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of an oil-soluble phenolic resin. Research on this pro1)lt.m WYLLS started, and news of a discovery t h a t a phenolic resin made from formaldehyde arid substituted phenol Kas oil soluble \vas checked by experimentation. This information and samples of oilsoluble resin were transmitted to the applied research group. After months of work, during which varnishes were prep:ired from all known drying oils v i t h various oil-soluble pheiiolic resins, another discovery \vas made involving the processing oi tung oil with phenolic resin. It was demonstrated that c,rrrniti types of phenolic resins gasproofed tung oil a t teniper:lture.considerably lon-er than those formerly required. This inform:ition was passed t o t h r sales department, rvhich wis ti,>-itigto perform the function of market research in zcldition to it activity. Fortified with amp lea :iiid data on the varnish trade t o inf0i.m thpm of t h r e s was slow. T h e tung oil-phi~ilolic rv
GEORGE E. NADLER,
Vol. 43, No. 4
by the varnish formulators exhibited poor film adhesion and dried s l o ~ ~ l y This . information was relayed to the applied research group as rvell as to the inventor of the oil-soluble resins. A change in the molecular n-eight of the resin solved the problem of improving the adhesion in varnish films, and a change in t h e drier balance employed in the varnish corrected the undesirable (hying property. As a result of this cooperation and exchange of iiifoi,ni:itioii, nn industry h:ir prospered. Thus, :tpplietl rc*se:irc.hi:: clcpeiideiit on other phases of research tor ini’oi,mntion in its cfforts to find profital)ie applications for nrw p i , o d u c ~ t ~ ;\Vithout . adi~qu:iti~v ~ u r c e s of information, applicd i ~ s t ~ a r cc.arinot h furictioii. RECI:ITt:u d e p r e i n b e r 11, IY:,O. \Iill. Ilcsearch L a l j < , r a t o r i e i .
P a p e r S o . 1 1 2 , ,Jc,t!rnal Series, (;c,rieral
General Mills Research Laboratories, Minneapolis, M i n n .
T h e transfer of a new chemical product from research laboratory to sales organization can present difficult problems and it must be treated as an exacting task. Generally, new products fall into tw-o classifications: those that fit comfortably into the markets and sales procedures of a company and those that are foreign to the company’s normal huriness. ilthough written reports
are a necessary vehicle for transferring information about new products from laboratory to operating organization, these usually cannot answer all the questions that may arise during the early commercial life of a new product. Often, therefore, wTitten reports should be supplemented by a personal sales development effort conducted by research specialists who are familiar with the material.
TRANSFERRING A NEW PRODUC 1 FROM RESEARCH TO SALES I . Markets for the product must be fairly well established RhSSFERRIKG a new product from a research 1aborittoi.y Iiy commercial plant trials and by the expressed interest of prost o a sales organization is not as simple as transterririg pective customers. ownership of a car from one individual t o another. hl2. Pilot plant production costs and volume of sales, projected though it need not be frightening, it cannot he over-simplified. on a commercial operatin basis, must offer profit possib within corporate policy qimits. (Investment, manufact It is a difficult probleni and must be treated as an exacting tayk. oosts, and general administrative and sales espenses are invariUsually, for example, it is impossible t o transfer a new chemical ably considered in judging this all-important factor.) product from t h e laboratory to the sales department \vit,h :L \$-hen a new product meets these requirements, it may move simple written report or by a series of impersonal document*. Although reports can outline iiiethods of production aiid givr to the commercial sales organization with t h e help of several information on costs, raw materials, indicated markets, and salrh types of “transfer” techniques. Which of these techniques is used will depend largely on whether the product “fits” the marprospects they seldom, if ever, can answer all the questions t h a t kets and normal sales procedures of the operating division t o m a y arise during the early comniercial life of a new product. Ti, which it is assigned or whether it is “unique” and, therefore, be effective, therefore, tlie transi’rr of information relating to :I unfamiliar to the sales organization. product must follow a developmciital procePs-iritroducto~~, Transferring a product t h a t fits comforta1)ly within a family personal, and advisory. This is particularly true \ v k i e i i t h of related items is, of course, much simpler than transferring a product is t o be sold to iiidustries not included among tlw iii:iiiuproduct t h a t is new t o the company. T h e following nine points facturer’s current customers a d lor when it must he dirtriliutd will serve as a fairly complete check list of information that must by techniques not covered by the company’s normal salzs pi’w be supplied to a sales organizat,ion with a product t h a t dovetails cedures. \\-itti established sales and manufacturing techniques (Figure 1): Iri practice, then, a ne\v chemical product need3 :i guiilc, t o D a t a sheets t h a t completely describe the chemical and expedite its advance fro111 research laboratory to c o i i ~ u i i ~ ~ ~ t ~ 1. . example, color, At General Mills, the research laboratories provide this ,quid:liic.i>: physical properties of the new product-for chemical analysis, compatibilities, special methods of handling, they have responsibility not only for formulating i i ~ \ vproclucats chemically, b u t also for establishing the commercial possihilitiruses, solubilities, and standard shipping containers. of these materials and for directing their early sales dcvelopnic.iit. 2. Sales product claims pointed toward specific niiirket8 or Only when a product has shoivn t h a t i t actually has nri :tttr:tctiv(. applications-for example, product S offers improved tenderness, longer shelf life, and increased yields in guni confections us sales potential is it ready for transfer t o either General l l i l l s ’ Chemical Division or Special Commodities Division, lvhich ~ r v e compared with competitive materials. the chemical processing and allied industries. 3. List of primary, secondary, and tertiary markets selected A rule-of-thumb for determining whether a new chernicaal is on the basis of field coniinents regarding the product’s characready for transfer t o a n operating division should iiirlalc t i v o teristics, competit,ive position, and actual customer interest. (This information Kill help the sales organization by suggedirig primary requirements:
1
April 1951
INDUSTRIAL AND ENGINEERING CHEMISTRY
major targets for salm and advertising effort.) Classification of markets for a new product involves a consideration not only of the ability of the product t o satisfy the needs of certain inductries b u t also a n evaluation of the ma\imuni sales potentialg of these industries. Obviously, it iiiay not pay to devote an extenslvc. sales and advertising effort t o n am:ill market even though the product satisfies the rcc~itircnic~nt~ of the industrial firm% compofiing t h a t market
DATA SHEETS SALES PRODUCT CLAWS
COMPETITION COSTS PROFITS MARGINS PRODUCT SPEC'S. PACK A C 1. NG RAW MATERlALS
SELLING PRlCE
835
lent in :in organization such as General llills, where diwrsific:ttion has taken the rompany f:ir from i k basic operations of flour iiiilliiig into t h r production of packaged specialty foods, hnine appliances, vitamin r), monosodium glutjamate, modified wheat starches, intiuptrial proteins, drying oils, and fatty acids. Any industrial firm with an active research laboratory, however, ma>- find itself with a potcntially valuable product that, differs snincwhat from the ilorm:il memt)crs of its line. Transferring information about a prorluvt O F this type from the laboratory to a n operating division (Figure 2 ) \ \ i l l usually be facilitated I ) ? a sales d(.vr:lopnient effort \i-hich ni:ty I)c conducted by the rrc;c:irrh laboratory and will include six atf(litiona1 avtivities: 10. Tcchnicad sales service: I'roctlssing industries that ivill purcha.-sis of the foremost competitive products and produmw in the markets t h a t the new product, is e x p e c t d t,o pmetrate. Any new supplier entering a highly competitive field -:iiid totlay there are few noncompetitive fields-is in a precarious position. If he does not exercise sound judgment, he niay he out of business before he has an opportunity to win a rightful place for his product. From a detailed study of successful competitive operations, however, he can often glean tccllniques t h a t will improve his chances for success. H e may then go on to develop neiv approaches t'o manufacturing and selling prolilcms t h a t will give him that slight edge so desirable in new business ventures. 5 . Costs, profits, and margin?;, along r i t h other mitrketing factors, are the yardsticks b y whioh management and the d e s organization m a y determine the amount of money and effort they should expend on the new product. ti. Product specifications are, of course, usciul to sales people and absolutely necessary for the manufacturing department. 7 . liecommendations for the most suitable methods of p:rckaging t h e new product. If many different' industries are poteiititil customers for the material, each niay have a preferred pnckage. T h e textile industry, for example, probabll- would like to receive its raw materials in cotton bags; the food industry might prefer leverlock fiberboard containers or m u l t i \ d l paper bags for masiinuni protection; some purch:tscrs of dry bulk niat,erials might be more receptive to thc product if it came in palletized units. 8. .5, list of approved soiircei o f ra\v niaterials for the production of t h e new product,. 9. Iteconiniended seiliiig pricr, developed according t o usual cost techniques as cstahlished hj- individual corporate policies. .Ilthough the information represented by these nine points organizntion the working tools with which t o r product, it, rvould be insufficient for the introductory commercialization of :t unique chemical material. So-called unique products, of r'ourse, are probablj- most preva-
Y
IT09 @ TECHNICAL SALES SERWC li TRANSFER OF P E R S O M I2 FIELD COWTACTS 13 CUSTOMER SERVICE REPORTS I4 SALES ~ R ~ A N I Z ~ T I O ~ 15 TEST MARKET M E A TECHN Figure
P
of the starch, they successfully emphasized the need for using higher processing t'eniperatures with this product. Visual evidence, made available as a technical sales service, Ras cle:rrly :imore effective point-of-sales tool than a barrage of words. If a new product sells a t a price equal t o or below t h e price of competitive products, i t v.41, of course, require much less techniral service backing than i t will if it sells at a premium. When it is a n obvious money saver, t h e prospective user will feel justified in making an exhaustive study of its application. But when it is premium priced, a technical sales service organization must aggressively assist prospective customers in proving the advnntages of using t h e new product. If the new product t,akes established sales Eervice groups into
INDUSTRIAL AND ENGINEERING CHEMISTRY
836
unfamiliar fields, an educational progr:im is necessary to acquaint sales service personiicl with both the properties of tlie product and the industries to which it, will be sold. Regardless of whether the new product, requires the establishment of technical service groups or leads existing groups into new fields of application. all the necessa1.y information needed for the transfer of thr. new produrt must t w assembled.
SALAD DRESSINGS MIXES
Figure 3.
Test Market Area Technique (Foods)
Vol. 43, No. 4
T h e laboratory data should describe the experiinent,al results and conditions that served as a basis for the recommendations. This report not only gives visual and conclusive proof of a company’s effort t o cooperate but serves to bring thr d e s man and his prospect closer together. It also gives the prospective customer an incentive t o continue his studies on the n w product. 11. Sales organization: T o merchandise many unique, new products, it may be necessary t o set up an entirely new sales organization. But a national d e s and warehousing system controlled b y a manufacturer is costly. Actually, for many new products it is a goal t o be attained rather than a starting point. Severtheless, it is well to recognize t h a t new products, used and purchased in relatively small quantities, are handicapped wit,hout strategic warehousing points. Because of present-day high rail and truck rates, any product that must be shipped directly from a plant will probably have little attraction for purchasers of lessthan-carlot quantities v h o are appreciable distances a w y . Practically, then, virtually all markets are local, and a new product must be able to maintain a competitive position in thrre local markets to win national acceptance. 15. Test market area technique: If a new product is intended f o r ultimate national distribution even though a properly trained sales organization and national varehousing facilities are not immediately available, the market area sales technique that has hcwi used successfully by General hlills and others in the food industry niay be of interest. This technique serves much thc same purpose as area market tests for new consumer food products (Figure 3). For II new General hlills industrial product, area markcit drvelopnient normally is undertaken by the research lahorntorips hefore the product is transferred t o the operating divisioti. It offers an opportunity to obtain the following facts with :I minimum of technically trained sales personnel, distribution farilities, : I n d oxp’nsc:
T h e reaffiriuation of earlier sales forecasts, idrtitihutioti of liriniary and secondary markets, and sales product claims: TVhen cninrnercial quantities of the new product are available, 11. Transfer of persorinrl: The research personnel who h a w continuous industrial use niay often bring t o light additional information concerning the properties or methods of use. “gron-n up” with the new product may be temporarily or prrSelected types of sales techniques arid approaches for attractmanently transferred to the operating division t o assist in thca ing maximum interest and sales impact. for the new product: exchange of information. Usually this procedure is esscntial I n entering a test market with a new General Mills product, when the commercial exploit,ation of the product involves new for example, a direct mailing was made to selected manufacturers of several industries that iyere important in the test area. Sammanufacturing and sales techniques. ples of the ncw product were sent along with airmail letters di12. Field contacts: Many companies have found that having rected to the on-ners or research heads of the companies on the laboratory technicians accompany salesmen on customer calk mailing list,. T h e commercial availability of the product was helps smooth the pathway for a new product. It gives t h r announced as well as the advant,ages to be obtained through its use and suggestions as t o how it could be formulated in their research man a clear insight into problems that may requircs finished products. It was also mentioned that a technical assistance from his laboratory and often makes it possihle t,o sales service man n-ould be located in the area for a period of work out problems during the call, thus eliminating the necessity time to assist and give counsel in working out the application of laboratory xvork. of the new product. This direct mail campaign served as an advance door opener for sales representatives and acquaint,ed 13. Customer service reports: An adequate flow of infornuprospects the new product. As a result, customers were tion to new and prospective customers can be a i i cffc~ctivi~ developed with in a reasonably short time, but without the personal stimulus to any new product introduction. Custonier servic*c technical assistance immediately following the letter, the line of neni customers would have been much slower in forming. report forms, for example, were devrloped and used hy t,hc D a t a on which to base forecasts of total national sales and General Mills technical service laboratory in presenting the solusales by individual industry: Some of the new product application to problems brought in b y salesmen from the field. TVhen tions anticipated during early research der7elopment stages may laboratory m-ork on a particular problem was completed, four not live up to sales expectations in the test market. Yet new, copiefi of a detailed rrport were iiiade by the servicr department : unanticipated uses may come t o light and win a leading sales position for the product. Obviously, such developments can one ropy was retained by the laboratory, one by the operating affect sales volume projections and should provide a stabilizing division, and one by the salesman who delivered the original guide with n-hich to anticipate the pattern of future nation-wide to the customer or prospect. sales of the product. The customer service report should consist of at least, thwc, Basic sales operating data such as the desired frequency of personal follow-ups and the normal time lag between initial component,s: contact, sample placement, laboratory results, plant trials, and ultimate commercial sales and reorders: This information is T h e problem should he clearly and concisely stated. invaluable in determining the amount of time, effort, and expcnse T h e recommendations should indicate the optimum amounts t,hat may be required to open another market area. of the new product to be used, its relationship to other ingredients, and suggested processing temperatures, times, and handling The reliability of test niarkpt data and the v d u r uf evprrienee techniques
April 1951
INDUSTRIAL AND ENGINEERING CHEMISTRY
Figure 4.
Industry Census Approach
gaiiied from the operation hinge largely on the area selected lor the tcst and the nature of the nen- product. I n general, thP marhrt area technique is most effective when the product h ' potmtial place in man)- different industries. The area chosen must contain as many as possible of the industries in which t h r new product may logically find application. It, is unlikely. of course, t h a t any test market area n-ill have these industric,s in the same proportion as they exist nationally. I n applj-ing tcst market sales t o national forecasts, therefore, i t is necessary t o krio\\- what percentage of each industrj- nationallj- the teet mnrket represerits. If a new product finds its principal market in on!' 01' two fields, it is probably better suited t o the widely used industry market tcst than t o t h e area technique (Figure 4 ) . If it is promoted \vith the area technique, however, it must have an wtremi.ly n-ell-adapted test area. If Iihode Island were splectcd as a test arra for a product uspd niaiiily by the testile intiu.qtry, it would not he possiblc t o appll- its sales rrrord t o S e \ v 170rk, whose textilc industr\- is considrrnbly smaller and of an entirely different makr-up than Rhode Island's. Similarly, projecting Rhode Island sales trends t o South Carolina viould be difficult and dangcrous, for South Carolina's textile manufacturers turn out diffprrnt tj-pes of materials and, therefor(,, have different ritiv material rpquirements than the Xew England component of the textile industry. However, for products such as General lIi11s modified starches, a properly selected test, area should produce accurate d a t a and salce reactions. As the actual test area was used as a full-fledged selling arena-and starches were merchandised in that area on a commercial basis mainly for laboratory-proved applicatioris-a reasonably accurate forecast of national sales n-as probably obt ained , Much of this discussion can he classified as the psychology of sales or the techniques of technical service, but it is all part and
(Salad
837
Dressings)
parcel of a nciv product and its market debut; the supporting information must be turned over t o the operating division where it can be p u t t o effective and dirert use. Regardless of t h e number of problems presented h y the t mnsfer of a new product t o operations, it is always best t,o offvr solutioiis to those problems in an easy-to-digest form, perhaps by prqmring a basic sales guide-one t h a t is understandable t o the sales organization which ultiniately is t o handle the product on a national scale. Although many of the bnsic concepts developed in the test market need not be a part of this guide, product d a t a sheets, sales product claims, principal applications of uses, and general background information on industries to be scrviccd and compet,itive niat,erials must logically be included. Such data should be valuablp not only to sales perJonnel b u t t o those responsible for future advertising as well. But it is obvious t l ~ a t reports dealing with the transfer of a new product, no matter how complete they may be, need working assistance arld implernentation from the research organizrttion t h a t originally dweloped the product. The transfer of products t o operating or sales organizations prematurely or with insufficient information can easily fill corporate closets to overflowing with new product sltelctons. Research, of course, is invariably judged by past accomplishments rather than by potentialities; if for no other reason than selfpreservation and t,he protection of otht,r products to come, the ~uccessfultransmittal of IIPXT prnduc+s to promotional and marketing groups should be onr of the primary objectives of a research laboratory. Literature Cited
( I ) Xeidig. C .
P., I N D . Esr;,
RECEIVED September 1 1 , 19.30. Research Laboratories.
HEY. 43, 843 (1961) Paper 111, Journal Series, General Mdls
