Why Southern States are the BEST Test Markets for many products???

Source:  Wikipedia

Guess what made Pepsi India drop plans to introduce Dole, its fruit-based beverage from its international portfolio, in favour of brand Tropicana few years back? And what made Dabur Foods give up plans to introduce papads and other ethnic food?

The answer to both questions is the same - the response of the consumer south of the Vindhyas, who disapproved both the launches.



While Dole was tested in Bangalore (leading to a lukewarm response), Dabur Foods undertook an extensive test-marketing exercise in Chennai  for a foray into papads and pickles, a bastion dominated by the unorganised sector.

BTB..Are we talking about the test markets? What is it all about?
According to Wikipedia, "A test market, in the field of business and marketing, is a geographic region or demographic group used to gauge the viability of a product or service in the mass market prior to a wide scale roll-out."
The test market ideally aims to duplicate 'everything' - promotion and distribution as well as 'product' - on a smaller scale. The technique replicates, typically in one area, what is planned to occur in a national launch; and the results are very carefully monitored, so that they can be extrapolated to projected national results.

Think Global , Act Local – The strategy behind a Test Market

After some secondary research and guest lectures, we learned that following are the key differentiators that makes Southern States a better test market!

• The propensity index in the South is higher than in the North and the per capita consumption for many products categories is higher too.
• SEC A and B households in the South have excellent cable and satellite penetration. This leads to vernacular isolation. Relative isolation from densely populated media markets so that advertising to the test audience can be efficient and economical.
• Customers from southern side are known for experimentation. They do not hesitate to try new products when it hits the market – be it Deodorant or a new flavor of a carbonated drink.
• Also, the companies have excellent distribution network set up in the southern states, making it easier to make the product available to the customer.
• Apart from taste-led preferences, another significant reason why FMCG marketers prefer Chennai or Bangalore to test-market products is to do with the media scenario. Advertising on a local channel turns out very cost-effective and makes the Southern market far more media-friendly. Compared to Sun TV, Star Plus charges roughly 5 times over that.  Sun TV is available in every home in the southern states. For a brand's target audience in, say, UP, one would not know what percentage of them watches Sony and what percentage watches Zee. In such circumstances, perhaps, the South is a more suitable test-marketing ground.

That is the Story behind why FMCG companies choose Southern States for testing their innovative products. This goes without saying that if a product is locally relevant in the north, it does not make sense to launch and test it in South markets as it would be an "Out of Syllabus" item for the South Indians :) 

Reference

http://www.thehindubusinessline.com/catalyst/2002/02/21/stories/2002022100010100.htm