A case of Superior Food Products

Tasty Flakes was a ready-to-eat breakfast cereal that the Superior Food Products Company had put on the market almost four years ago Marketing research undertaken during the development of tasty Flakes had indicated that the new product would be very successful. However, Tasty Flakes never reached the sales volume company management had expected. Consequently management undertook a series of research projects to determine if certain changes in the brand’s marketing mix could bring about an improvement in sales.

One of the research projects was designed to measure the effect of using more television advertising. The research was expected to show how effective the use of 15 percent more advertising and 30 percent more advertising would be when compared with the amount of advertising currently being used. The objective was to determine if either of the increases in television advertising would favorably affect consumer purchase of tasty Flakes; and if so which level of television advertising increase was most desirable economically.

The test was run in a medium sized city in which television programming was transmitted through cables rather than over the air. As part of its system, the cable company had set up a split cable research service involving two panels of consumer households “matched” or “interchangeable” on the basis of their demographic characteristics (i.e. age, income, education, family size etc). While both panels received the same television programming, the split- cable system was set up in such a way that each panel of households could receive different commercials for a given brand or a different number of commercials or a given brand. The research service recorded when a household’s television set was turned on as well as the channel to which it was tuned. The households in the two panels had agreed to make all of their household purchase with a special credit card and only in specified sties equipped with social optical scanner check outs. This allowed the research service to record all purchases made by the panel members.

The test was run over an eight month period. The television commercials that had been used in the previous 12 months were also used throughout the 8 month test. During the first four months both panels of households received the same number of Tasty Flakes commercials, the number being based on the amount of television advertising that had been used during the previous 12 months. Purchase data from the two panels were combined and were treated as representing purchase behavior data under “normal” advertising intensity. During the second four months of the test, one of the panels received 15 percent more commercials for Tasty Flakes than it had in the previous four months, while the other panel received 30 percent more Tasty Flakes commercials. The purchase data from the two panels were recorded separately during the second four month period.

After it had been determined that there was no noticeable difference in the television viewing patterns of the two panels, researchers began to compile the data collected during the eight month study. Purchase data from the first four months were considered representative of purchase behavior when the normal level of advertising intensity was in use. The two sets of purchase data from the second four month period were considered representative of purchase behavior when advertising intensity was 15 percent above normal and 30 percent above normal respectively. There three columns of purchase data – one for normal advertising intensity, one for 115 percent of normal advertising intensity, and one of 130 percent of normal advertising intensity. The number of households in each set of purchase data that purchased or did not purchase at least one package of Tasty Flakes during the appropriate four month period. The purchase data are broken down into three different household size categories.

Households that Purchased Tasty Flakes:

Normal advertising
Size of household Purchased Did not

1—2 91 261
3—4 46 242
5 or more 13 247
Totals 150 750

115% Normal Advertising

Purchased Did not

48 128
21 123
8 122

77 Total 373

130% Normal Advertising
Purchased Did not

42 134
33 111
29 101
104 Total 346