The Case of the Test Market Toss-up Essay Example for Free

The Case of the Test Market Toss-up Essay In this case, the top management put the new frozen dessert Sweet Dream on ice; however, the product manager felt it was not a correct decision and tried to persuade the top managers to reconsider. The company of Paradise Foods didn’t realize the threat on LaTreat and the opportunities on Sweet Dream. They didn’t embrace the concept of using analytical marketing research based on computer technologies as the premise of the right decision. The issues are: 1. The research data on Sweet Dream seemed to steal the share from LaTreat. 2.  The top managers didn’t really understand the meaning of the analytical numbers which Bill got from the marketing research and only considered that the return was low so that decided to stop Sweet Dream and try another new concept. 3. The company didn’t recognize the threat on LaTreat and the chance of Sweet Dream; Bill has cleared up the data that the sales of LaTreat was only on promotion and was interested in persuading the committee to continue Sweet Dream. The company should put the position of LaTreat in perspective and distinguish the different positioning of LaTreat and Sweet Dream. According to the â€Å"Product Life Cycle†, LaTreat has already been in the area of maturation and the company should launch a new product or exploit a new market to make more profit. Moreover, the company should adjust the promotion of LaTreat in case that the strategy of lower prices would ruin the value of the brand. In contrast, the product manager should do a simple and easy understanding report to the top managers because of the communications difficulties and related misunderstandings. LaTreat was the first â€Å"super premium† in the Paradise Foods’ history. As more and more new entrants enter the frozen specialties market, the competition has stiffened. The demand of LaTreat is getting saturation, so the market needs another new product, or the sales would be down sooner or later. The 18 months trial of Sweet Dream has gotten a considerable data that Sweet Dream would be a promising product. If Paradise Foods cuts down this new product, other companies will take over it and make it a significant profit which will take the share of Paradise Foods. LaTreat and Sweet Dream were different products that the ingredients and functions are different. Although there was some shifting from LaTreat to Sweet Dream, the two products are not the cannibalization that if Sweet Dream is facing to the present market which would be the product development strategy or if it is facing to the new market which would be the diversification strategy. Besides, the company had used the inappropriate promotion which brought the customers into the price-sensitive types that would decrease the value of brand and the loyalists. Paradise Foods has used the advanced computer-based research services to do the marketing analysis of Sweet Dream and it also has planned two different areas with different advertising and promotion strategies. However, the Sweet Dream product manager, Bill has made a complex report in 40 pages which has lead to the little interest and patience for the top managers to read and understand; and the committee only see that Sweet Dream didn’t produce the revenues they want. Furthermore, Bill hasn’t analyzed the situation of LaTreat at the beginning which would make the top managers recognize the threat of LaTreat and support the necessary and feasibility of the new product. Besides, if the company wants to try another concept of the new product, it will take more time than Sweet Dream which will let another competitor win the first chance. In addition, the promotion in LaTreat has made it be a price-sensitive product and the company has kept the profits and sales by shifting print and TV money into coupons and rebates which was not a long-term strategy. There are two alternatives to deal with this case. One alternative is to accept the decision made by the top management: shut down Sweet Dream, try another new concept and adjust the promotion strategy of LaTreat. Changing the promotion of LaTreat would make the product life cycle longer in order to keep it in making profits. However, trying another new concept will take a long time to realize and it has the indeterminate potential risk to success or failure. Besides, the time is also another key to be successful that the longer it takes, the more risk it will be defeated. The other alternative is to make another report combined with the analytical research of LaTreat in an easy understanding way in order to make sure the top managers know what the numbers mean and do the best to persuasive the top managers to reconsider. Because it did well in Midland and Pittsfield and it just needs some adjustments that will be successful. Moreover, it saves time and start another profit line in Paradise Foods. The company should choose the latter alternative. Sweet Dream is not a totally failure and it did well in Midland and Pittsfield. In contrast, LaTreat is tiring out and is only surviving on promotions; in addition, the loyalists of LaTreat were shrinking. LaTreat is a weakening brand; while, sweet dream would be a strong brand if it is allowed to survive. The company can take three steps to measure the success of Sweet Dream. First of all, it should meet the hurdle rate within six months. Moreover, it should take some proportion of Paradise Foods and also reach the level which can be compared with the level of LaTreat’s profits. Finally, the proportion of Sweet Dream and LaTreat has been changed that Sweet Dream makes more profits than LaTreat.