Central New York is a great test market

Several years ago, Coca-Cola introduced a product called C2 which contained half the calories and carbohydrates of regular Coke. It created C2 specifically for men who did not like the image or flavor of Diet Coke, but did not want to consume all the calories and carbohydrates in regular Coke. 

After spending nearly $50 million on advertising and promotion of C2, Coca-Cola’s worst fears were confirmed. Its target market did not like C2. Instead Coca-Cola learned its target group wanted a beverage that had more flavor than Diet Coke and contained zero calories and carbohydrates. In the end, Coca-Cola was forced to shelve C2 and waste a lot of time and money in the process.

Coca-Cola did however learn a valuable lesson from C2 in that it should have done its research first. According to the Harvard Business Review, about 75 percent of consumer packaged goods and retail products do not earn enough income when they are first introduced. The main reason? Lack of market research.

Testing a product before producing it on a full-scale level minimizes risk and can save a company lots of time and money. Furthermore, one of the best places to test a new product is right here in Central New York. The use of Central New York as a predictor of eventual product success or failure has been well documented by marketers for decades. Products, services, and advertising — both famous and obscure, ranging from ice cream to alcoholic beverages to baby carrots — have been tested in Syracuse.

The criteria used to judge the acceptability of a test-market region or group include: a population that is demographically similar to the proposed target market (in most cases that is the U.S.), relative isolation from densely populated media markets, and low advertising costs so testing can be efficient and economical.

1. Similarity to the eventual desired market
It goes without saying that a test market should have similar demographic and consumer purchasing habits to the wider area where a product or service will ultimately be distributed. Some criteria where it might be important for a test market to mirror the intended larger market include age distribution, home ownership, blue-collar/white-collar mix, educational attainment, racial/ethnic composition, just to name a few.

The Syracuse metropolitan area has a demographic composition that largely reflects the United States, which makes it a great test market by research standards.

In fact, Acxiom Corp. recently published a “Mirror on America” study that ranked the top 150 test markets in terms of how well they conformed to national norms in key criteria. Out of the list of 150 test markets, Syracuse ranked 5th. The top five were:

• Albany, N.Y.
• Rochester, N.Y.
• Greensboro, N.C.
• Birmingham, Ala.
• Syracuse, N.Y.

2. Geographic isolation
Some metropolitan areas are tightly packed among others (e.g., Baltimore is sandwiched between Washington and Philadelphia) while others are a great distance from the next population center (e.g., Phoenix, Ariz.). The latter type of market is desirable for test-market purposes because, as with any type of research, it is important to isolate variables as much as possible. If people are regularly exposed to advertising in one media market, but do a significant amount of shopping in another, they are poor test subjects. People who live in isolated population pockets are more likely to be exposed to marketing messages and make their purchases within that market. That makes it easier for researchers to isolate the effect of, for example, a TV commercial on sales.

Even though Syracuse is located in the relatively densely populated Northeast, and in a state that many outsiders assume is synonymous with New York City, it is a combination of urban, suburban, and rural communities isolated in part by significant natural boundaries such as the Adirondack Mountains and Lake Ontario. Syracuse is about a 90-minute drive from Rochester, two hours from Albany, and four hours from New York City. The nearest televisions markets — Watertown, Utica, and Binghamton — are at least an hour away and have small reaches beyond their core cities. 

3. Affordable advertising media
Larger cities don’t normally make the best test markets because, among other things, it can be very expensive to advertise in them. The cost of advertising in New York City or Los Angeles is much higher than in a mid-sized market like Syracuse. The main purpose of the test market is to determine the likelihood of success while expending minimal resources. For that reason alone, smaller, more affordable media markets make much more sense to test marketers.

So you have this great test market, now how do you test your product?

The same factors that make Syracuse a great test market also make it a great place to conduct market research. Even if your business does not need to test a new product it could conduct research on various different topics. Common consumer-based research topics are:

• Brand loyalty
• Customer satisfaction
• Customer retention
• Purchasing habits
• Message effectiveness

There are two methodologies, quantitative and qualitative, that marketers use to conduct research. Qualitative research is used to explore and understand people’s beliefs, experiences, attitudes, behavior, and interactions. It generates non-numerical data — for example a customer’s description of satisfaction rather than a rating using a numerical scale. Focus groups, in-depth interviews, and mystery shopping are examples of qualitative research that can document a variety of experiences, revealing views and experiences of test subjects.

On the other hand, quantitative research often generates data that can be converted into numbers for a statistical review. A typical example would be a restaurant survey card that asks “from 1 to 5, with 1 being ‘very dissatisfied’ and 5 being ‘very satisfied,’ how would you describe your dining experience today?” Surveys that use a research panel can allow firms to quickly access willing participants. 

A company could reach a specific audience, such as females aged 25 to 40, and survey them on a specific characteristic of brand loyalty, for example measuring their satisfaction on a new variation of an existing product to see how additional features or changes would be perceived. “RMS ViewPoint” is a local research panel made up of Central New York residents. Participants are paid a stipend to participate in surveys, focus groups, etc. depending on the type of study being conducted.

In conclusion, whether you are a small business like a local pizza shop or a large conglomerate like Coca-Cola, you should never simply make assumptions about your consumers’ habits, tastes, or preferences. Take the time to do the research; ask the right questions and gain valuable insights that either affirm your assumptions, or better yet, prevent costly mistakes.        

Lori Lichorobiec is the communications coordinator for Research & Marketing Strategies, Inc., or RMS, a full-service marketing and market-research firm based in Baldwinsville. Contact her at loril@rmsresults.com