JRC&A New Product volume projection

Our method for projecting a new product's sales volume is based on a compilation of models and articles published in several academic journals by John Golanty, David Olson, Robert Blattberg and others. A lot of the data on which these articles were based originated with the Leo Burnett advertising agency where Mr. Golanty and Olson worked. Jacques Chevron also worked in that company.

The original purpose of the "Leo Burnett New Product Data Bank" was to provide an early diagnostic for the success or failure of a new product so that the agency's clients could save the expense of continuing to test market a product that was destined to fail. The process was carefully labeled "New Product Data Bank" rather than "Model" because it relied on data assembled from the many new products market-tested and/or introduced by the agency for its clients.

The (very simplified) principles are as follows:

1 - A certain amount of Target GRP's (a measure of the strength of a media plan) will result in generating product awareness - if the advertising copy is intrusive, that is;

2 - Product awareness will result in generating initial trial - if the product's concept, as explained in the advertising, is appealing;

3 - After an initial trial, consumers are R% likely (the Retrial rate) to purchase the product a second time - if their first experience with the product was positive and fulfilled the expectations created by the concept;

4 - The "retriers" are S% likely (the Stay rate) to stay in the new product's franchise - if the product has staying power, i.e., if the consumer is willing to make the product a part of his regular consumption pattern.

5 - As they learn to live with the product and make it a part of their normal pattern of purchases, the "retriers" can give you an estimation of the frequency of their future purchases.

For each of the 400+ new products in its data base, Leo Burnett attempted three measures. An initial measure, before the start of advertising. A second measure 6 to 8 weeks after start of advertising. A third measure 12 to 14 weeks after start of advertising. As soon as the third measure was analyzed, the product's year one volume could be projected and its long term viability could be assessed.

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3 - After an initial trial, consumers are R% likely (the Retrial rate) to purchase the product a second time - if their first experience with the product was positive and fulfilled the expectations created by the concept;
	4 - The "retriers" are S% likely (the Stay rate) to stay in the new product's franchise - if the product has staying power, i.e., if the consumer is willing to make the product a part of his regular consumption pattern.
5 - As they learn to live with the product and make it a part of their normal pattern of purchases, the "retriers" can give you an estimation of the frequency of their future purchases.