The Dickson Company was one of the largest US producers of detergents and cleaning agents. Its annual sales exceeded $2 billion, and its line consisted of more than 6,000 products ranging from industrial chemicals and adhesives to a variety of household cleaners and detergents. Consumer product represented about half of the company’s total sales.
Some of the company’s brands had been sold successfully for a long time. Others were modified or dropped as market conditions changed. New products were constantly being developed The company’s policy with respect to consumer cleaner type products was to obtain at least a 10 percent share fro any new product in a particular market within a year after introduction. Otherwise, the product was considered a failure and phased out. Although the new development process could vary substantially from one product to the next, the company followed the policy of thoroughly testing the product concept and the physical product itself under a variety of conditions, including test markets. Labels, containers, pricing, and advertising were similarly tested.
Recently the company had developed a new pump-action, all-purposes, household cleaner that was positioned as a cleaning agent for all household surfaces. The new product different from the more traditional all purposes cleaners in its versatility; that is, it could clean a variety of surfaces, including wood, ceramic, glass, and plastic. Further, it could handle the removal of tough stains. Thus, it could take on big cleaning jobs including those pertaining to floors, cabinets, walls, doors, windows and similar surfaces as well as tough smaller ones. The new product, code named APHC10 (All purposes Household Cleaner 10) was particularly effective in playrooms, hallways, kitchens, and bathrooms. It was priced to compete successfully against both specialized cleaning products (e.g. those for the bathroom) and more generally applicable cleaning agents.
The company’s product management group saw in the new spray cleaner an opportunity to market a new liquid cleaner that could improve the company’s relatively weak position in the liquid all purposes household cleaner market. Heretofore the company’s liquid cleaner entries had targeted specialized surfaces such as those involving painted wood and ceramic tile.
APHC10 was first among 500 housewives, even though the product was not yet perfect. The spray pump leaked and the fluid contained in the transparent bottle changed color when exposed to light over a long period of time. Despite these technical problems, the product management group felt that work on the new product should proceed rapidly. Thus, the company’s advertising agency was briefed and asked to begin work on developing copy, container design, and label ideas. In communicating with the agency, the company summarized the new product’s market opportunity, positioned it as a convenient, versatile, all purposes cleaner; and forecast market shares of 6 percent at the end of the first year, 10 percent one year later, and 14 percent two years out.
The results of the use test among 500 housewives as reported by the research firm doing the in-home placement study showed that most (80 percent) used it for both large surface and spot cleaning jobs, that the product’s cleaning power was generally rated as being good or very good, and that some 40 percent used it only on wood surfaces (e.g. floors and cabinets) There was little differences in the findings by region, demographics, and life style.
Regardless of whether they used Nielsen or NPD, the company would have to take the responsibility for placing the advertising with the appropriate media as well as the issuance of any coupons. If the Nielsen test market data generation service was purchased. Dickson would not have the task of getting the stores in the test market sites to stock the new cleaner and to keep adequate inventory on the shelves at all times. If the NPD service was purchased, Dickson would have to perform both of those tasks. Assuming test market duration of one year and a need to test only two different advertising approaches, the cost of a six city tests was estimated at $1million.
Because of the operational problems involved in running a test market of the type described above, the research director favored the use of an electronic test market service such as that provided by Information Resources, Inc (called Behavior Scan) This service tracks the grocery and personal care purchases made by more than 15,000 households located in a number of small cities scattered across the country. The service also monitors all TV commercials going into these same homes hence, the term single source data system. Such electronic test market services ensure that test market stores will stock the new product as well as use in-store display. Because of the size of the consumer panels in each of the test markets as well as the ability of the service to control the commercials going into each panel home, it would be possible to test the effectiveness of two advertising approaches in any given city. Additionally, different advertising weights could be tested using several different test cities. The cost of an electronic test market study lasting 6 – 9 months and using several cities would be between $600,000 and $900,000 depending upon the number of marketing mix variables being tested.