Test markets offer marketers the opportunity to test new ideas before incurring the expense and risk of a national introduction. Marketers use test markets to experiment with: Show
There are three types of test markets: Standard test markets, controlled test markets, and simulated test markets. Marketers of consumer packaged goods are the primary users of test markets. Consumer packaged goods (CPGs) are products that are sold in packages that consumers use almost everyday. Due to the low cost of switching products and the short purchase cycle, consumer packaged goods markets are very competitive. Consumer packaged goods include breakfast cereal, packaged coffee brands, carbonated soft drinks sold in cans or bottles, laundry detergent, over-the-counter analgesics, soap, and cigarettes. Standard Test Markets: Standard Test Markets are like a normal national marketing campaign except that they are conducted in a limited number of cities that are a fair representation of the national market. The marketer does everything in these test cities that it would do in the national market. The sales force sells the product to distributors and retailers. Marketing mix strategies are devised and implemented. To measure the performance of the test market, the marketer tracks sales, conducts surveys of consumers and distributors, tracks in-store activities. Results are then compared to the national campaign. The advantage of a standard test market is that the marketer gets to measure the real-world performance of its marketing plan. But, there are a number of serious disadvantages. The primary disadvantage is that competitors learn about the marketer's new product or new marketing strategies well before the national introduction. This gives competitors ample time to prepare a counter attack and an opportunity to interfere with the test market. Other drawbacks are that standard test markets are very expensive and can take as long as three years to complete. Controlled Test Markets: Controlled test markets provide marketers with an artificial testing venue that is cheaper and faster than standard test markets. Two companies offer controlled test markets: ACNielsen's Scantrack and Information Resources Inc.'s BehaviorScan. Controlled test markets are used most often with new product introductions. With a controlled test market, the research supplier offers the marketer a panel of stores. Suppliers monitor the checkout scanner data to measure initial and repeat purchases as well as the sales of competitive products. Distribution of the marketer's brand is "forced" into these stores. This has an advantage and disadvantage. The advantage is that distribution is guaranteed. The disadvantage is that the marketer cannot gauge retailer's reactions to the new product. Other disadvantages of controlled test markets are that competitors can look at the new product before its national launch. Another concern is that even though the Scantrack and BehaviorScan propriety models are very sophisticated, it is questionable whether the shoppers at the test stores actually represent "average" targeted consumers for the brand being test marketed. Simulated Test Markets: Like controlled test markets, simulated test markets were designed to overcome the drawbacks of standard test markets. Simulated test markets are not conducted in real-world markets; they are laboratory tests. A simulated test market is a staged or artificial marketplace where researchers expose subjects to advertising and other marketing mix variable to gauge the subjects' purchase intent. Simulated test markets are significantly faster and cheaper than standard test markets because the marketer does not have to execute the entire marketing plan. The companies that run simulated test marketing—ACNielsen's Bases, Harris Interactive's Litmus, and Synovate's MarkeTest—use a variety of mathematical models to estimate the effects of the tested variables. Here is how a simulated test market works:
Test Market ConsiderationsBefore committing the investment of time and money, marketers should consider the following questions: What should a marketer look for when deciding on a test market city?Because test markets often run 1 to 3 months, there is plenty of time for product leaks to occur during that time. To avoid this, you should choose a city where it would be easy to isolate media and prevent it from escaping to other locations.
What makes a good test market city?The criteria used to judge the acceptability of a test market region or group include: a population that is demographically similar to the proposed target market; and. relative isolation from densely populated media markets so that advertising to the test audience can be efficient and economical.
Which factors should be considered in test market selection?When selecting test markets the following criteria are typically used:. The markets should not be over-tested.. The markets should be 'normal' regarding the historical development of the product class involved.. The markets should be typical regarding the competitive advertising situation.. What are test markets in research?Test marketing is a method that aims to explore consumer response to a product or marketing campaign by making it available on a limited basis to test markets before a wider release. It's important to note that customers exposed to the product or campaign may be part of a test group without the customers' knowledge.
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