Table of Contents
- 1 New product testing is often required within the new product development process.
- 2 Marketing Decisions
- 3 Market Testing Options
- 3.1 Simulated Test Marketing
- 3.2 Scanner Based Test Marketing
- 3.3 Testing Industrial Products
- 3.4 Factors and Test Marketing
- 3.5 Selecting Product Testing Sites
- 3.6 Length of the Test
- 3.7 External Influences
- 3.8 Interpreting Results
- 3.9 New Product Models
- 3.10 Customer Adoption Process
- 3.11 First Purchase Models
- 3.12 Repeat Purchase Models
- 3.13 Selecting a Model
- 3.14 Commercialization
- 4 The Marketing Plan
New product testing is often required within the new product development process.
New product testing is essential for any product.
Guidelines for marketing strategies depend on the new product being developed. The new product requires a complete targeting and positioning strategy.
Product modification only needs a revised communication strategy to convey to target buyers information on the benefits offered by the improved product.
Regardless of how new the product actually is, the review and assessment of the product’s entire marketing strategy can help avoid problems and identify opportunities.
Use test and product evaluation efforts conducted before product development often provide important information for designing a new product marketing strategy.
Such information includes potential buyer characteristics, product features, advantages over competing products, usage relations, feasible price range, and communication needs.
It is important to begin developing a marketing strategy as soon as possible in the process of new product planning since several activities must be completed. Marketing strategy analysis and planning should be initiated during product development.
Coordination activities such as packaging, product information, colors, materials, and product safety, must also be coordinated between engineering, manufacturing, and marketing.
Selection of the market target(s) for the new product range from offering a new product to an existing target to identifying a new group of potential buyers.
A review of all prior marketing research for the new product may yield useful insights into targeting opportunities. It may also be necessary to test market the product before finalizing the market targeting strategy.
Positioning must be resolved during the marketing strategy development stage. Product strategy regarding packaging, named selection, size, and other aspects of the product must be decided on. If new channels of distribution are used, the firm must develop a channel strategy.
Management must also formulate a pricing strategy. Research on price may be necessary to gain feedback on buyers’ responsiveness to alternative price levels.
The company needs to develop an advertising and sales promotion strategy, and testing of advertisements may occur at this stage. Finally, The Firm must select a personal selling strategy, including necessary salesforce training and adjustment in selling efforts.
Market Testing Options
Market testing can be considered after the product is fully developed. Provided that the product is appropriate for market testing. Market testing often gauges a response to the new product and test one or more positioning strategies.
Test marketing is popular for many consumer non-durable products such as food, health, and beauty aids. In addition to conventional test marketing, less expensive alternatives are available.
The following testing elements are explained:
- Simulated test marketing
- Scanner based test marketing
- Conventional test marketing
- Testing Industrial Products
- Factors and test marketing
- Selecting test sites
- Length of the test
- External influences
- Interpreting results
Simulated Test Marketing
Marketing analysts can implement this test method by recruiting shoppers at a shopping center.
The consumer is asked to read an advertisement for the new product and get a sample to take home. Follow-up telephone interviews evaluate the consumer’s experience with the new product.
Test conducted over a 90-day period can be quite useful and weeds out failures, but they are less useful in predicting Market success. Simulated test marketing can be conducted much faster than conventional test marketing.
It is far less expensive it is not as visible to the competition. The product is not advertised and is not available in stores.
Simulated test marketing includes the following steps:
- Recruiting participants for the test– either a general audience or a more specific group of respondents.
- Securing background information– usually awareness, usage, attribution, and demographic data.
- Exposing test participants to information regarding the new product and attempting to create interest in the product by representing its primary value proposition.
- Determining the reaction to the test product before use in assessing the determinants, if any, to trial.
- Determining the reaction to the test product after use and assessing the determinants, if any, to repurchase.
Scanner Based Test Marketing
This test method (scanner testing) is less artificial than simulated testing and is less expensive than a conventional test. The participants receive an identification card to show two participating store cashiers.
Purchases are electronically recorded and transmitted to a central data bank. Cable television and enables controlled advertising tests.
Companies can use scanner testing to evaluate various aspects of the marketing strategy, including what kind of advertising attracts different people.
Conventional Test Marketing
This form of testing puts the product under actual market conditions in one or more test cities. It is used for frequently purchased consumer products. Test marketing uses a complete marketing program, including advertising and personal selling. Product sampling is often an important factor in launching a new product in the test market.
The product is marketed on a commercial basis in the test cities, and test results are then projected to the National or Regional target market. Because of its high costs, conventional test marketing represents the final evaluation before full-scale market introduction.
A test can cost more than $1 million. Companies sometimes decide not to test the market in order to avoid competitor awareness, eliminate testing costs, and accelerate introduction.
Testing Industrial Products
Market testing is appropriate for various industrial products. Test sites may need to include more than one or two cities to cover the test sufficiently. The testing company has substantial control of an industrial product test since it can use direct mail, email marketing, and personal selling.
The relatively small number of customers also makes it easier to target marketing efforts. The product should have the characteristics necessary for testing. It should be producible in test quantities, relatively inexpensive, and not subject to extensive buying-centered influences throughout the company.
Factors and Test Marketing
The basic purpose of test marketing is to protect how the new product will perform during full-scale commercialization. Many factors are important in testing, like selecting good test sites, determining the length of the test, controlling for external influences on the test, and interpreting results.
Selecting Product Testing Sites
The test site should have the market and environmental characteristics of the commercial target market. Since no site is perfect, the objective is to find a reasonable match between the test and the commercial market.
Each test city should be isolated from the other city, contain people generally comparable to the target market profile. These cities should also have a representative media mix, offer research and audit services, providing a diversified socio-economic cross-section of people, and exhibit no unusual environmental characteristics.
Length of the Test
The length of the test is important in obtaining valid test results. Manufacturers need 10 months to be reasonably sure that market share data are representative. The market test can sometimes take over one year. I’ve seen some micro-brands being test marketed with Facebook ads and Instagram ads and can take as little as 30 to 60 days with valid results.
The most troublesome external factor that may affect test market results is the competition that does not operate on a normal basis.
Competitors may attempt to drive test market results awry by increasing or decreasing their marketing efforts. It is also important to monitor the test market to identify other unusual influences during the test period. Unusual economic conditions may affect test results for some products.
Various conditions are important in interpreting test results. In addition to the length of the test and external factors, the nature and composition of the results should be analyzed. Determining the characteristics of the buyers provides important information for targeting.
Repeat purchase data are essential to determine whether the product will be repurchased. Several new product models are available for analyzing test market data and predicting commercial market success.
New Product Models
Analytical models have been developed for predicting sales and market share from test market data. Some newer models also consider the effects of marketing mix components. The dimensions of product newness in repeat purchases provide a basis for classifying available models.
The models fall into two categories:
- First purchase models designed to predict the cumulative number of new product try overtime.
- Model design to protect the repeat purchase rate of those buyers who have tried the product.
The latter type combines an inappropriate first purchase model with a repeat purchase model. A brief overview of the customer adoption process for new products sets the stage for an examination of the two types of models.
Customer Adoption Process
Research concerning the adoption of innovations indicates that:
- New product adopters follow a sequence of stages in their adoption process
- Their characteristics vary according to how soon they adopt the product after the introduction
- Adoption findings may be a value in new product planning
The adoption stages are awareness, interest, evaluation, trial, and adoption. By identifying and targeting such early adopters, companies may be able to accelerate the adoption of a new product. Early adopters also tended to draw from a variety of information sources and are more cosmopolitan than later adopters.
First Purchase Models
The concept of these models is a diffusion of the new product into the market. The models generate a life cycle sales curve using a mathematical model with a number of parameters. The parameters are estimated based on the experiences of similar products, consumer pretest, or early sales results. The range of models extends from a simple exponential curve using market potential in the rate of penetration as parameters, to more complex, multi-stage models.
Repeat Purchase Models
A wide variety of consumer and industrial new products are non-durables that are repurchased on a regular basis. Several repurchase models have been developed for projecting sales of these products and for evaluating marketing program positioning strategy combinations. The assessor model illustrates this class of models.
This model evaluates the new product before test marketing but after decisions have been made regarding positioning strategies. Management can use this information with direct behavior and attitude data from the laboratory and used tests, to generate market share predictions and diagnostic information.
Trial/repeat and attitude models are built into assessors. The model uses two approaches to estimate the brand’s market share. This is a key feature. The use of laboratory facilities in the simulated shopping experiment is also innovative.
Model applications like assessors are expensive, but they cost a small fraction of a market test or full-scale commercialization. Considering the stakes involved in the introduction of a new product, the use of modeling to reduce risk is likely to expand in the future.
Selecting a Model
The choice of a test market model should be matched to the specific new product planning situation possibilities range from sales projections to marketing mix variable analysis.
Management may prefer to introduce its products one at a time to assure complete attention to and control over the introduction. Introducing new products requires a sequence of decisions including a complete marketing plan, coordinated introduction activities of all business functions, and monitoring and control over the product launch.
The Marketing Plan
The commercialization stage (also called the go-to-market stage) requires a complete marketing strategy. The strategy should indicate actions, responsibilities, and deadlines. It should be discussed with various people responsible for the introduction, including salespeople, sales managers, and managers and other functional areas such as production, distribution, finance, and human resources.
An important decision a new product introduction is the timing and geographical scope of the launch. The options range from a national market introduction to an area by area rollout. The national introduction is a major endeavor, requires a comprehensive implementation effort.
Some companies prefer to introduce the product on a stage-by-stage basis. This reduces the scope of the introduction and enables management to adjust marketing strategies based on experience gained in the early stages of the launch. One limitation of the rollout approach is that it allows competition more time to develop and introduce competing products.
Monitoring and Control
Real-time tracking of new product performance at the commercialization stage is important standardized information services are available for monitoring sales of products such as food, health, beauty aids, and prescription drugs.
Information is collected through store audits, consumer dairy panels, and scanner services. Special monitoring studies may be necessary for products that are not included in standardized information services.
Management should include product performance standards in the new product plan to evaluate how well the product is performing. Performance targets often include profit contribution, sales, market share, in return on investment objectives.
It is also important to establish values for objectives that indicate unacceptable performance. Regular measures of customer satisfaction are also important gauges of market performance.
Management can designate zones for new product performance, such as above expectations, acceptable, below expectations, and unacceptable. An organization must prepare to drop a new product if it is apparent that unacceptable performance will continue.
Development and testing change the product from a concept to a prototype. Product development transforms a concept into one or more prototypes. Used testing gain users reactions to the prototype.
Manufacturing development determines how to produce the product in commercial quantities. Marketing strategy development begins during or at the completion of the product development stage.
They complete marketing strategy must be formulated for a totally new product. Product line additions, modifications, and other changes require less extensive development of marketing strategy.
Completion of product and marketing strategy development moves the process to the market testing stage. At this point management must obtain some form of user reaction to the new product, providing marking testing is feasible.
Testing options include simulated test marketing, scanner bass test marketing, and conventional test marketing. Testing of industrial products is less expensive than testing consumer products although frequently purchased non-durables can be tested.
Commercialization completes the planning process, moving the product towards sales and profit performance objectives. The successful product may fail due to faulty implementation. Execution is critical.
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