Products go straight from consumer research to national launch.
Once upon a time any self-respecting packaged goods marketer launching a new product would first put it out to test in a region such as Tyne Tees or Border. ITV contractors even had special packages, such as Tyne Tees's Pulsebeat, which offered guaranteed distribution to companies carrying out tests. That traditional routine - from concept to prototype, from qualitative research to quantitative research to test marketing - has all but disappeared. Pulsebeat, for example, was withdrawn before the 1990s opened.
There are many reasons for test marketing's demise. Marketers have become obsessed with speed to market. They are afraid that test marketing will reveal their hand and allow competitors to rush in with copycats. TV sales houses are increasingly selling air time on a national or pan-regional basis, and charging a premium to advertisers wanting to buy time in individual regions. And, crucially, the big grocery chains have turned against the practice. They have centralised their distribution, and they need a very good reason to incur the hassle of earmarking a product for delivery to stores in just one region. Colin Tether, marketing director of Manor Bakeries, summarises the overall effect: 'Frankly, I don't think you can do test marketing any more'.
Retailers say they offer an alternative: chain specific tests. 'There are some real advantages,' suggests Chris Bruce of the new product development consultancy Greyhound. 'If you get a retailer's co-operation you might get data sharing, and they will support it in-store so you'll have a natural advantage when you roll it out nationally.' Many marketers are sceptical. Going through a single supermarket chain hardly gives you a sample of the population as a whole. And by favouring one chain the manufacturer risks incurring the displeasure of its competitors. 'You start getting phone calls,' says Tether. 'You find yourself between the devil and the deep blue sea.' So these days new products tend to go straight from consumer research to national launch. In some categories, where brands carry many lines, marketers are now accustomed to adding or withdrawing variants on a national scale. 'They are becoming more experimental,' says Richard Pinder, managing director of Research International's NPD unit.
Marketers claim that consumer research techniques are now so sophisticated that full-blown tests are no longer necessary. Besides, once they have invested in R&D plus new plant, and created an advertising campaign, they might just as well go national immediately. 'The fixed costs are so high that you might as well get on with it,' says Mark Sherrington of marketing consultancy Added Value. Yet nine out of 10 packaged goods products die in the first year.
There are a number of specific drawbacks to the new state of affairs. Product development is becoming so expensive that brand managers are increasingly opting for ersatz innovation in the form of low risk, low investment range and line extensions (except perhaps in soft drinks and confectionery, whose heavy sales through impulse outlets makes them less reliant on the grocery multiples). And those who can afford to lay out big money on NPD are always liable to make some equally big mistake. Would the Persil Power debacle have happened if Unilever had employed traditional test marketing?
Finally, argue the sceptics, by putting obstacles in the way of test marketing, retailers are simply tipping the scales further in their own favour. While the financial risks of innovation rise for branded manufacturers, retailers can still place their own-label products on the shelves - and withdraw them - virtually at will.
Some optimists think that new technologies could help to restore a balance. Simulations based on virtual reality, like Visionary Shopper, permit companies to replicate the feel of a supermarket. Consumers can 'walk' past shelves where a new product is on display, 'pick up' an item that catches the eye, read the details on the pack - and 'buy' if they choose. Cable TV could also ease the pressure by allowing for more precise micro-market testing. In the US there are already a number of 'split site' cities where marketers can place ads in the commercial breaks in one half of town but not in the other.
Globalisation could be another balancing factor. When multinationals like Procter & Gamble, Unilever and Kraft Jacob Suchard develop a new product they plan to sell it in at least 30-40 markets, points out David Miller, a client services director at ad agency Ogilvy & Mather.'The multinationals are basically using countries as their test markets. Belgium has become the new Tyne Tees.'.