Are investment spending market tests a good strategy or a waste of time and overly cautious?
I'm working on a case study and I'm having trouble picking a side to argue. The instructor wants us to decide how promotion money should be allocated in the case.
The full case can be found here:
docstoc. com/docs/122750087/Lever-Case
The gist of it is:
One person believes more marketing funds should be allocated to a key market area, with a very high population, where sales are down and products are threatening to be delisted by 2 major chains. The other disagrees and believes funds should be allocated to where its business currently is and support their areas of strength.
It was suggested that money should be used to conduct an investment spending market tests for a year, in the high population, "key market area" to see if incremental spending yields higher sales or profits large enough to justify allocating higher spending there.
My thoughts:
There are risks either way, products could be delisted from major stores during the market tests and the company could be missing out on an opportunity to grow in one of the most highly populated areas, but allocating funds directly to "key market" could end up not increasing sales and being a waste. I could build arguments around either, but am curious to which option seems like the best strategy.
I've tried researching to find similar cases to help pick a side and attempted to find information on both strategies but have had little luck :/
Is the investment spending market test a good strategy or a waste of time and overly cautious?
Any help is appreciated.