Monday, June 13, 2011

Cookies, A Tale for our Times

There is very little that I remember from the course I took in marketing as an undergraduate, but I do remember the following example precisely because it explains so much that has nothing to do with business:

A company made cookies at the high end of the market.  After awhile they looked at changing the recipe to lower costs.  So they came up with a cost reduced version, then tested it against the current version and when the tasters couldn't distinguish between the two versions they went with the lower cost recipe.  A year or so later they did the same thing testing version (b) against version (c) and getting the same result they switched again to the lower cost version.  Over the course of a few years this pattern persisted, until at some point their sales dropped off.  They couldn't come up with a reason for the declining sales until they tested the current version of the cookie (after many changes) to the original.  While the incremental changes had been too subtle to notice, the absolute change was significant and easy to detect.

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