Testing, Testing, One, Two, Three

In April 2018, Buzz by Jane PorterLeave a Comment

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Sometimes a Twitter spat with the competition is all it takes to spur action, as when burger chain Wendy’s called McDonald’s out publicly for using frozen beef in its Quarter Pounders. And sometimes, you’re in the right place at the right time to benefit from that action, as is often the case if you live in Raleigh.

Last month, McDonald’s chose Raleigh as one of eight U.S. cities to debut its fresh beef Quarter Pounders, cooked on the spot, as part of an effort to attract customers who want fresh food.

This month, Raleigh is at the epicenter of a North Carolina market that stretches from Winston-Salem to Wilmington, where the energy drink company Red Bull will try out a new organic beverage line, ORGANICS by Red Bull.

In the last decade, the Triangle and Raleigh in particular have become increasingly popular for companies looking to test out their products on a micro scale before launching them in other major national markets. Pepsi tested Tava, its line of no-calorie soft drinks, in Raleigh back in 2008. In 2015, Google announced that the Triangle would be an early market for Google Fiber, along with a handful of other U.S. cities. And the Phoenix-based car rental company Carvana brought a $2.5 million, five-story car vending machine to the Research Triangle last year, one of just seven in the country.

Business and marketing experts say the region’s growing appeal as a test market for new products and services shouldn’t come as a surprise.

“Demographically, North Carolina, and the Triangle in particular, is a major destination,” says professor Jim Johnson, a strategy and entrepreneurship specialist and director of the Urban Investment Strategies Center at UNC-Chapel Hill. “It’s a destination for a diverse constituency across the life course, and it is a ripe market for companies to understand any niche they want to target.”

Johnson cites data that show that North Carolina has added 2 million people to its population since 2000; 40 percent of that growth has been in Wake and Mecklenburg Counties, and Wake alone has added 60,000 people to its population since 2010. We all know the reasons why the region is growing: job opportunities, low unemployment, relatively low housing prices, good schools and a temperate climate all contribute to the quality of life we enjoy here.

But it’s not just growth and having a large population to draw from that companies testing products are looking at. It’s the cultural and ethnic diversity, and the wide range of ages (and their associated interests and skills) that comprise that population, that’s important as well.

“Companies can identify just one segment of the population easily,” explains Tom Byrnes, a lecturer at NC State University’s Poole College of Management. “It’s like one-stop shopping; there is good diversity but if you want to focus on one significant segment, you have it here.”

Byrnes says Triangle consumers meet the profile of a more typical kind of national consumer than those companies would find in larger markets such as New York City, San Francisco, Chicago or Atlanta, where the cost of living is higher. That’s attractive to businesses testing out products, as is the proportion of the population that’s educated at the region’s high concentration of colleges and universities. Not only are there plenty of students around to give feedback, but educated consumers are significant drivers of new market trends.

“Products and services that are more healthy or more green are more likely to appeal to more educated and environment and health-conscious populations,” says Jon Carr, an entrepreneurship professor at Poole College. “Tech companies and upscale, health conscious products and services are highly attracted to those types of populations and markets, and they test here because they’ve determined there are benefits to [sampling] an educated population.”

As the region’s population continues to grow and becomes more diverse, and more educated, the test market trend isn’t likely to slow down. That’s good news for local consumers who like trying new things. Of course, the real test for Raleigh and the region will be if Amazon decides to locate its second headquarters here. NC State’s Byrnes says Raleigh would be an ideal location for the company for the same reasons that make it an ideal test market for other national corporations.

“The Raleigh area has been identified in U.S. news reports as one of the best places to live,” he says. “That’s helpful for different employment opportunities, and it does attract a wide, diverse group of people.”

UNC’s Johnson agrees.

“The unique thing about North Carolina, and the Triangle in particular, is the constellation of forces here that serve as magnets,” Johnson says. “You have RTP, our portfolio of great universities, world class healthcare, the emerging innovation economy. All those things make this area a crucible for marketing and advertising.”

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