Tracker: An Early Test Market Forecasting and Diagnostic Model for New Product Planning

Abstract

A new product forecasting model is described which uses survey data (not panel data) to predict year-end test market sales from early test market results (usually three months). In addition to offering a sales forecast, the model is designed to provide diagnostic information about a new product's strengths and weaknesses. By relating advertising expenditures, price, and perceptions of performance/acceptability of the product to sales, the model indicates how an unsuccessful product can be redesigned or the marketing mix changed to make possible a successful introduction. The model also can be used for new product planning. Given a media plan, price, sampling level, couponing, and some estimate of repeat usage, a pre-test market forecast of year-end sales can be made which allows management to evaluate different marketing plans to see which best meets profit or sales goals.