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OBJECTIVES - TEST MARKET CONSIDERATIONS MODULE. To learn the reasons for conducting a test market To learn the basic steps in test market studies To learn the role of Technology in a test market study. TEST MARKET DEFINED.

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objectives test market considerations module
OBJECTIVES - TEST MARKET CONSIDERATIONS MODULE
  • To learn the reasons for conducting a test market
  • To learn the basic steps in test market studies
  • To learn the role of Technology in a test market study
test market defined
TEST MARKET DEFINED

Test Markets are large-scale commercial marketing experiments in a limited geographic area chosen for very specific marketing-related reasons. They are part of the screening process for new products and provide the means to evaluate a product and its marketing program.

sequence of product testing
SEQUENCE OF PRODUCT TESTING

Product Development

Employee

Testing

Guidance

Testing

Expert

Evaluation

Test

Market

Market

Research

National

Roll-out

Marketing

who learns from test marketing
WHO LEARNS FROM TEST MARKETING?
  • Product Development
  • Manufacturing
  • Marketing
  • Sales
  • Distribution
  • Purchasing
  • Distribution
  • General Management
when not to test market or go straight to national distribution
WHEN NOT TO TEST MARKET (or, GO STRAIGHT TO NATIONAL DISTRIBUTION)
  • When the risk is low
  • When investment is low
  • When competition can rapidly copy your product
types of test markets
TYPES OF TEST MARKETS
  • Standard
  • Controlled
  • Simulated (Laboratory)
basic steps in conducting a test market
BASIC STEPS IN CONDUCTING A TEST MARKET

1. Define objectives

2. Plan strategy

3. Determine methodology

4. Select markets

5. Execute plan

6. Evaluate results

factors in selecting a market
FACTORS IN SELECTING A MARKET
  • Number of cities
  • Size of market
  • Demographics
  • Isolation of market
  • Market factors
learnings from test markets
LEARNINGS FROM TEST MARKETS
  • Consumer awareness and attitudes
  • Purchase Measures
  • Reaction from competitors
  • Cannibilization
  • Next steps
simulated test market data
SIMULATED TEST MARKET DATA

Purchase Test Weights Estimate of

Intent Scale Results Potential Trial

Definitely 25% .52 13.00%

Probably 30 .17 5.10

Might or might 35 .08 2.80

not

Probably not 7 .02 0.14

Definietly not 3 .01 0.03

100% 21.07%

simulated test market model
SIMULATED TEST MARKET MODEL

Estimated trial rate 21.07%

X X

Total awareness (Marketing Plan) 50.0%

X X

% Distribution (Selling Plan) 70,0%

=

Net cumulative trial 7.37%

X X

Ongoing repeat rate 30.0%

=

Ongoing unit sales rate 2.21%

reasons for test market failures
REASONS FOR TEST MARKET FAILURES
  • Product Reasons
    • Technical problems
    • Did not fit with concept
    • Not unique
    • Did not meet consumer needs
  • Marketing Reasons
    • Poor marketing plan
    • insufficient marketing dollars
considerations for technology
CONSIDERATIONS FOR TECHNOLOGY
  • What product should be put into test market?
  • Where should it be produced?
  • What samples should be retained?
  • What evaluations should be performed?
  • Should Technology make in-store visits?
  • What should you do with consumer comments?
key takeaways test market considerations module
Key Takeaways - Test Market Considerations Module
  • Use test markets to confirm and learn at reduced cost
  • Product Development should use test markets to verify technology selected and determine product quality and stability in a real-world situation
role out
ROLE-OUT
  • OBJECTIVES:
    • To be able to answer the questions as to -
      • When are you ready?
      • Where will you roll out?
      • How are you going to market you product?
when are you ready
WHEN ARE YOU READY
  • Test market results for consumer reactions are positive and sy GO
    • Launch new products initially in carefully selected geographic regions, taking into account deomgraphic and seasonal factors – versus a national role-out
    • Advertising and promotional strategies are in place, taking into account competition and based on consumer response in test market
    • Packaging and graphics have been evaluated and are ready to go
  • Manufacturing process yields products meeting consumer acceptance, quality, shelf-life, regulatory and cost requirements
where are you going to market
WHERE ARE YOU GOING TO MARKET?
  • Retail only
  • Food Service only (HRI- hotels, restaurants, and institutions

– schools, hospitals, government agencies including military

  • Retail and Food Service
  • Industrial Users (Igredients)
how are you going to market
HOW ARE YOU GOING TO MARKET?

Retail distributors control access to market

  • Usually, only only large regional and national manufacturers, with established product lines and reputations can get direct access to supermarket chains.
  • Small companies need food brokers or manufacturer’s representatives to bring buyer and seller together for new entries into market
  • Food Service distributors control access to HRI, except for government contracts.
  • Government contracts may be the best entry point into food service for small manufacturers (Small business set-asides)
timing for roll out for your new product
TIMING FOR ROLL OUT FOR YOUR NEW PRODUCT?
  • Appropriate timing can be critical!
  • Seasonal factors need to be considered
    • Season of the year
    • Holidays
  • Competitive activity
    • Don’t want to roll out just after major competitor has just introduced a new product
key take away
KEY TAKE-AWAY
  • The how, when and where of a product roll-out requires consideration of a large number of factors that depend on company size and marketing strategies