The Pluses and Minuses of San Diego as a Test Market

Los Angeles, Philadelphia, Baltimore and Washington were all in the running to be the test market for Allie's, Marriott Corp.'s new family restaurant chain. Marriott passed on all of them, however--from the City of Angels to the nation's capital--in favor of another major metropolitan area: San Diego.

The first Allie's, at the site of Marriott's former Big Boy restaurant on Sports Arena Boulevard, had its grand opening June 25. The Bethesda, Md.-based corporation plans to convert 15 of its San Diego Big Boys into Allie's by the end of 1988, and, if those restaurants pass the test, another 600 will open throughout the United States within the next five years.

Marriott is not the first major company to let San Diegans decide whether its products will sink or swim.

In February, the Clarion Corp. began test-marketing its digital audio tape car stereo system in San Diego, San Francisco and Chicago. Miller Brewing tested its Matilda Bay wine cooler here last summer. And the California Milk Advisory Board used San Diego to test for Vital 15, a 1%-fat, high-calcium milk targeted to women.

Cereal Bars and Canned Spuds

Other food and beverage products tested here in the past 18 months include Kellogg's Nutri-Grain Bars, Idaho Supreme Canister Pack Potatoes, Rod's whipped toppings, Golden California Cheese and Chicago Brothers Pizza Shop Deluxe Pizza, according to Lynn Dornblaser, general manager of Gorman's New Product News, a monthly trade journal that keeps tabs on product introductions and testing.

The Premier Test Market

Despite the number of major companies that test new products ranging from food and beverages to soap and stereo equipment, San Diego's status as the premier U.S. test market is a matter of dispute.

Some marketers say the city is too big and, rather than being isolated, too contaminated by Los Angeles TV stations to be an ideal test market. Some claim it is so popular a test market that it is actually overused.

Saatchi & Saatchi DFS Compton, the world's largest advertising agency, compiles an annual test-marketing guide for which it first selects the top 45 markets, then ranks them according to how often they have been used in the past year. San Diego does not even appear on the list, which is headed by Minneapolis-St. Paul; Portland, Ore.; and Columbus, Ohio.

"The main problem we had with San Diego is it had considerably higher cable penetration than most areas," said Ira Weinblatt, senior vice president-director of Media Planning at Saatchi & Saatchi.

Because cable TV provides so many stations in an area, some of which don't sell commercial time, it makes it more difficult and expensive for a marketer to saturate the airwaves with ads for a test product, he said.

Useful for Several Reasons

But most marketing professionals interviewed seemed to think that, for a number of reasons, San Diego's heterogeneous population and media isolation make it a useful test market.

"We looked at the demographics of the areas around the (Allie's) units and the competition, and we thought that San Diego was a good, fair test," said Allen Schiffenbauer, Marriott's director of market research.

Success Not a Given

"It was representative of what we'd face in other places, and the competition (from other family restaurants) was strong enough that success wasn't a given," he said. If Allie's makes it in San Diego, it will be a portent of success in other places, he added.

A local Allie's spokesman also brought up the argument of San Diego's media isolation.

"We've got Mexico to the south, the desert to the east, the ocean to the west and Camp Pendleton to the north, which really separates us from that Los Angeles-Orange County market," he said. "When you do media and advertising here, you can really isolate the market."

Allie's test marketing is the current phase of an extended market research process. When Marriott decided to replace its unprofitable Big Boys two years ago, it embarked on a series of studies that cost more than $500,000 and included more than 10,000 family-restaurant patrons nationwide.

The cornerstone of the research was a study in which adults in five cities--Los Angeles, Atlanta, Philadelphia, Dallas and Cleveland--were asked to rank 16 hypothetical restaurants, each of which had a different combination of food, service and pricing. They also rated their favorite family restaurants according to the same categories.

Based on 1,500 of these interviews, Allie's ran computer simulations of a wide variety of possible restaurants as a way of predicting which of them would appeal to the greatest number of people, said Schiffenbauer. Although he would not give any details, he said the winning combination revolved around the food.

"We eventually ended up with an Allie's that, according to our computer games, was the best Allie's we could come up with and should be the leading restaurant in all the markets we did research in," he said.

To obtain the proof of the pudding--or, in Allie's case, of the fajita salad, Better-Than-Mom's Meat Loaf, char-broiled halibut and raspberry-apple shortcake--Marriott will do extensive research here during the test period.

With a potential restaurant empire riding on its outcome, the company's San Diego marketing represents a substantial investment. The price tag for the effort--which includes market research, the cost of converting 15 Big Boys into Allie's, promotional events and an advertising campaign that will debut near Labor Day--will total about $10 million for the first full year, Schiffenbauer said.

Clarion Corp. picked San Diego as a test market for its new digital audio tape car stereo product because there are "a lot of high-tech type people, as well as less affluent people" here, said Tom Mitchell, Clarion's director of marketing. Clarion is also testing the product in San Francisco and Chicago.

Must Expand Customer Base

Because the DAT is the first car stereo system costing more than $1,000, Clarion must expand beyond its typical customer base of 18- to 24-year-old males, Mitchell said. He said the company has not yet developed advertising for the product, but is using customer responses obtained in the test marketing to help determine the approach.

Miller Brewing prefers smaller markets that are easier to control, but selected San Diego specifically because it was marketing wine cooler, said Beverly Jurkowski, public relations manager for the Milwaukee company.

"San Diego was critical because at the time we did our testing (June 1 to Sept. 1, 1987), San Diego represented the ninth-largest cooler market in the United States," she said. "We felt if (Matilda Bay) were successful there, we had a product that had a pretty good chance of surviving elsewhere."

Matilda Bay--which was tested in San Diego, Denver, Kansas City and Atlanta--and its Australian origins are touted in its J. Walter Thompson-created commercials. It passed with the finesse of Crocodile Dundee and went into national distribution at the end of the test period.

The California Milk Advisory Board chose San Diego to test Vital 15 because "it's a large enough market to be significant so research data would be very valid," said Cal Crandall, Fluid Milk Project Manager.

The test, which began in September, 1986, illustrated the importance of a test-marketing approach. Although total San Diego milk sales went up 5.3% during the one-year test period, Vital 15's women-oriented positioning fell on its face.

Campaign Alienated the Men

Research showed that, rather than attracting women, the campaign alienated men. Vital 15 has essentially been replaced by other high-calcium milk products, such as Knudsen's Nice and Lite.

According to Nancy Roach, product communications specialist for the Kellogg Co., which is testing Nutri-Grain bars in San Diego and Los Angeles: "We felt Southern California was representative of the rest of the country. Also, people in the Southern California area are more in tune with products like this that have no sugar or preservatives added."

Despite its use in market tests, San Diego gets a thumbs-down from a number of national marketing research companies and manufacturers.

Robert E. Blanchard, vice president/general manager for Colgate-Palmolive's home care division, said he "has never considered" San Diego as a test market.

"San Diego gets so much (television) from Los Angeles, so many people watch L.A.-originated stations, you'd have to spend more to translate the media plan," he said.

Other marketers who have passed on San Diego said the city of more than a million has grown too large for a controlled, cost-efficient test.

Small-Market Advantages

"San Diego is not a very common test market for us," said Jack Stratton, marketing research director for General Mills' Betty Crocker division. "We tend to look for small markets that are somewhat isolated. Portland, Ore., would be a more likely candidate for a test market."

Portland has a population of 359,000. Even Minneapolis-St. Paul, the most popular test market according to Saatchi & Saatchi, comes in significantly below San Diego, at 597,000.

"For a particular test we want a medium size, people representative of the total U.S., and somewhat isolated--that's especially important from the media sense," said Sandy Eubank, vice president of SAMI/Burke, whose clients include eight of the top 10 U. S. food manufacturers, as ranked by Fortune magazine.

Even locally based Foodmaker tests new Jack in the Box products elsewhere.

"The biggest reason is sheer size," said Paul Haack, division vice president for Foodmaker product marketing. "We have a lot of units in San Diego, around 70. We prefer to test in a less risky situation."

San Diego may also be losing test-marketing business because it is not one of the permanent test sites established by major research companies. In those cities, expensive monitoring equipment keeps track of the purchases.

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