ROBERT S. AIRES
AND
WILLIAM COPULSKY, R. S. Aries
& Associates,
400 Madison Ave., New York 17, N. Y.
Two alternate methods of building np contact lists are described: The first through careful end use anallsis and market investigation and the second through unrestricted sample advertising. The choice of one or the other will depend on the nature of the particular product being in-
\estigated and the extent of its deFelopment. For each product, the correct method or combination of methods w-ill ha\e to bc ascertained separately; both haze been iisecl with success. Several case histories are given to indicate the relative value of the methods.
DE VEL 0 PING PROSPECTS MARKET RESEARCH AND ADVERTISING METHODS
T
H E preparation of a contact list is the first step in the solution of a t least three problems in new product development:
the disadvantages. In sampling, the product is immcdiatc~ly placed in the hands of the potential user. Field difficulties can be spotted before market,ing; grading information is obtained; and the results of market surveys can be checked against the results obtained in sampling. Some companies have attempted t o evade this issue by furnishing samples for evaluation and testing only t o independent conaultants, familiar n.ith the consuming industry, who have no connection with the potential customers for the neiv cheniical product. I n offering chemicals to the rubber industry for esample, before potential consumers are approached ( 5 ) , independent evaluation has become almost a “must.” When a new product is not fully proved and evaluation by outside agencies is necessary, careful selection of such agencies is important. For esample, n-hen Dow Chemical Co. developed ethylene dibroniide in the soil fumigant field, testing contacts were limited t o federal and state experiment stations and progressive farmers, to prevent premature promotion and sale ( 8 , 9 ) .
1. Test,ing and evaluating the new material in consumer industries 2. Extending markets by finding n e x applications iri consumer industries, based on the principle that up t o 75% of n e x uses come from customers ( 2 1 ) 3. Finding potential customers There are t x o ways of approaching the problem. One is with the philosophy, (‘TYehave the8e chemicals but rye don’t knon- n-hat they are good for.” T h e answer to this is, “contact everyone and his brother and his grandfather.” T h e other approach is to develop uses and applications through laboratory and careful market i,csearch, restrict initial sampling to a select group of less than a dozen contacts, and then contact potential customers. There is DO scientific choice between the two methods because there has never been, and there may never be, a scientific experiment that will decide objectively which of these t r o methods is best. As consultants, the authors have advised clients to use n-liichever method seems most appropriate to their specific product. Some clients have received assistance in planning advertising campaigns that offer new product samples to anyone arid automat,ically build contact lists. Others have been advised to check their products first in an independent laboratory and then among a limited number of contacts before extending xmipling. .kdvertising departments have had to be convinced that the unrestricted advertising method viill not always work, and more technically and scientifically minded men have had to be sold the idea that unrestricted sampling might be the a n s w r to their specific problem. T h e purpose of this paper is to explore and contrast the two methods of building up cont,act lists for new products ivith references to several case histories n-hich may indicate the rplative valur of the two methods.
Building List Through Technical and M a r k e t Research
I n building up a contact list for a new chemical product, the investigator is faced with a unique market rescarrh problem. R e must investigate a chemical product with 1vhii.h few chemists arc familiar. h “new” chemical product refers to a product not necessarily new to the laboratory or researcher but a product n(~w to commercial use on an appreciable scale. Uses of chemical products are not apparent from their superficial examination. Seither sight, taste, nor touch can tell very much about x h a t a chemical product is good for. Chemists can obtain valuable clues from structural formulas, but not thc more definite information that is required in commcrcial producmt development. And yet chemicals must be sold on a basis of use, aiid through the development of new uses. One job of the commercial development department, theii, is to uncover the vast amount of information which lies, not in the literature of patents, but in unpublished data in the minds of men. The method may be simply summarized: Know what you want to find out; ask the right questions; ask the right man. Who is the right man? H e is the man who knows more t l u n you do. T h e results when interpreted intelligently will greatly increase the value of a new product survey. The right nieiithe men with the ansnws-often are or represent potential users of the product and can yield both qualitative and quantitntivc: information which reflects on the possible future of the nely product. Others of these men have had past experience with the new product. This is possible because a new product is rarely entirely new. Many new products have actually been developed in the Iaboratory years previously. I n the past, other companies may have attempted to manufacture the product or a derivative of it, or
Restricted vs. Unrestricted Contact lists
One of the most widespread procedures in testing nelv products begins with the furnishing of samples t o prospects (29). h l though this procedure seems customary and usual, many objections have been raised t o sampling and evaluation by customers. It may be considered a nuisance by some customers, but a t the opposite extreme, the results may be so successful that the customer desires unavailable commercial quantities a t once. Samples offered for testing before perfection may give customers a bad impression of the new product. Moreover, a firm price cannot be quoted a t the time the sample is given. If some customers are given samples and not others, resentment may arise. One pitfall of sampling has always been in the distribution of samples without adequate patent protection for products and processes. However, the advant,ages of sampling seem to outweigh by far 852
April 1951
INDUSTRIAL AND ENGINEERING CHEMISTRY
other companies may have actually developed a use which was not ctuploited because, a t the t,ime, the product required rvas nothing riiore than a laboratory curiosity ( I O ) . For esample, although the Quaker Oats Co. did not go into the commercial production of furfural until 1922, their preliminary investigative n-ork shoved that a fairly abundant literature on furfural esisted consisting of many references in scientific journals going back t o 1832 and even invluding a fen- patent references in the early 1900's. This was on]>-n:it,ural since furfural, aside from ethyl alcohol and acetic acid, was the only simple chemical compound of known composition aiid structure which could readily be obtained from plant material such as bran and cereal hulls. Actually, furfural had no known use in 1920 and was a chemical rurioeity. But in the 90 years prior t o 1022 probably 100 furfural derivatives had been made and studied. During the 1920's rrsearch workers associated with the Quaker Oats Co. prepared about 40 derivatives ( 1 7 ) . There are more than 300,OO known organic chemicals. But only ahout 7000 are produced in the United States, and only about 3000 have a production of over 20,000 pounds annually
Table
ProportionOf Net Capital Assets Owned by Concerns in Industries Buying Chemical Products-1 947 (16)
Table
3 ', Net Capital Owned by Given 3-o. of Companies
Industry
I .i8 29 28 28 2i
22 rrackers) Canning and preserving nriigs and medicines
9
X!
.I.>
in 4Q 40
l:i
3; 20
11 8
21 17
3 92 64
in
4 94 69 88 60
8
..
78 9.j
I.->
82
71
,
74 70 38
80
25
62 02 31
3" 21
39 30
51 48
i G
.57 -16
,
.,
29
..
I t is not ali~a:-sdesirable to incluck t h e entire United Btatrs in a contnct list. Frequently contacts in geographical areas wherc distribution T o d d be unprofitable (-:in lie e1iniinatt.d b y a preliminary determination of ai'ea market potentials (4). Another difficulty in making u p a reliable sainpl(3, especially in larger conipaniw, is t h a t the intervielying of era1 individuals within a company may yield entirely different v t s of facts, even in some cases contradictory, so that a sample in any instance could never be made u p on a company basis alone. But the greatest difficulty with new produc>tsis t h a t they are familiar t o only a small group of people. Of course, there is a lot of supplementary information to be obtained, especially as t o competitive products, from persons unfaniiliar with a new product. But the best and most significant information comes from people who have come in contact Kith the product in some wt!or who have had experience n-ith i t ,
Census of Manufacturers for 1947-Chemical Industriesq s o . r,f
Industry Alkalies and chlorine Beet sugar Cane sugar refining Clay refractories Cleaning and polishing preparation3 Cork products Distilied liquors Flat glass Gaskets and asbestos insulation Glass containers Grease and tallow Gypsum products Hydraulic cement Inorganic color pigments hIedicinal chemicals Mineral wool Morticians' goods Pharinaceutieal preparations Plastics products, n.e.c. Paints and varnishes Paper bags Paper and board Plywood plants Pottery products n.e.c. Pressed and blo& glassware, n.e.c. Primary aluminum Primary batteries Pulp mills Raw cane sugar Rubber footwear industry Rubber industries, n.e.c. b Soap and glycerin Storaee batteries Synthetic fibers Synthetic (chemicd) rubber Tires and inner tubes Teneer mills Titreous and semivitreous ]ihimbing fixtures K o o d presernng Induitr/al inorganic eheuiicals. n.e.c.' Industrial organic cheiilicals, n.e.c.
(11).
The Sampling Problem. The problem of obtaining a repre,wntative sample for contact purposes is a unique one in new chemical product development because of the nature of thc iitdu,4,y. l l a n y products are sold t o a small number of cust onicri. Tiierc are great individual differences betrveen conipanic., an(l the number of companies i. not great enough t o :illon. the selection of a reliable sample. Actually no adequate critcrion has been found for the construction of an industrial mnlkrt research sample. Although it, is true t h a t there is a body of "snxill sample theory," this does riot, apply when the individual compoiic~itsof the group differ so greatly in their characteristics as do clic.iniciil companies, As in all industries, a small number of companies do most of the business and produce most of the products (Table I). Although there has been some dispute as to the niaiinc'r in which this table was compiled by the Federal Trnili, C'oniniiwion, it nil1 serve t o illustrate the problem irivolvccl.
II.
a53
'
a
Eat:iblis!iIIIrnTs 32 74 2 ..?I -
1G9 1.038 36
226 34 191 87 5.57 73 15.5 94 92 91 568 1,163 1,360 1,291 143 665 162 491 126 11 38 226 82
26 777 219
247 38 19 57 1.56 33 242 380 258
Process
S o . of LinyIoyeP-
I n , 8,i3 13,412 1, , 3 7 6
17,978 1i, R
