Consumer Goods – Marketing Testing

In testing consumer products, the company seeks to estimate four variables: trial, first repeat, adoption, and purchase frequency. The company hopes to find all these variables at high levels. In some cases, it will find many consumer trying the product but few re-buying it; or it might find high permanent adoption but low purchase frequency (as with gourmet frozen foods).

Sales wave Research: In sales wave research consumers who initially try the product at no cost are reoffered the product, or a competitor’s product, at slightly reduced prices. They might be reoffered the product as many as three to five times (sales waves) with the company noting how many customers selected that product again and their reported level of satisfaction. Sales wave research can also expose consumers to one or more advertising concepts to see the impact of that advertising on repeat purchase.

Sales wave research can be implemented quickly, conducted with a fair amount of security, and carried out without final packaging and advertising. However, it does not indicate the trial rates that would be achieved with different sales promotion incentives because the consumers are pre-selected to try the product, nor does it indicate the brand’s power to gain distribution and favorable shelf position

Simulated Test Marketing: It calls for finding 30 to 40 qualified shoppers and questioning them about brand familiarity and preferences in a specific product category. These people are then invited to a brief screening of well known and new commercials or print ads. One ad advertises the new product, but it is not singled out for attention. Consumers receive a small amount of money and are invited into a store where they may buy any items. The company notes how many consumers buy the new brand and competing brands. This provides a measure of the ad’s relative effectiveness against competing ads in stimulating trial. Consumers are asked the reasons for their purchases or non purchase. Those who did not buy the new brand are given a free sample. Some weeks, later, they are re-interviewed by phone to determine product attitudes, usage, satisfaction, and repurchase intention and are offered an opportunity to repurchase any products.

This method gives fairly accurate results on advertising effectiveness and trail rates (and repeat rates if extended) in a much shorter time and a fraction of the cost of using real test markets. Pretests often take only three months and may cost $250,000. The results are incorporated into new product forecasting models to project ultimate sales levels. Marketing research firms report surprisingly accurate predictions of sales levels of products that are subsequently launched in the market.

Controlled Test Marketing: In this method, a research firm manages a panel of stores that will carry new products for a fee. The company with the new product specifies the number of stores and geographic location it wants to test. The research firm delivers the product to the to the participating stores and controls shelf position; number of facings, displays, and point-of-purchase promotions; and pricing. Sales results can be measured through electronic scanners at the check-out. The company can also evaluate the impact of local advertising and promotions.

Controlled test marketing allows the company to test the impact of in-store factors and limited advertising on buying behavior. A sample of consumers can be interviewed later to give their impressions of the product. The company does not have to use its own sales force, give trade allowances, or “buy” distribution. However, controlled test marketing provides no information on how to sell the trade on carrying the new product. This technique also exposes the product and its features to competitors’ scrutiny.

Test Markets: The ultimate way to test a new consumer product is to put it into full blown test markets. The company chooses a few representatives cities, and the sales force tries to sell the trade on carrying the product and giving it good shelf exposure. The company puts on a full advertising and promotion campaign similar to the one it

Would use in national marketing. Test marketing also permits testing the impact of alternative marketing plans by varying the marketing program in different cities: A full-scale test can cost over $1 million, depending on the number of test cities, the test duration, and the amount of data the company wants to collect. —