May 17, 2014
To: Charles Krieger – President/ Clover Valley Dairy
I am writing you in response to your concern regarding a market test of the new 6 oz. cups and multi-pack yogurt carriers that Clover Valley Dairy would like to introduce to our customers. The purpose of the research project will be to see if the new type of packaging for yogurt will be worth the change and if our consumers are accepting of the new change. It will tell us if our new six-cup carrier is effective or not. I feel the new type of carrier should be tested in non-competing areas. However, it should also be tested in our market as well as our competitor’s market.
A key part in testing this new product and/or design should begin with our competitor’s in mind. Knowing what our competitor’s offer and how well it is being accepted by the consumer should be the determining factor in our decision for a test. Knowing our market and what it offers will give us an idea of how our customers will be impacted. This also will let us know why we should consider our competitor’s and non-competitor’s customer views, for comparison. By not doing so, we may hinder our ability to find out what will and what won’t really sell. I suggest that we limit our test to one competitor only. This will allow us to have more money in our budget but also allow us to get the information that we need.
If testing is necessary, what would be the criteria for success or failure? It is my belief that the main point to stress would be to show how sales are impacted. Many times sales can be increased simply by the look of a package for an item. If the packaging of a new item/product is well presented, often times the customer will purchase the item/product simply because of its appearance. Many surveys have been done about the appearance of a product by targeting a certain type of consumer, namely women. These surveys have shown that if an item/product is targeted toward women and the packaging appealed to them, they would most likely purchase the product.
This type of information will be helpful for us to define our target market as I feel we should try to have our product to appeal to children and especially their mothers. Our sales results of the 6 oz. and 8 oz. yogurt cups have steadily increased every year, so I believe that the 6 oz. individual serving cups combined with the new 6-cup yogurt carrier can help to increase our sales even more. Also, I believe the convenience of our new carrier can help to increase our sales within the limited market share area(s) that we have.
There are four important factors that we need to look at in determining the success or failure of our new product test. The first factor we need to consider is cost. Cost is always a large part of buying a new product. We can lower the cost of our testing if we limit ourselves to comparing with only one competitor. The second factor is going to be market share. If we can satisfy our customer’s wants and needs we can increase our market share as a result. The third factor would be handling. If a package is easy to handle, in other words, open and close, we will certainly have more success.
I believe that this can best be achieved by combining the 6 oz. individual yogurt cups into a 6-pack carrier container. The fourth factor in determining our success is reuse. Is our product recyclable? We are in the age of “Green” technology so it is important for us to make our product easy to recycle. If we make our product/package out of plastic for the individual container and aluminum foil as the cover of the individual yogurt, we can lower our costs considerably.
I also wanted to discuss how useful this market test will be in addressing a management problem. Are there changes that can be made so that we don’t make mistakes from the management side or production side? I say that we can! Again, we need to make our individual yogurt cups out of recyclable plastic and the cover is to be made from aluminum so as to reduce the costs of production. The new multi-pack carrier will also make it easier for customers to take home, and help to eliminate packaging costs. Management will need to work together as a team, delegating the tasks accordingly to the production team(s).
I would concur with your idea of conducting on-site surveys to determine acceptance of our new product. Success will come with a team effort standing behind this product testing process. Everyone’s opinion will make a difference, diversified, and successful test. It will also be beneficial as it will help to increase sales and identify mistakes that may have been overlooked. This entire process will also allow our employees to express their creativity and give them a chance to contribute to the success of our company.
The last item I would like to present is the evaluation of cost and/or the value of this type of research. Evaluation costs do not need to be expensive. A rule of thumb is to estimate approximately somewhere between five and ten percent of our total budget. This can include time that the staff has spent on the evaluation and out of pocket expenses/costs. We can save on the cost of the evaluation if we focus our questions to only what we need and what we would like to know. I have set up a cost structure for this evaluation as follows;
1. Salary and benefits for staff involved
2. Funds for an outside evaluator
3. Travel expenses/costs
4. Communication tools (surveys, stamps, telephone, etc.)
5. Printing of reports and questionnaires
6. Supplies and equipment (computers, cartridges, etc.)
I will start on this immediately once I receive your approval for this market test. I believe this marketing strategy will be a huge success for our company to grow and increase our sales. I also believe this will help us to build our reputation within the industry. Our company team will be strengthened and we will be able to build long lasting relationships with our competitor’s. I would like to thank you for understanding and helping to direct our company to succeed!
Vince Roth – General Manager/Clover Valley Dairy Company