O'Grady's: Evaluating Test Market Success & National Expansion Plan

This case study examines O'Grady's potato chips' test market performance in Omaha as of June 1983, focusing on whether the company could achieve its $100 million sales objective. The analysis reveals that while the brand generated enthusiasm, competition posed a challenge. The chips, designed for dipping, had unique features, including consistent thickness and flavor. Despite lower gross margins and higher production costs, the test market showed consumers shifting from established brands like Ruffles and Lays. The preference for regular flavor over cheese flavor was noted, along with a high repeat purchase rate for the regular product. Recommendations for future actions include conducting further market research, refining the product mix based on flavor preference, and adjusting the budget for national distribution. The projected national sales depend on consumer preference, with an estimated 38.2 million in sales based on capturing a portion of Ruffles and Lays' market share. Desklib offers this case study solution and many other resources for students.

O’Grady’s
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Contents
1. Assessment of test market results as of June 1983? And will O’Grady able to achieve the $100
million sales objective?....................................................................................................................3
2. What sales O’Grady’s will achieve nationally? Suggestion on the Future actions?...................4
REFERENCES................................................................................................................................5
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1. Assessment of test market results as of June 1983? And will O’Grady able
to achieve the $100 million sales objective?
As Mr Earl Shirley was assigned the task to test the market and to assess the brand test market
result whether they would be able to achieve the objective of making their new product suitable
for the market or not. This is said that from the report that company was promoting its brand in
enthusiastic manner but the test results were not that good as there were competition from the
other firms (Chen, 2018). The product that was made by the company was O’Grady’s potato
chips which were textured in a manner that they looks similarly processed and were suitable for
use with a dip which gave them a pronounced flavour when eaten. The feature that this chips
includes is that they never got thicker from a set level and from one area and also they never
have a uncooked portion left. Also this was first time done where cheese flavour was taken as
compared to other brands in the industry. Also it was considered as the product and the place that
was chosen for test market was Omaha which is suggested by the executives of the company that
they are confident about the social and economic profile of the users there. As the city contained
around 1.6Mn users who are likely to be the users of salty snack products. Also as it is seen that
the company wanted to sell the product in different package size which consist of 8-ounce and
12-ounce size at comparably lower price than its competitors which gave them advantage of
being in success (Gibbons, 2016). Also it is seen that the product gross margin was lower to 44%
as compared to other products which was a discouraging factor for the company. Also as the
production cost was high the company wanted to sell the product at higher price as compared to
other products which are already seen as a successful brand.
The result of the test market stated that as the consumers were moving from their
preference from Ruffles and Lays to O’Grady’s chips this was mesmerising. As these brands
combined around 16 percent of the total salty snack market. Also it was seen that as the cheese
flavour was not as much preferred by the consumers over the regular favour. This would help the
company to produce the regular flavour at a higher rate. Also it was seen that the repeat rate was
high in the regular product of the company which helped them in analysing that it could become
successful in the market (Pavic, Shen and Yin, 2016). The test market in the Omaha city was
successful as the company was getting huge response from the consumers. Also it was seen that
the company was able to achieve the objective of $100Mn sales as they were getting their brand
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promoted more fastly and around 16 percent of total salty snacks consumers were shifting
towards them.
2. What sales O’Grady’s will achieve nationally? Suggestion on the Future
actions?
The future action that Mr. Barnes should take so that they are able to capture the market and are
able to sell the all the products at a more consistent rate includes that, they should take more time
for doing market research on putting O’Grady’s on sell in market. As this product is converting
the consumers of Lays and Ruffles into the consumer of O’Grady’s so this is seen that no new
consumer is added or made from this product (Mongardi, Rapagnetta and Saccà, 2016). Also it is
seen that they have set a budget of around $500,000 on the test market which is considered as
very high amount and also a budget of $2Mn is set for distributing the product nationwide which
is again a huge budget which should be minimised as the cost of the production is very high for
this product due to which they are having lowest profit margin on this product. Mr. Branes
should take steps to further test the product for more 3 months so that they get a clarity about
how this product would perform in the market (Mongardi, Rapagnetta and Sacca, 2018). Also he
should check that regular chips are preferred more by the customers as compared from the
cheese chips so they must reduce the production of cheese chips and should increase the
production of regular chips.
The amount of sales that O’Grady will achieve nationally depends on the consumer
preference. This is expected as around,
Total salty snacks user in country: 78.8Mn
Total volume of market captured by Ruffles and Lays: 78.8*16/100 = 12.608Mn
This was 33% of sales volume of O’Grady’s so expected sales: 12.608/33*100 = 38.2Mn
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REFERENCES
Chen, H., 2018. O'Grady's Birational Maps via Wall-hitting. arXiv preprint arXiv:1804.05082.
Gibbons, L., 2016. Standish O'Grady's Cuculain: A Critical Text ed. by Gregory Castle and
Patrick Bixby. James Joyce Quarterly. 54(1). pp. 185-189.
Mongardi, G., Rapagnetta, A. and Saccà, G., 2016. The Hodge diamond of O'Grady's 6-
dimensional example. arXiv preprint arXiv:1603.06731.
Mongardi, G., Rapagnetta, A. and Sacca, G., 2018. The Hodge diamond of O’Grady’s six-
dimensional example. Compositio Mathematica. 154(5). pp. 984-1013.
Pavic, N., Shen, J. and Yin, Q., 2016. On O'Grady's generalized Franchetta
conjecture. International Mathematics Research Notices, 2017(16). pp. 4971-4983.
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