Last Updated May 2, 2007 7:28 PM EDT
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.
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.
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.
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.
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:
- 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.
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:
- 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.)
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:
- 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
- conduct pre-launch and post-launch research and evaluation.
Below are some tips for operating a successful regional launch.
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.
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.
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:
- customer response
- advertising effectiveness
- media mix
- various creative approaches or messaging
- sampling effectiveness
- special offers
- price variations
- sales and retailer incentives
As in a full product launch, advertising can play various roles in a test launch. These might include:
- increasing product awareness;
- 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.
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.
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:
- 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?
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:
- increased advertising among competitors in the test region;
- higher levels of reseller support offered; and
- attempted spoiling tactics to limit your campaign's effectiveness.
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:
- creative approaches
- target customers
- response mechanisms
- frequency and timing
Various ways you can carry out your campaign include:
- 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.
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:
- 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.
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.
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.
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.
American Marketing Association: www.marketingpower.com