In the "A Night to Remember" episode of the Emmy-winning 1960s drama Mad Men , Betty Draper gets miffed at her husband, Don, after a dinner party for his clients at their home. She goes to a great deal of trouble to serve a sophisticated international meal accompanied by imported beer she noticed in a special display at her local market.
When Betty learns that the display was part of a new test-marketing scheme hatched by Don's advertising company — geared toward upper-middle-class housewives like herself — she feels bamboozled.
Betty had no reason to feel aggrieved. Test marketing is an integral part of the consumer-product industry and has been for decades. For much of that time, Richmond's been a popular test market, gauging consumer response to new products and advertising campaigns. In this way, Richmonders often have a say in whether the products have the right stuff to succeed — or not.
High-speed Internet, stuffed-crust pizza and Sam Adams beer were all introduced here first, or nearly so, and have gone on to national success. But Richmonders rejected Frozen Coke (in fact, an investigation found that Coke rigged a market test here to create better results), low-alcohol Chelsea beer and Taco Bell's French fries.
Why is the Richmond-Petersburg metropolitan area a popular test market? Turns out that our region has just the right combination of demographic and geographic factors that companies consider strong predictors of success in larger markets. Before launching a national campaign, marketers need data to make decisions about store placement, packaging, advertising naunces, and, of course, whether people actually like the product.
As a result, locals have had lots of fun making or breaking some of the best and worst products of all time. "Test marketing is important because a mistake can cost you millions of dollars," explains Frank Franzak, an associate professor of marketing at VCU's School of Business.
But it's not just about saving money. Companies use market research to fine-tune a product and perfect it before entering a larger market. "You are potentially avoiding failure because you can make some adjustments," Franzak says. "Another good thing you get from a test market is forecast of sales, because a forecast is difficult enough with a trend line or a track record, but it is a lot more difficult with a new product where you don't have that track record."
Three major factors make our region an ideal place to test products: First, Richmond's population makeup is similar to that of the country as a whole; second, it's a relatively isolated market; and third, media costs here, for advertising and marketing, are relatively inexpensive. "It's really expensive and risky to launch a product nationally," says Matt Thornhill, president of the Boomer Project at the Richmond-based Southeastern Institute of Research.
The region's population makeup has mimicked that of the entire country for many years. Indeed, way back in 1935, the G. Krueger Co. used Richmond as the proving ground for America's first canned beer. And the region's racial composition continues to correlate with the larger U.S. population today. In 2004, Acxiom Corp., a marketing data firm, ranked the area 10th on its "Mirror on America" list, a ranking of the 150 top test markets in the United States. Richmond's most recent rating by Acxiom in 2009 is fairly stable at 15th.
In addition, using data compiled from the 2000 U.S. Census, the Southeastern Institute of Research shows a very close statistical correlation between the Richmond area and the United States with respect to key population and sociographic components, such as female and non-white populations, families with children under 18 years of age, and householders living alone.
Based on information from the 2010 Scarborough Multi-Market Release Second Study, the metropolitan area has remained consistent in the above categories. Also, the basic layout of Richmond and its surrounding counties (a downtown hub that melds into distinct neighborhoods and then outlying suburbs) mirrors the way most Americans live. "A test market is an experiment," says Franzak. "You want the subject city to represent some larger population so that you can make a projection from the test market to the nation as a whole."
Experts say that Richmond is an urban island of sorts, because it's at least 50 miles from the next major city. And for market research, that's a good thing — ideal for capturing data. Just like a scientist who needs to keep a viral strain isolated from other influences to fully understand its uncontaminated behavior, test markets need to be singular to be effective. Companies want consumers to react only to local advertising, and to buy locally, thereby avoiding what the industry calls "spill-in" — advertising from nearby markets.
"For years, what marketers have done is find a large enough market that is representative of the U.S. population that's isolated in terms of media," Thornhill says.
Syracuse, N.Y., another popular test market, is also considered a good example of an urban island. Like Richmond, it is situated in a fairly rural area, with other regions' television markets at least an hour away.
On the other end of the spectrum, Baltimore consumers are influenced by advertising from Washington, D.C., and Delaware, making it more difficult to determine the effectiveness of a focused promotion campaign. Isolated markets can also help keep a new product hidden from competitors, who, if they are aware of a test-market campaign, might jam the market — lowering prices to undercut the test product.
In addition, according to the team at the Southeastern Institute, the Richmond region has fairly neutral social characteristics. That means that there are a variety of industries, employers, political affiliations and media forces. Neutrality is good in test markets; otherwise, research findings may be skewed by primary opinion influencers like, say, one dominant employer. Six Fortune 500 companies call the Richmond area home, along with state-government agencies, universities and lots of small firms.
The final factor in determining the value of a test-market location is the cost of advertising. According to the SQAD Media Market Guide's winter 2010 edition, Richmond is very close to Albany, N.Y., in terms of number of television-watching households (550,200 in Richmond; 556,800 in Albany). Richmond charges an average of $13 less per rating point for ads.
Although most test marketing is done without consumers' knowledge, simulated test marketing is conducted with groups that willingly participate. Bonnie Andrews remembers being a part of a women's group that participated in a simulated test-market exercise in the mid-1980s through Trinity United Methodist Church, in western Henrico County. Unlike Betty Draper, Andrews says she enjoyed being a guinea pig.
"Procter & Gamble would give us products, and we would take samples home to our family," Andrews recalls. "Then sometimes they would ask us to bring things in like stained shirts. It was really fun." Procter & Gamble then collected information from the test group to determine potential public acceptance of the products. Andrews was impressed by the detail of the questions: "They asked things you would never have thought about, like the feel of the toothpaste, the texture, the smell. Was it easy to get out of the tube? How did the cap feel in your fingers? Would you buy this product? It was all very interesting."
And what of recent test-market products? Last year, Wendy's introduced its Berry Almond Chicken Salad in Richmond. The verdict from customers was a thumbs-up. "We tried it out last year, and [the response] was so good that they brought it back this year," says Tony Danielson, general manager of the Wendy's at 4805 W. Broad St. Thornhill summarizes the overall feeling test marketers have about our town: "If they like it in Richmond, they will like it everywhere."
Note: Bonnie Andrews is senior editor Kate Andrews' mother.
