Slide 16 of 17
Notes:
A test market is usually conducted in pairs. For example, in Denver we may test
our product with a nationally translated ad budget of $10 million and a retail
price of $2.99. In Orlando, we may use a $20million ad budget and a price of
$3.49. Which plan optimizes our volume and profit?
The shortcoming of this type of experimental research is that the markets are
dynamic...the outcome we may obtain now is not translatable to a national one in
six to nine months. Macro-economic factors may change (e.g. a recession) or
competitors may change their price or new products may be introduced.
Research helps minimize the likelihood for failure...it does not eliminate
it.
