Test marketing is defined as a strategy used by companies to check the viability of their new product or a marketing campaign before it is launched in the market on a large scale. It is used across the business world to find out what consumers want and need in their everyday lives. It is like an experiment performed on the field (the test market) covering real stores and real-life shopping situations. This is conducted without the customers’ knowledge of their participation in an assessment exercise.
What is the purpose of test marketing?
Test marketing is used to ascertain various uses of a product, the class or category of users, and the motives that prompt the users or buyers. This helps organizations gauge the nature of general competitive situations, the latest trend in demand, etc. This test is conducted to know consumer behavior in terms of:
- Trial: If the potential customer will try out the product, at least once.
- Repeat: Whether the consumer will repurchase it after the trial.
- Adoption: Whether the customer receives the product with positivity and buys it again.
- Frequency: How frequently will the customer purchase the product.
10 ways how businesses benefit from test marketing
Let’s look at the benefits of test marketing in detail:
- It gives a product the chance to sell itself: Great products sell themselves. Having a great product can serve as its marketing tool. Over time, customers will come to rely on the product that they are using and decide to stick to it. When that happens, the company will have converted a free trial into a paying customer who loves the product and will come back for even more.
- Competitive edge over similar competitor products: For some industries, providing a free product trial may not be considered the standard practice. Offering the product would then shift expectations within the targeted demographics, giving companies a chance to expose their product to interested consumers. Using a free robust product will help create a want in the minds of the customers. But, it works in the other way too. If consumers in the industry expect a free product trial because that’s what everyone else is doing, then not offering one may hurt the companies reputation. Much of this depends on how the company can showcase the features.
- People are allowed to invest time into the brand: Money is valued higher than time. But, from a marketing perspective, time with the test products and brand message is more valuable than cash inflow. When people are using the products and investing time into the company, they’re naturally building a relationship with the brand. Relationships create loyalty. Loyalty creates customers who keep coming back for more great products.
- Critical feedback is received about the product: The whole idea of test marketing is that a product trial allows the brand to see how the product will react in real consumer environments. Tests and simulations will only get you a limited amount of data. Consumers can be unpredictable, using the product in ways that brands may have never imagined. Having each trialist upload pictures, send reports, or share the way they use their product can tap the brand into information resources that may allow them to refine or improve the product over time. This is one of the benefits of test marketing.
- Offer incentives: Product trials generate opportunities for the brand to better the deal if their customers are on the fence. Once customers try a product and think of purchasing it, offering a discount or an incentive on it may help to gain the customer. Referral discounts are another way to help close a deal and find new prospects that might be interested in what the brand is offering.
- It gives consumers a sense of urgency: One of the benefits of test marketing is when prospective consumers are faced with a sense of urgency, they quickly evaluate the pros and cons of keeping the product. Urgency is important because it forces decisions. The end of a free trial creates a sense of urgency, while the perception of missing on the product creates feelings of inadequacy. This combination will typically result in a sale if the consumer feels like the value promises live up to reality.
- It aligns customer interests with company values: Once a trial is offered on the product, it helps the company set expectations on their offerings. Brands can communicate clearly to each prospective customer, letting them know what to expect from the product and how to use it properly. In doing so, brands can align the interests of the customer with the values of the company, which helps to further reinforce the relationships they’re trying to form with exposure to their products.
- Brands can see the seriousness of their customers: If a prospect has no interest in the product, then offering a trial to them will confirm that the lead has grown cold. Brands will always come across people who take a product trial without the intent of buying the product. But many people try products when they have an interest in the results. This process allows brands to score leads better, create stronger follow-ups, and grow their inbound marketing opportunities.
- Data provided is from actual customer spending: Replicating the sample selected for test marketing helps the brand understand the trends that may arise once the product is put up for sale. The buying patterns can help the brand tweak the price, size, packaging, etc of the product. All these decisions to position the product rightly are made based on data captured from the actual customer spending.
- Risk of a full-scale launch eliminated: Huge costs can be saved on branding, manufacturing, and marketing if the product doesn’t pass the test. The pitfalls found during the test launch can be rectified by the brand. Changes can be made based on the feedback and data collected from the test sample. If there is a defect or a problem in the product, immediate recalls can be done from the test. Recalling the product from the test audience is much better than launching a product to the whole market and then recalling it or understanding what is wrong with the product. This saves the reputation of the brand too along with saving on money.
Test markets should be conducted to understand the potency of the marketing plan when it comes to both consumers and trade responses. This helps to identify steps to boost productivity, avoiding potential risks. The findings of the test market must be used to assess the marketing strategy, not to create new ideas.