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Test marketing is one of many forms of market testing others include simulated test
market, informal sale, minimarket, rollout.
Test marketing is also a much less common form now due to cost and time commitments
and other drawbacks.
Mathematical sales forecasting models are readily available that can run on a relatively
limited amount of data.
We are building quality in, testing the marketing components of the product at early
stages (ads, selling visuals, service contracts, package designs, etc.) rather than testing the
whole product at the end.
Increased competition puts greater pressure on managers to accelerate product cycle time.
Market testing is a team issue, not solely in the province of the market research
department.
Negative market test results cannot be ignored just because the team is reluctant to kill
the CEOs pet project!
Diagnostic information to allow for revising and refining any aspect of the launch.
Any special twists on the launch? (limited time or budget, need to make high volume
quickly)
Costs (direct cost of test, cost of launch, lost revenue that an immediate national launch
would have brought)
Capability of testing methodologies (do they fit the managerial situation at hand)
Manufacturing process: can we ramp-up from pilot production to full scale easily?
Vendors and resellers: will they do as they have promised in supporting the launch?
Speculative Sale
Often used in business-to-business and consumer durables, similar to concept and product
use tests.
Give full pitch on product, answer questions, discuss pricing, and ask:
If we make this product available as I have described it, would you buy it?
Where industrial firms have very close downstream relationships with key buyers.
Where new product work is technical, entrenched within a firm's expertise, and only little
reaction is needed from the marketplace.
Where the adventure has very little risk, and thus a costlier method is not defendable.
Where the item is new (say, a new material or a completely new product type) and key
diagnostics are needed. For example, what set of alternatives does the potential buyer see,
or what possible applications come to mind first.
Create a false buying situation and observe what the customer does.
Mall intercept.
Self-administered questionnaire.
Advertising stimuli.
Post-exposure questionnaire.
Mathematical complexity
False conditions
Possibly faulty assumptions on data, such as number of stores that will make the product
available
Does not test channel member response to the new product, only the final consumer
Used for business-to-business products, also consumer products sold directly to end
users.
Train salespeople, give them the product and the selling materials, and have them make
calls (in the field, or at trade shows).
Do not use regular local TV or newspaper advertising, but chosen outlets can advertise it
in its own flyers.
Use rebate, mail-in premium, or some other method to get names of purchasers for later
follow-up.
Audit sales from grocery stores with scanner systems over a few markets or national
system.
Sample uses:
Can compare cities where differing levels of sales support are provided.
Minimarkets and Scanner Testing: IRIs Behavior Scan and Info Scan
Full record of what other media (such as magazines) go into each household
Family-by-family purchasing
Full record of 95 percent of all store sales of tested items from the check-out scanners
Result: IRI knows almost every stimulus that hits each individual family, and it knows almost
every change that takes place in each family's purchase habits.
The Test Market
Product is sold into those cities in the regular channels and advertised at representative
levels in local media.
Once used to support the decision whether to launch a product, now more frequently used
to determine how best to do so.
Risk Reduction
monetary risk
channel relationships
Strategic Improvement
marketing mix
production facilities
Disadvantages:
Kellogg tracked the sale of General Foods' Toast-Ems while they were in test market.
Noting they were becoming popular, they went national quickly with Pop-Tarts before the
General Foods' test market was over.
After having invented freeze-dried coffee, General Foods was test-marketing its own
Maxim brand when Nestle bypassed them with Taster's Choice, which went on to be the
leading brand.
While Procter & Gamble were busy test-marketing their soft chocolate chip cookies, both
Nabisco and Keebler rolled out similar cookies nationwide.
The same thing happened with P&Gs Brigade toilet-bowl cleaner. It was in test
marketing for three years, during which time both Vanish and Ty-D-Bol became
established in the market.
General Foods' test market results for a new frozen baby food were very encouraging,
until it was learned that most of the purchases were being made by competitors Gerber,
Libby, and Heinz.
Despite the cost and time commitments, traditional test markets still are used, especially
if risks and uncertainties are high.
Starbucks did traditional test markets for Via instant coffee, as the risks were judged to be
high and a failure could hurt overall Starbucks brand equity.
The Rollout
Select a limited area of the country (one or several cities or states, 25% of the market,
etc.) and monitor sales of product there.
The company may be able to get the ball rolling more easily there
The company may deliberately choose a hard area to sell in, to learn the pitfalls
and what really drives success.
Types of Rollout
By application
By influence
By trade channel
Risks of Rollout
Competitors may move fast enough to go national while the rollout is still underway.