Evaluating a New Market: A Forecasting System for Nonimpact Computer Printers

In 1975, Xerox put on “hold” and nearly cancelled the development of a high speed xerographic-scanning laser computer printer because prior market research had failed to demonstrate that the company could profitably market such a product. A team composed of Management Scientists, market researchers, and product planners designed and implemented a market-research-based forecasting system for high-speed computer printers. The forecasting system models the behavior of each market research respondent with respect to choice of computer printers. It predicts his choices from among sets of alternatives and his usage levels of the selected products. The system then uses product marketing scenarios to construct a dynamic version of these predictions and produces detailed forecasts of product populations and usage over time.Use of this system produced a credible analysis of the market; based on this analysis, Xerox decided to develop, announce, and manufacture the 9700 Electronic Printing System. The forecasting system was also used to design pricing and other marketing strategies for the new product. The 9700 is now an extremely successful product that is projected to produce billions of dollars of revenue for Xerox. The forecasting system has set a new company standard for evaluating new markets. It is influencing the design of other market-research-based forecasting systems and improving the overall quality of new product planning.