Till recently, companies used to keep their products secret. But now companies go outside the company to get customer approval.
Products that do not succeed in test marketing do not get an opportunity for launch at the national level. Test marketing is a controlled experiment on a limited basis in a limited geographical area to test the acceptability of new product or in some cases other aspects of marketing mix like different prices or differing communication themes or media mixes.
Advantages of Test Marketing: First, the overall workability of marketing plan can be evaluated. It is “like a shakedown cruise for a new ship.”
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Second, it evaluates alternative allocations of the budget. It is done on the basis of consumer responses in each of several test markets.
Main objective of Test Marketing is to evaluate and adjust, as required, the general marketing strategy to be used and appropriate marketing mix. Early interactions enable marketers to gauge the issue important to next generation of product development. Thus test marketing reduces risks. After test marketing, marketing plan can be finalised and product gets ready for launch.
Disadvantages of Test Marketing:
Test marketing may not be pursued for the following reasons: First, Test marketing is a costly affair. Second, test marketing takes time in completion. It normally takes six months and within this time the product may lose its uniqueness. Third, it prematurely informs competitors of a company’s plans. Competitors have sufficient time to sabotage or jam the test marketing purposely and launch their products. Fourth, Test marketing can’t evaluate services beyond the concept level. Finally, High value consumer products, like cars, or industrial products like jet engines can’t be test marketed.
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Because of cost, time and confidentiality problems associated with test marketing, consumer packaged goods company often turn to simulated (or laboratory) test markets, a technique that stimulates a full scale test market in a limited fashion. Some companies do it online – the product is shown and information gathered. But it is not a realistic proxy for in-store shopping. In case of pharmaceuticals testing is to begin on animals, then the drug is given to patients to check safety and side effects. Thus it takes lot of time
Commercialisation:
This is the stage when the product is to be finally launched at the national or international level. During this stage, heavy emphasis is placed on organisational structure and the management talent to implement the marketing strategy. Company must take care of design, cost of manufacturing, quality control, and inventory management. Firm must also see that the new product does not lead to cannibalisation, if it is so, the product should immediately be stopped.