39 terms

ch.18 Market testing

market testing
basic idea of market testing is to test the combined package of product and its marketing plan to see if it will be successful, before spending a lot of money on a product launch

implement the plan in a few cities and see what happens in the real marketplace, against real competitors, being bought by real customers

market testing is not test marketing
forms of market testing
test marketing
simulated test market
informal sale
market tests must have teeth
insights gained at this stage include:
solid sales forecasts with greater accuracy

diagnostic information to revise or refine any aspect of the launch
deciding whether to market test
what information is needed? ex: sales volumes

nature of marketplace
capability of testing methodologies
types of information that may be lacking
manufacturing process
vendors and resellers
pseudo sales
asks potential buyers to do something such as say they would buy the product if it were available

the action is distinct and identifiable, and much more of the marketing strategy is utilized in the presentation

little pain for the buyer - no pain no major risks
speculative sale
often used in b2b and consumer durables

give full pitch on product, answer questions, discuss pricing ask - if we make this product available as i have described it, would you buy it?
simulated test market
comes very early in the development process

create a false buying situation and observe what the customer does

utilizes ATAR mode

get estimates of trial and repeat rate

procedures: mall intercept, self administered questionnaire

drawbacks -

false conditions
mathematical complexity
may not be applicable to the new to the market products
informal selling
used for b2b products and consumer products sold directly to the end users

we ask them to buy
direct marketing
the sale of a primarily consumer product by the maker directly to the consuming unit by means of mail, telephone, etc.

cheaper than other techniques
select a limited number of outlets - each store is a minicity or minimarket

do not use regular local tv or newspaper advertising, but chosen outlets can advertise in its own flyers

ex: scanner market testing
scanner testing

infoScan: a system of auditing sales out of outlets selling grocery store products; a method of market test design and data gathering
full scale
all variable are go!
test marketing
a firm picks several markets to sell the new product into, and test all variables including competition,trade, ad, etc.

the product is sold in the regular channels and advertised at representative levels in local media

reduces risk and creates strategy improvement

costs $1 million, length, competitor can disrupt
the roll out
select a limited area of the country and monitor sales of product there
by geo, by application, by influence, by trade channel

gives management most of the knowledge learned from a test market; it has an escape clause without losing the full budget if things bomb

new product facility - roll out requires full plant
competitors may be able to move fast
available distributors are powerful and shady
rollouts tend not to be newsworthy
importance of market testing
opportunity to obtain solid forecasts of dollar and unit sales

the planners need diagnostic information to help them revise and refine anything about a product launch that seem to require it - product, packaging, communication effort, etc.
costs involved in market testing
direct costs
costs of the launch
lost revenue that a national launch would have brought
market testing and test marketing are synonymous
which of the following causes for new product failure does concept testing cover?
if there is a lacke of need for the product
concept testing
lack of need
product use testing
product does not meet need
market testing
marketed poorly
under which of the following situations will market testing be quick, if at all it takes place?
when competitors can take retaliatory action that will hurt a company launching a new product
visionary shopper
a virtual market testing technique in which a respondent is brought into a virtual retail store environment and encouraged to look around, take products off the shelf and read the label, and make purchases
direct marketing
involves real purchasing under some real competitive environment
which of the following is an advantage minimarket testing provides over test marketing
minimarket testing allows for greater flexibility in changing price and other variables of a new product when compared to test marketing
the controlled sale market testing method that involves distributors and retailers or dealers in the process?
most likely to make use of a rollout
full sale
sometimes called tiered marketing
market testing should typically be carried out:
once the ideation phase begins
identify the situation in which the marketplace may not be good for market testing
in the case of global launches
identify the method of market testing more likely to be used for packaged consumer products?
identify the method of market testing that is least likely to be used for industrial goods
direct marketing
which of the following is a pseudo sale method of market testing?
which of the following statements is true regarding speculative sale?
it creates a false buying situation and observes what the consumers do
informal selling is a _________sale method of market testing
which of the following methods is a variation on minimarkets?
informal selling
_______ is sometimes called tiered marketing or limited marketing
direct marketing
the rollout:
cannot avoid the problems of a test market