Page 334 - Foundations of Marketing

Developing and Managing Goods and Services | Chapter 11 301

must ascertain approximately what price the target market views as acceptable. In addition,
a marketer usually tries to set a quality level consistent with that of the firm’s other products.
Obviously, the quality of competing brands is also a consideration.
The development phase of a new product is frequently lengthy and expensive; thus a rela-
tively small number of product ideas are put into development. If the product appears suffi-
ciently successful during this stage to merit test marketing, then, during the latter part of the
development stage, marketers begin to make decisions regarding branding, packaging, label-
ing, pricing, and promotion for use in the test marketing stage.

Test Marketing
A limited introduction of a product in geographic areas chosen to represent the intended mar-
ket is called test marketing . Altria Group, for example, conducted market tests of its new
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smokeless tobacco sticks at select Kansas retailers. The aim of test marketing is to determine
the extent to which potential customers will buy the product. Test marketing is not an exten-
sion of the development stage; it is a sample launching of the entire marketing mix. Test mar-
keting should be conducted only after the product has gone through development and initial
plans regarding the other marketing mix variables. Companies use test marketing to lessen the
risk of product failure. The dangers of introducing an untested product include undercutting
already profitable products and, should the new product fail, loss of credibility with distribu-
tors and customers.
Test marketing provides several benefi ts. It lets marketers expose a product in a natural
marketing environment to measure its sales performance. The company can strive to identify
weaknesses in the product or in other parts of the marketing mix. A product weakness dis-
covered after a nationwide introduction can be expensive to correct. Moreover, if consum-
ers’ early reactions are negative, marketers may be unable to persuade consumers to try the
product again. Thus, making adjustments after test marketing can be crucial to the success of
test marketing Introducing a
a new product. On the other hand, test marketing results may be positive enough to warrant
product on a limited basis to
accelerating the product’s introduction. Test marketing also allows marketers to experiment measure the extent to which
with variations in advertising, pricing, and packaging in different test areas and to measure the potential customers will actually
extent of brand awareness, brand switching, and repeat purchases resulting from these altera- buy it
tions in the marketing mix.
Selection of appropriate test areas is very important because the
validity of test market results depends heavily on selecting test sites Table 11.1 Common Test Market Cities
that provide accurate representations of the intended target market.
U.S. cities commonly used for test marketing appear in Table 11.1 . The
Columbus, Ohio
criteria used for choosing test cities depend upon the product’s attri-
butes, the target market’s characteristics, and the firm’s objectives and Peoria, Illinois
resources. Columbus, Ohio, has become a major test market for fast
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food and other new products. Albany, New York
Test marketing is not without risks. It is expensive, and competitors
may try to interfere. A competitor may attempt to “jam” the test pro- Jacksonville, Florida
gram by increasing its own advertising or promotions, lowering prices,
Lexington, Kentucky
and offering special incentives, all to combat the recognition and pur-
chase of the new brand. Any such tactics can invalidate test results.
Des Moines, Iowa
Sometimes, too, competitors copy the product in the testing stage and
rush to introduce a similar product. It is desirable to move to the com- Battle Creek, Michigan
mercialization phase as soon as possible after successful testing.
Because of these risks, many companies use alternative methods Greensboro, North Carolina
to measure customer preferences. One such method is simulated test
marketing. Typically, consumers at shopping centers are asked to view Cleveland, Ohio
an advertisement for a new product and are given a free sample to take
Phoenix, Arizona
home. These consumers are interviewed subsequently over the phone
and asked to rate the product. The major advantages of simulated © Cengage Learning

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