Page 169 - DMGT408DMGT203_Marketing Management

Marketing Management/Essentials of Marketing

Notes If the product qualifies as sufficiently successful and considered eligible for test marketing, then
marketers make decisions about branding, packaging, labelling, pricing, and promotion during
test marketing.

7.2.6 Test Marketing

Test marketing is essentially a limited introduction in some carefully selected geographic area
that is viewed as representing the intended market. Test marketing is a sample launching of the
entire marketing mix. The aim is to assess how large is the market and determine the reactions
of consumers and resellers in an authentic setting. Most companies use test marketing basically
to lessen the risk of product failure. Test marketing can furnish valuable information about
buyers, dealers, and effectiveness of promotional efforts.
Test marketing is a fairly time-consuming process and has to be conducted for a sufficiently long
period to collect reliable information. The period of testing may be anywhere between a few
months to one year. Much depends on the company’s investment level and risk perceptions as
well as time pressures. Designing the programme for test marketing involves making a number
of decisions:
1. Where and in how many markets should the test marketing be carried out? Markets
should be a representative of target markets. Marketers generally consider two to six
markets in which to conduct test marketing.

2. What should be the duration of test marketing? Much would depend on the nature of the
product. For example, in case of consumer non-durables, average repurchase period should
be considered.
3. What to test? Marketers are interested in information that concerns consumer response to
promotion, trial rate, usage, satisfaction level, repurchase, and reseller reactions.

4. What criteria should be used to determine success or otherwise? The decisions would
concern trial rate, repurchase rate, adoption, and frequency of purchase.
Companies use various testing methods. Some of the more popular ones are:
Sales-wave: Consumers are offered free samples for trial and they may also be exposed to one
or more ads. Subsequently, they are offered the product at a reduced price. The product may be
re-offered three to five times. The number of consumers who select the product again, and their
satisfaction level, is recorded.
Controlled Test Marketing: An independent research providing company is hired and it is asked
to test the product by placing the product in a geographic area and in the specified number of
stores. The research firm decides the product’s price, promotion and store displays, etc. Finally,
electronic scanner data is collected at the checkout point. The research firm also interviews a
sample of customers to learn their responses.

Simulated Test Marketing: A sample of thirty or more customers is interviewed to determine
their familiarity and brand preference in a particular product category. This sample is then
shown a mixed bundle of commercials or print ads of company’s test-product as well as competing
brands. Consumers are then given a small amount of money and invited in a store to buy any
item. The researcher notes how many of these consumers buy the test-brand and competing
brands. This points out the advertisement’s relative effectiveness against competing ads of other
brands. Subsequently, consumers are interviewed to learn their reasons for buying or not buying
the company’s product. A free sample of company’s product is given to consumers who did not
buy the test-product and some weeks later are interviewed on telephone to learn their responses
concerning satisfaction and purchase intentions. This is a good method to evaluate the
effectiveness of ads and trial rate of the company’s product.

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