You are the Marketing Vice President and one of your directors has prepared the

Question

You are the Marketing Vice President and one of your directors has prepared the following research proposal for your review and approval. Please evaluate the proposal and choose to approve or disapprove it. Justify your answers. TO: Marketing VP FR: Marketing Director RE: Consumer Advisory Panels Background: Given the dramatic changes that have occurred in our industry since September 11, many of the current marketing programs have not been as effective as in the past in generating new customers and keeping current customers. Previous focus groups and surveys have not provided the answers that we need because new respondents participate each time, limiting continuity from research findings. Proposal: It is proposed that we organize a group of consumer advisory panels to which we could present product ideas, evaluate competitive products, and discuss issues about advertising, product quality, and customer loyalty. It is proposed that we organize one group of 20 panelists in each of our eight sales regions. Panelist’s compensation will be $150 per 2-hour session, with a session planned every 60 days. Panelists will be selected randomly from our customer base for a one-year period, with new panelists included every six months. These groups will be facilitated by members of the marketing department and recorded for future reference. Costs: Total annual costs will be $160,000, which will be taken from the $890,000 secondary research budget. Pilot Test: Two groups will be set up in the closest regions to trial the process and determine its effectiveness. If these first groups are successful, other groups will be organized in 90 days to complete the panels. I am requesting $20,000 to initiate the first two groups and would like to have both in place within 30 days. Your approval is requested before I begin. Sincerely, Chris Jones

Explanation / Answer

The response is stated as below:

Dear Chris,

I have gone through your proposal of setting up "Consumer Advisory Panels". While the proposal seems to be attractive, the period of a new session may need a revision as conducting a session after every 60 days may not provide us with the desired results in terms of new product evaluation, selection and production. Therefore, I would suggest a half yearly period in place of 60 days . This would provide us with a more realistic picture of the impact of changes that we will undertake after conducting these sessions.

Secondly, each market may have a different customer base (in terms of age, gender, etc.). We will have to make a careful selection of the members of the advisory panel to ensure that we get the most reasonable and relevant information. I would recommend a shorter time frame for selection of members (may be last quarter than the previous year).

Thirdly, the panelists once selected should continue to be the members for atleast 1 year.

Lastly, the cost of $150 per 2 hour session appears to be on a higher side. I would advice a revision in this figure. Based on my experience, we can fixed payment of $75 per 2 hour session with reimbursement for traveling expenses upto $25 each member. We can also provide the members with free lunch in the office cafeteria after each session.

I would request you to review the changes suggested and get back to me by the end of this week, so that we can proceed ahead with the proposal.

Regards

XXX

VP-Marketing

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