Page 350 - Introduction to Business

324 PART 3 Marketing

TESTING. Two types of testing are required. There is technical testing and market
technical testing Subjecting a new testing. Technical testing involves subjecting the product to physical evaluation
product to a physical evaluation that that indicates its ability to meet the market’s expectation of performance. Exam-
measures its ability to perform up to
expectations ples include simulating heat and rain on a new roofing material to estimate its
useful life, trying out new medicines on a sample of patients, subjecting tires to
sharp objects to see if they can withstand punctures, and driving new prototype
automobiles in the summer in Death Valley to determine how well they will per-
form in hot weather climates. The results of technical testing enable companies
to place warranties on their products and develop advertising campaigns built
around product performance. Products that fail physical tests will either have to
undergo further development or will be dropped. New medical drugs often run
into problems when being tested. In other words, they do not perform well
enough. For example, Oxford Glycosciences had a major product, Zavesca (for
Gaucher’s disease), fail a trial run with patients, and Powderject had to withdraw
a vaccine for tuberculosis. 15
market testing Marketing a product on Companies used to employ market testing to measure the level of customer
a limited basis to help decide which acceptance of a new product. These results would determine whether the product
marketing mix should be used when it is
commercialized would be introduced to the market or dropped. Today, a change in thinking has
occurred. Firms will no longer subject a product to market testing unless they are
sure that it will be accepted by the market; it is too expensive to allow a product to
get that far in the new product development process unless management is sure
that the product will be successful. Instead, companies will use market testing to
decide how to more effectively commercialize the product. That is, what prices to
charge, what channels of distribution to use, what advertisements will be most
appropriate, and so on.
test markets Cities that mirror the entire Test markets are cities that mirror the larger U.S. market on factors believed
U.S. market so that companies use them important in the sale of the new product, such as income, age, and ethnicity. Fre-
to market their products on a limited
basis to develop a marketing mix for the quently used test market cities are Tulsa, Indianapolis, Phoenix, and Dallas. In order
commercialization stage to find out which of two prices, for example, would result in the most revenue, a
firm would choose two test markets and sell the product at a different price in each
city. This process is called test marketing.
While the use of test marketing is helpful in developing the new product’s mar-
keting mix, there are several downsides. They are time consuming and expensive,
often requiring more than six months and close to $1 million. Perhaps even more
important, they tip off the competition, allowing them to get their products out
before the test market is even completed. This happened to such well-known prod-
ucts as Mrs. Butterworth’s syrup and Head and Shoulders shampoo. Competitors
can also bias the test market results by, for example, charging a lower price that they
know they can’t sustain, thereby lowering the sales of the product in the test market
and discouraging the company from introducing the product. Because of these
simulated test markets An alternative to problems, some companies are using simulated test markets. Consumers in shop-
test markets that offers speed, lower ping malls would be exposed to an advertisement for a product and would then
cost, and less competitor interference
take the product home. They would be called after having had the opportunity to
use the product and asked to rate it. Simulated test markets can be accomplished
more quickly and at lower costs than test markets, and they eliminate the possibil-
ity of competitor interference.

commercialization Strategies employed COMMERCIALIZATION. Commercialization refers to the strategies used to introduce
to introduce a new product and to a new product to the market as well as the methods used to track its progress. The
monitor its performance
new product’s marketing mix will be finalized based on the results of market testing.
Its quality, warranties, price, promotion, and channels of distribution will be put
into play with the expectation that they will enable the product to be successful.

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