Why do most firms consider test marketing essential for new products?

Marketing Teams often find Market Research a tedious task. Why? Although through the test marketing campaign, a marketer may ascertain the success ratio and improvement areas to beat the competition, its accuracy, and secrecy is always a challenge as per marketing folklore.

What makes the test marketing sometimes more difficult, is that the goals of the test marketing are sometimes unclear to the marketing executive,. Besides, once the information is once gathered, it is often not used up to the mark in comparison to the potential it holds. The problem piles up as test marketing also has major disadvantages. One of the biggest risks is that the competition learns about its product. Hence Brand’s must weigh the scale of risk its disadvantages against key advantages and then only the decision must be evaluated.

This article is aimed at exploring various benefits and challenges of the new product test marketing, and most importantly, the possible alternatives to deal with those challenges.

AT A GLANCE — WHAT IS NEW PRODUCT TEST MARKETING?

The market test is generally carried out to ascertain the performance and probable market success of the new products. It provides necessary information on the level of product acceptance, viability and customer satisfaction before it is launched in the market on a large scale.

There are two primary kinds of test marketing — Consumer Product Test Marketing and Industrial Product Test Marketing.

A. Consumer-Product Market Testing is conducted to know consumer behavior in terms of Consumer Trial, Repeat, Adoption and Re-purchase and Purchase Frequency.

To ascertain these variable, following subtests under Consumer-Goods Marketing are conducted:

1-Sales-Wave Research:

Under this test, the consumer is offered the product multiple times, free of cost. This is done to determine the consumer’s willingness on every free offering.

Example: Distribution of Shampoo sachets, for the acceptance test is one good example of this.

Benefits: Can be done with limited quantity and without final packaging.

Challenges: Consumers often pick up free samples from various tets marketing venues/booth without offering feedback, resulting in wastage of product with no outcome evaluation base.

Possible Solution: At the time of handing over the sample, consumer details can be collected and can be followed up later. Brands have started offering free samples through online orders, which automatically limits the wastage of free samples and also records consumer details for follow-ups and retargeting.

2-Simulated Test Marketing:

In this technique, 30–40 selected consumers are invited to the store and offered a money card having little shopping balance for buying anything. The new products are placed along with the old or competitor’s product in order to ascertain consumer’s preference and product selection.

In case, the new product is not chosen by them, free samples are offered to them. A few weeks later, they are inquired telephonically about their product experience.

This test marketing offers demand forecasting and helps the management to make the “go/no-go” decision, prior to new product launch.

Example: Sanitizers, Make Up items and food sample for tasting gives good responses that can be measured.

Challenge: Slight possibility of the product gets exposed to the competition, before launch.

Possible Solution: Could be done amongst employees, like business goods alpha testing. The only additional cost would be to buy competition products, which is better in comparison to exposing any revolutionary technology to the consumer.

3-Controlled Test Marketing:

Under this testing method, the brand’s select certain stores in different geographic areas and ask them to keep their new product into their stores in return for a fee. Brand’s controls the shelf position, displays, point of purchase promotions and pricing.

Example: New cold drinks, cookies, etc at the grocery shop near the cash counter is one good example of this.

Challenges: Possibility of the product getting exposed to the competition is higher.

Possible Solution: Similar to Simulated Test Marketing.

4-Test Markets:

In this, brands choose the representative cities for the full-fledged pilot launch, right from the promotion campaign to the ultimate sales. Once successful, it is then launched nationally.

Example: Although not exactly a product,brand owned exclusive outlets are a good example to analyze launch performance and consumer acceptance.

Challenges: Possibility of the product getting exposed to the competition is maximum. It demands an immediate launch and a narrow situation and involves other substantial costs of advertising expenditure, salesforce time and involvement, the reputation of the company, the store shelf space required by the new product, the production limitations that always escort any new product introduction.

Timelines must be followed stringently. The problem is often faced by the brands is that the new products aren’t developed yet in a systematic enough way for the marketing team to plan and execute thoroughly.

Possible Solution: A structured planning calendar and overall expense planning, and cohesive work culture of all the department — from product development to Marketing to Operations could expedite the process. If the expenditure decision can be deferred until the time projected sales success can be estimated a measured, then this test marketing is certainly desirable.

B. Industrial/Business-Product Market Testing encompasses Alpha testing (conducted within the firm through employees) and Beta testing (conducted with outside customers, often through trade shows, distributors and dealers, wherever the attention of the customers can be gained).

Challenges: The biggest challenge often encountered is through Alpha testing. It could be that selected consumers are not the well-defined target audience for the same.

Possible Solution: Businesses can have a trusted and experienced panel of Consumer Feedback Survey and Response Forecasting for the Industrial goods, before conducting the test marketing.

HOW NEW FLAVOUR OF COKE FAILED THE TEST — AN UNFORGETTABLE CASE OF THE CENTURY!

Let us visit the history of the 1980s. Did you hear the tale of New Coke failure? Although coke never revealed how much have they lost exactly, online media anticipates that they spent $4 million in its development phase, and–after a huge failure, $30 million to pull New Coke from the shelves. Forget about what all would have got spend during the test launch.

Where did they go wrong?

Their market research team conducted 200,000 taste tests and confirmed that the subjects preferred New Coke over both Classic Coke and Pepsi. But, as it turns out, neither the taste preference was the only factor nor that was the consumer’s aspiration. And thus, Coke learned a rocky lesson.

We all know the war between Coke and Pepsi.And the moment Pepsi in the 1980s positioned itself as the young person’s drink through an outstanding campaign. Coke lost its grip against and only controlled 24 percent of the market share as per the online reports.

Coke decided to make a move with a new Coke formula. And an inaccurate test market research that consumers preferred New Taste, over both old Coke and Pepsi, led to massive losses. Another grievous mistake they made was that they had done testing only on the taste parameter.

In the end, all settled, Classic Coke was reintroduced and Coke made potentially more profit in comparison to the previous, with the coming back of new Classic Coke. However, with this grave footprint in the history of marketing, how should brands decide for new product launch and test marketing!

WHAT SHOULD BRAND’S DO?

The products mentioned as an example here, are just a handful of them, however, it completely depends on the product, it is TG and management’s objective — as to which method for the test marketing must be opted for, or if the test Marketing should ever be considered?

Test Marketing ensures to reduce the risk of a mass-scale launch expense — and if the product fails, a test then certainly saves significant costs. A successful test marketing paves the way to tweak the marketing mix before the full launch.

However, test marketing medium must be thoughtfully weighed before executing, as it is possible that the desired results can easily be gathered with today’s modern Digital surveys, instead of expensive and time-consuming Traditional method of the Test Marketing. However, whatever be the medium, the potential of the test marketing cannot be ignored at the same time.

Although there are a plethora of parameters before deciding the new launch test marketing, brands must ensure to evaluate the following parameters:

· Weigh the cost of product failure against the profit and new product success probability.

· If at all brand image and monitory loss could happen, brands must compare whether Test Launch loss would be higher or the National Launch with a limited edition.

· The pace with which the Competition would be able to copy the idea.

· Will new product launch entails the additional manpower, machinery, and plant set up which would become a liability in case of failure, or it can be managed with the available resources.

· Is your product compatible with a time-bound online test marketing as online is fast-paced and helps in quick decision making.

· Can Test Marketing be done at a micro-level rather than a full-scale test marketing.

.The customer holds all the Aces and there are a number of techniques to get the product feedback, however, nothing can ever replace the Test Marketing. Market situations and trends are volatile, and only test marketing can help to get the actual new-product acceptance matrix. This is one of the important reasons, why Test Marketing will continue to be an important tool of the Marketing Strategy. The need is to carefully analyze the decision parameter and opt for the safest Test Marketing.

Visit us: empulsemarketresearch.com

At eMpulse, our team of experts conducts the best suited Test Marketing medium or a mix of few, with close monitoring to ensure secured evaluation. Importantly, we design Test Marketing Strategies in your desired budget that discovers maximized outcomes.

Call us on 6364396848 to know more empulsemarketresearch.com about eMpulse Test Marketing Strategies.