Download Conducting Effective Test Marketing

Conducting Effective Test Marketing
by BNET Editorial
Tags: marketing, test marketing, launch
When launching a new, mass-market product or marketing campaign, you should first
conduct a small-scale launch or other customer research in a test market. The purpose of
this type of test marketing is to gauge how products will be received on a wider scale.
Test marketing helps ensure your product and marketing strategy are sound, and it can
also provide you with valuable information on customer response, marketing channels,
and distribution issues. With the results from your test market in hand, you can move
forward with your full product launch with confidence, or if necessary, refine your
marketing strategy.
What You Need to Know
Do the benefits of test marketing outweigh the risk of giving information to
the competition?
Definitely. Though there is some risk that competitors with learn something about your
new products or launches when you conduct test marketing, it is rare that they would
learn enough to get a full indication of your plans. Failing to test, however, may result in
far greater loss if your product fails due to inadequate pre-launch information.
Does poor performance in a test market mean I should abandon the
product?
It depends on why performance was poor. Keep in mind that many factors may result in a
product not performing to expectations, including advertising, packaging, distribution
channels, or consumer knowledge. Use your test results to identify weak points and refine
your marketing strategy. Sometimes, though, the results in a test market will reveal more
fundamental problems, and in this case you may choose to discontinue your launch.
Many products fail in the market, so it is advised to have complete confidence before
moving forward.
Can I do test marketing for a business product?
Yes, but your approach for a business product would likely be different, with a focus on
product evaluation by select customers. Test marketing in specific regions is most
common in consumer markets, because the media have developed more of an
infrastructure in this area to help companies.
What to Do
Establish Goals
Before moving forward with a test market, have a clear picture of what you are
evaluating. For instance, test marketing can provide information on product performance,
customer knowledge, advertising or promotion requirements, and distribution. Knowing
your goals will help you pick an appropriate testing method.
There are several forms of test marketing:
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working with a small group of customers who provide direct product feedback;
conducting a regional product launch prior to a full launch;
using a targeted direct marketing program to evaluate advertising strategies; or
conducting an Internet test.
Conduct a Test with Select Customers
Having a small group of customers evaluate a product and provide feedback is very
common in technology industries, where it is called beta testing. Customers test and
provide feedback on new products or upgrades before they are released to the full market.
The feedback provided is used to make improvements and fix potential problems. Small
group testing also is common for business product launches.
There are many benefits to involving customers in product evaluations:
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Involving customers in the development process makes them feel more invested
in the product—and by extension, your company.
Feedback from customers can provide invaluable input to the development
process.
Research provides important information on customer attitudes.
Research allows you to communicate with customers about future product
developments. (For business customers, this allows them to take into account your
future developments as they make their own product development plans.)
Conduct a Regional Launch
Conducting a product launch regionally before a full launch allows you to see how a
product performs in a test market and assess your marketing strategy before going
nationwide. A test launch should be carried out exactly as you plan to carry out your full
launch. As with your mass-market launch, you should:
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secure media coverage and advertising;
train your sales force and provide incentives;
use selected retailers and distributors;
train retailers and provide incentives;
send direct mail to select customers;
offer product samples; and
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conduct pre-launch and post-launch research and evaluation.
Below are some tips for operating a successful regional launch.
Select an Area That Matches Your Target Market
Take care that your selected area reflects your full market as much as possible. Consider,
for instance, the demographic characteristics of people in the area and ensure they are
similar to those you hope to attract on a broader scale. If you are testing a business
product, be sure to include a cross-section of small, medium, and large accounts.
The area you select for your regional test also should offer a variety of advertising media
that reflects what you plan to use nationally in press, radio, television, and online. If
direct sales is a large part of your strategy, you might identify one of your geographic
sales regions for a regional test.
Use Media Resources Wisely
National and local media are a great resource for identifying test regions, because many
produce information packets specifically to promote their regions as test markets. These
packets contain information on demographics, spending patterns, retail operations, and
media coverage. Some media owners offer other resources as well, including facilities
and support to assist smaller companies in conducting tests. They may even be able to
carry out test distribution and sampling, or provide you with a contract sales force.
Establish Test Objectives
Whether you are testing your full campaign or just wish to evaluate just a few variables,
it is important to clearly identify your objectives. These may include evaluating:
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customer response
advertising effectiveness
media mix
various creative approaches or messaging
sampling effectiveness
packaging
special offers
price variations
sales and retailer incentives
Establish Advertising Objectives
As in a full product launch, advertising can play various roles in a test launch. These
might include:
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increasing product awareness;
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communicating product benefits;
generating leads for the sales force or retailers;
convincing prospects to buy directly through a direct response mechanism;
encouraging prospects to switch brands; or
communicating product information or how to buy.
Be sure to be clear about your advertising objectives during your test launch, so that you
can evaluate its effectiveness precisely.
Conduct Research Before and After Testing
To see changes in customer product awareness, advertising recall, attitudes, and
responses to different creative approaches, be sure to conduct research before and after
you launch your regional test. This will allow you to evaluate more clearly the
effectiveness of your campaign.
Evaluate Distribution Channels
A regional test offers a great opportunity to evaluate resellers, retailers, or other indirect
channels for distributing your product. Here are some questions you might ask:
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Are resellers prepared to stock the product?
What incentives are required to achieve target stock levels?
How well do various retailers display the product?
What retailer training is required?
What retail support is needed?
How effective are point-of-sale campaigns?
Evaluate Competitive Response
One risk of test marketing is that it can inform competitors about your product or launch
plans. This offers a benefit too, though, in that you can evaluate the competitive response
and anticipate what will happen during your full product launch. Be sure to evaluate:
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increased advertising among competitors in the test region;
higher levels of reseller support offered; and
attempted spoiling tactics to limit your campaign’s effectiveness.
Use Direct Marketing
Using direct marketing is one way you can conduct a market test while sharing minimal
information with your competitors. Though they still may be aware of your campaign,
they will be less able to measure its size and scope. A number of variables can be tested
through direct marketing campaigns, including:
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offers
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creative approaches
target customers
response mechanisms
frequency and timing
Various ways you can carry out your campaign include:
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using a representative sample of your target audience
in a specific sales or geographical region
in a defined sector of your target market
It is easy to evaluate the effectiveness of a direct marketing campaign. The most effective
will be the one that has the highest response levels.
Conduct an Online Test
Testing products on the Internet offers the advantage of speed and allows you to evaluate
a broader geographic region with minimal expense. Other advantages include:
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You can carry out your test anywhere throughout the world.
You can test a full product range without physical limits.
You can easily customize displays, pricing, and products for different customer
groups.
You can obtain a high volume of information in a short period of time.
What to Avoid
You Don’t Test the Market
Considering the significant investment required for a new product launch, and the high
rate of new product failures, it is careless not to do test marketing. Test marketing allows
you to make refinements to your marketing strategy as necessary, so you can move
forward with your product launch confidently.
You Choose a Test Area That Doesn’t Reflect Your Market
Be sure your test market reflects your full target market as nearly as possible. This will
allow you to replicate the conditions of the full market with the greatest possible accuracy
and increase your test’s significance. To learn about specific regions, take advantage of
information on specific geographic areas offered by media outlets.
You Fail to Evaluate Factors Critical to Success
It is important to clearly identify factors critical to your success before conducting your
test and include them in your evaluation. Be sure to be clear about your test objectives.
Where to Learn More
Book:
Gorchels, Linda. The Product Manager’s Handbook. 3rd ed. Chicago: McGraw Hill,
2005.
Web Site:
American Marketing Association: www.marketingpower.com