In this article we will discuss about:- 1. Meaning and Considerations of Test Marketing 3. Purposes of Test Marketing 4. Procedures in Test Marketing Plan.
Meaning and Considerations of Test Marketing:
The term ‘test marketing’ is also some- times called ‘field-testing’. The word ‘test’ means examination or trial. Test marketing, thus, means testing the product in the market before the product is commercialised on a large scale. This is done with a view to understand the market and the marketing considerations like nature of competition, nature of demand, and the consumers’ needs, etc.
Considerations of Test Marketing :
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In test-marketing, the following considerations are essential:
1. Identification of the different uses of the product.
2. Classification of the market from geographical angle with reference to the major uses or applications of the product.
3. Selection of one or two such cross-sectional markets as samples that represent the features and conditions of the whole market where the product is contemplated to be sold.
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4. Classification of customers such as rural vs. urban, white collar population vs. working class, age-wise analysis, etc. for the cross-sectional market areas.
5. Identification and grouping of the customers into consumer market, industrial market, reseller market, government market, etc. in order to distinguish the marketing characteristics.
6. Collection of pertinent information regarding the product and its features including the price from the different cross sections of the customers on whom the tests are made so that an in-depth analysis can be undertaken to understand their buying behaviour and interest.
Purposes of Test Marketing:
The purpose of undertaking test marketing are:
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1. To ascertain various uses of the product, the class or category of users, and the motives that prompt the users or buyers.
2. To gauge the nature of general competitive situations, latest trend in demand, etc.
3. To elicit the following fundamental information necessary for arriving at the proper marketing decision: specific product advantages and disadvantages, new uses or applications of the product, necessity or otherwise for the modification or improvement of the product, etc.
In a word, the basic objectives behind the test marketing are:
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(i) To sharpen the knowledge of the territory for marketing and
(ii) To decide marketing strategy with respect to pricing, promotions and distribution systems.
Procedures in Test Marketing Plan:
In test marketing, the following procedures are usually adopted:
1. The number of cities or towns or markets as test markets is determined at the outset. In doing so, the marketing management should consider the factors like representativeness of the area, cost of testing, regional differences, competitors’ efforts, etc.
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2. While deciding the above for test purposes, it is examined whether such markets are having the characteristics like – existence of trade centers, industrial infra-structure, population-mix, etc.
3. After having decided the test markets, the marketing manager carries out the test for a certain period. The duration of the test period depends on a variety of considerations. Of than the important factors are, existing position of competition, probable expenditure, and average repurchase period.
The competitive position influences the test duration in the sense that longer duration will give the competitors enough time to improve their products and introduce the same in the said markets. Again, too short a duration will not yield the desired results.
Again, higher the test duration higher will be the cost of such tests. Further, the repurchase period is directly proportional to the test duration. If the repurchases by the customers are very frequent, then a shorter duration of the test may give the required data.
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4. The next step is collection of pertinent information, during test marketing, by the marketing management for the purpose of detailed analysis. The marketer usually decides beforehand about the types of needed information which in general includes and extends to the product, customers, distribution channels, buyers’ behaviour, habits and customs, etc.
5. After having tested the market, the marketing management decides about the marketing mix and marketing strategy. If the sales are excellent and highly promising, a decision to commercialise a product is taken.
If the sales are not so bright, the underlying reasons are investigated for further improvement or modification and a retest is undertaken. If the sales indicated by test are poor, the management may drop the idea altogether.