Fourt-Woodlock equation
Encyclopedia
The Fourt-Woodlock equation (sometimes misspelled Fort-Woodlock equation) is a market research
tool to describe the total volume of consumer product
purchases per year based on household
s which initially make trial purchases of the product and those households which make a repeat purchase within the first year. Since it includes the effects of initial trial and repeat rates, the equation is useful in new product development
.
The Fourt-Woodlock equation itself is
The left-hand-side of the equation is the volume of purchases per unit time (usually taken to be one year). On the right-hand-side, the first parentheses describes trial volume, and the second describes repeat volume.
HH is the total number of households in the geographic area of projection, and TR ("trial rate") is the percentage of those households which will purchase the product for the first time in a given time period. TU ("trial units") is the number of units purchased on this first purchase occasion. MR is "measured repeat," or the percentage of those who tried the product who will purchase it at least one more time within the first year of the product's launch. RR is the repeats per repeater: the number of repeat purchases within that same year. RU is the number of repeat units purchased on each repeat event.
The applied science of product forecasting
is used to estimate each term on the right-hand-side of this equation. Estimating the trial rate is complex and typically requires sophisticated models to predict, while the number of households is usually well known (except in some unusually complicated markets such as China
).
Market research
Market research is any organized effort to gather information about markets or customers. It is a very important component of business strategy...
tool to describe the total volume of consumer product
Consumer product
A consumer product is generally any tangible personal property for sale and that is used for personal, family, or household for non-business purposes. The determination whether a good is a consumer product requires a factual finding, on a case-by-case basis...
purchases per year based on household
Household
The household is "the basic residential unit in which economic production, consumption, inheritance, child rearing, and shelter are organized and carried out"; [the household] "may or may not be synonymous with family"....
s which initially make trial purchases of the product and those households which make a repeat purchase within the first year. Since it includes the effects of initial trial and repeat rates, the equation is useful in new product development
New product development
In business and engineering, new product development is the term used to describe the complete process of bringing a new product to market. A product is a set of benefits offered for exchange and can be tangible or intangible...
.
The Fourt-Woodlock equation itself is
The left-hand-side of the equation is the volume of purchases per unit time (usually taken to be one year). On the right-hand-side, the first parentheses describes trial volume, and the second describes repeat volume.
HH is the total number of households in the geographic area of projection, and TR ("trial rate") is the percentage of those households which will purchase the product for the first time in a given time period. TU ("trial units") is the number of units purchased on this first purchase occasion. MR is "measured repeat," or the percentage of those who tried the product who will purchase it at least one more time within the first year of the product's launch. RR is the repeats per repeater: the number of repeat purchases within that same year. RU is the number of repeat units purchased on each repeat event.
The applied science of product forecasting
Product forecasting
Product forecasting is the science of predicting the degree of success a new product will enjoy in the marketplace. To do this, the forecasting model must take into account such things as product awareness, distribution, price, fulfilling unmeet needs and competitive alternatives.-Bass model:Bass...
is used to estimate each term on the right-hand-side of this equation. Estimating the trial rate is complex and typically requires sophisticated models to predict, while the number of households is usually well known (except in some unusually complicated markets such as China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...
).
Sources
- Fourt L.A., Woodlock J.W., 1960. 'Early prediction of market success for new grocery products.' Journal of Marketing 25: 31–38.