Simulated Test Marketing in Emerging Markets: The Need to Re-Think

TY - JOUR

T1 - Simulated Test Marketing in Emerging Markets

T2 - The Need to Re-Think

AU - Korotkov, Nikolay

AU - Occhiocupu, Nicoletta

AU - Simkin, Lyndon

PY - 2013

Y1 - 2013

N2 - Purpose– The world's leading manufacturers of fast moving consumer goods (FMCGs) generate up to 50 per cent of their revenues in emerging markets. Simulated test marketing (STM) is a common practice deployed by these companies to forecast new product sales. Emerging markets represent only a small portion of the global STM business. The purpose of this paper is to incorporate and further explore some key trends anticipated in the development of the future generation of STM models by drawing specific attention to the issues currently experienced in one of the emerging markets, Russia.Design/methodology/approach– A quantitative survey of Russian client-side marketing experts provides strong evidence for the need to further improve and modify STM methods, addressing new challenges in rapidly developing markets of Eastern Europe, the Middle East, Asia, Latin America and Africa.Findings– Marketers in Russia believe many STM approaches poorly reflect the nuances and characteristics of their markets. This has implications for global players targeting emerging markets based on assumptions formed for STM in their home markets.Research limitations/implications– This is a preliminary study which warrants following up. Its basis in Russia arguably has implications for other emerging markets, but whether these findings are evident in other markets needs to be tested.Practical implications– FMCG companies in Russia would appreciate a flexible, proactive, “client-oriented” approach as opposed to conservative, “model-centered” services based on “global” execution standards. This would lead to the co-creation of STM models that could achieve more accurate forecasts in emerging markets and achieve a greater level of confidence in the use of STM among multinational FMCG companies.Originality/value– The research undertaken leads to a general conclusion that although traditional STM models have attained relatively high awareness among FMCGs in Russia, their use is still limited as there is a perception of this being a research instrument that would need adaptation to the Russian market. Instead, simpler, cheaper and less time consuming alternatives are often employed, such as expert assessments, basic quantitative or qualitative tests. Although the most commonly acknowledged advantages of STM are well understood in Russia, there are some key barriers to its widespread adoption: poor quality or insufficient market data, lack of local market experience and validations, lower forecast accuracy as compared to “western” markets, low flexibility in terms of design and cost.

AB - Purpose– The world's leading manufacturers of fast moving consumer goods (FMCGs) generate up to 50 per cent of their revenues in emerging markets. Simulated test marketing (STM) is a common practice deployed by these companies to forecast new product sales. Emerging markets represent only a small portion of the global STM business. The purpose of this paper is to incorporate and further explore some key trends anticipated in the development of the future generation of STM models by drawing specific attention to the issues currently experienced in one of the emerging markets, Russia.Design/methodology/approach– A quantitative survey of Russian client-side marketing experts provides strong evidence for the need to further improve and modify STM methods, addressing new challenges in rapidly developing markets of Eastern Europe, the Middle East, Asia, Latin America and Africa.Findings– Marketers in Russia believe many STM approaches poorly reflect the nuances and characteristics of their markets. This has implications for global players targeting emerging markets based on assumptions formed for STM in their home markets.Research limitations/implications– This is a preliminary study which warrants following up. Its basis in Russia arguably has implications for other emerging markets, but whether these findings are evident in other markets needs to be tested.Practical implications– FMCG companies in Russia would appreciate a flexible, proactive, “client-oriented” approach as opposed to conservative, “model-centered” services based on “global” execution standards. This would lead to the co-creation of STM models that could achieve more accurate forecasts in emerging markets and achieve a greater level of confidence in the use of STM among multinational FMCG companies.Originality/value– The research undertaken leads to a general conclusion that although traditional STM models have attained relatively high awareness among FMCGs in Russia, their use is still limited as there is a perception of this being a research instrument that would need adaptation to the Russian market. Instead, simpler, cheaper and less time consuming alternatives are often employed, such as expert assessments, basic quantitative or qualitative tests. Although the most commonly acknowledged advantages of STM are well understood in Russia, there are some key barriers to its widespread adoption: poor quality or insufficient market data, lack of local market experience and validations, lower forecast accuracy as compared to “western” markets, low flexibility in terms of design and cost.

KW - Marketing research

KW - Emerging markets

KW - Marketing planning

KW - Test Marketing

U2 - 10.1108/MIP-01-2013-0010

DO - 10.1108/MIP-01-2013-0010

M3 - Article

VL - 31

SP - 807

EP - 822

JO - Marketing Intelligence and Planning

JF - Marketing Intelligence and Planning

SN - 0263-4503

IS - 7

ER -