The Case of the Test Market Toss-up

THE CASE OF THE TEST MARKET

TOSS-UP

INTRODUCTION TO CASE

• ISSUE- Paradise foods to launch a new dessert called “Sweet Dream.”

• Conflict of opinion arising

in the top management

regarding the cannibalization

of the product

PARADISE FOODS –A successful manufacturer of packaged foods and household products

• :La treat”- a dessert much in demand

•Marketing research of “sweet dreams” in order to know it’s success

•Testing of “sweet dreams” done in Marion ,Indiana and Covallis, results indicate trial of 15% but repurchase was only 45%

•Research methods used – “Infoscan and Behavior scan

•Occupying a greater shelf space was again an issue

•If the product was not launched the other competitors will get a hand over the idea soon

• Weston and Williams(Competitors) will gain more profit

•Introduction of sweet dreams did not mean that la treat was being overshadowed

•Essential to keep the cannibals in the family for double profit generation

•Line extension is essential to survive in the competition

•As far as research is concern both the firm and customer level research is done

All the stages of product development being used:

1. Idea generation

2. Concept development

3. Feasibility screening including the price and the profit

4. Concept testing

5. Product development

6. Product testing

7. Market testing

8. Go-no-go decision

Expert Opinions

Jerry Della Femina

Competitor will launch a similar productInternal Market CannibalizationWithdrawal of a new product

Brand Extension

William H Moult

Inappropriate utilization of Market research techniques

Super Market RFID scannersComputer based Marketing models

Research should be in accordance with the needs of the senior managers

Continuous category Development

Richard Chay

New products should be introduced.

Sales Promotion techniques should be used extensively.

Cannibalization

• Cannibalization is a phenomenon that results when a firm develops a new product or service that steals business or market share from one or more of its existing products and services. Thus one product may take sales from another offering in a product line.

Example of Cannibalization•  In India, where the passenger-car segment is going

dramatically since the turn of this century, Maruti-Suzuki's launch of Suzuki Alto in the same sub-category as Maruti 800, which was the leader of the small-car segment to counter the competition from Hyundai is seen to be a classic case of cannibalization strategy.

Why should Paradise launch Sweet Dreams?

• La Treat is an older product in a category that thrives on novelty.

• Sweet Dream should be able to cannibalize La Treat at a favourable absolute contribution margin level.

• In the Sweet Dream rollout, La Treat will be able to defend its hard core users.

• La Treat and Sweet Dreams are two different categories of product.

Drawbacks of the Bill’s Research

• Good research means talking to customers.• No addressing of an issue that counted

cannibalisation of La Treat.• No consumer attitude data has been generated

on the frozen speciality dessert category in general and Sweet Dream in particular.

• Report submitted had an overwhelming amount of information with limited experience interpreting statistical material.

A company that wants to maintain a significant overall presence has no

choice but to introduce new products on a regular basis, so as

to recapture consumers as they tire of existing products.

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