When a decision is taken about manufacturing and introducing a new product into the market, the firm develops the product as such. A pilot production facility is set up. By this time, the firm is by-and-large committed to the new product, in the actual development of the product, production and marketing departments are actively involved, besides R&D.
Now, the new product has to be tried out in selected, market segments. Normally, firms go in for full-scale manufacture and marketing of the new product only based on the result of some experimental marketing. Market test helps achieve this purpose. Market test is essentially a risk control tool. It is experimental marketing at minimum cost and risk. When firms decide on full-scale manufacturing and marketing of the product on the basis of the results of the experiment, it helps avoid costly business errors.
Commercialization of new products without market test may land the firm in trouble. It may so happen that the product was not the right one, or was too expensive. Market test will bring to the fore such relevant facts. The firm may opt to drop the new product idea and avoid further investment. On the contrary, if the results received are positive and encouraging, the firm may go ahead with the commercial production and marketing of the new product.
Different methods of Market Test
Different methods are available under market test, like:
* Sales wave research
* Simulated test marketing.
* Test marketing.
Of these, test marketing is the most reliable method as it amounts to a full-fledged marketing program, but on a pilot scale.
In test marketing, the new product, with the support of the chosen marking mix, is actually launched and marketed in a few select â€˜testâ€™ cities/towns/other territories. The selected â€˜test marketsâ€™ will be representative of the final market.
Test marketing needs careful handling. Care is required in the first place in selecting the â€˜test marketsâ€™. Care is also required in monitoring the marketing and in analyzing ad interpreting the results. Test marketing is also a time-consuming process; it has to be carried out for a fairly long duration in order to obtain reliable indications. It is possible for competitors to manipulate the test marketing process and make the results unreliable.
In India, many companies are now resorting to test marketing before commercialization of new products. For example, when HLL launched Organics, the shampoo with glucasil, it did some test marketing, as a part of which, it sampled around 30 million sachets in selected market territory, both urban/semi-urban. TTK group test marketed Yummies, a snack food and Vazir Sultan test marketed Charms cigarettes. Metropolitan test marketed their shirts for a period of six months in Bangalore, before going in for full-scale marketing.
It has to be noted that market test is not synonymous with test marketing. The latter is actually one kind of market test.
At this stage, the company takes the decision to go in for large â€“ scale manufacturing and marketing of the product. It gets to this stage only when all the previous steps provide favorable signals. At this stage, the company fully commits itself to commercialize the new product with the required investment in manufacturing and marketing.