot longer than you. Their gut tells them things your computer cant. Besides, you and ' both know that when you collect this much data, you can make it show "ust about anything. @o ahead and talk to bob, but im sure he would see things the same way ' do.(