OBJECTIVES - TEST MARKET CONSIDERATIONS MODULE - PowerPoint PPT Presentation

• 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 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.

Product Development

Employee

Testing

Guidance

Testing

Expert

Evaluation

Test

Market

Market

Research

National

Roll-out

Marketing

• Product Development
• Manufacturing
• Marketing
• Sales
• Distribution
• Purchasing
• Distribution
• General Management

• When the risk is low
• When investment is low
• When competition can rapidly copy your product

• Standard
• Controlled
• Simulated (Laboratory)

1. Define objectives

2. Plan strategy

3. Determine methodology

4. Select markets

5. Execute plan

6. Evaluate results

• Number of cities
• Size of market
• Demographics
• Isolation of market
• Market factors

• Consumer awareness and attitudes
• Purchase Measures
• Reaction from competitors
• Cannibilization
• Next steps

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%

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%

• Product Reasons
• Technical problems
• Did not fit with concept
• Not unique
• Did not meet consumer needs
• Marketing Reasons
• Poor marketing plan
• insufficient marketing dollars

• 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?

• 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

• 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?

• 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

• Retail only
• Food Service only (HRI- hotels, restaurants, and institutions

– schools, hospitals, government agencies including military

• Retail and Food Service
• Industrial Users (Igredients)

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)

• 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

• 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