what is test marketing?

Experiments are used with a small number of consumers to compare different approaches to one element of the marketing mix, perhaps to determine which of two advertisements is more memorable.

​Another use for experimentation in market research is in test marketing. Test marketing allows an experimental introduction of a change in the marketing mix to occur in a small part of the market to see how the modification works.

Test marketing is used, for example, to see if a new product will sell to the targeted market segment. The piloting of new services or products, or of government programmes, in selected geographical areas is a form of experimentation.

Comparison is the basis of much experimental research, and may be achieved by a number of approaches.

Before and after. The most usual approach is to test the 'subject' before they are exposed to what is being tested, and again after exposure to it.

The performance of what is being tested is judged by the change in the 'measurements' taken of the subject, often in terms of their attitude to it. For example, an organisation might decide to introduce a new training programme for its sales force designed to increase their productivity.

The productivity of the sales force would be measured before the training course, and again after the course to discover if it had made any difference.

Split runs. Different stimuli (services, products, programmes, advertisements, etc.) are applied to separate but statistically equivalent groups, and the results compared across them.

If the aim were to increase the productivity of the sales force, the organisation could try two different training programmes. It could divide its sales force into three groups: one which received no additional training, one which received training programme A, and one which received training programme B. The organisation could then measure any change in productivity in the three groups following the training.

Difference. In some tests the objective is simply to see if the subject can tell the difference between the stimuli — often products — being presented. A subject might be presented with two brands of coffee and asked to say if they can tell one from the other, and which they prefer. Sometimes 'triads' are presented, where two products are the same and one is different. The subject will then be asked to distinguish between them.

In practice, organisations and managers use a variety of methods of market research simultaneously.

First, you need to be clear about what you are trying to achieve by using market research — what is the value you aim to add to your customers' experience? What performance objective of your team, section, project or organisation will the information contribute to?

Second, you need to plan: what information do you need, and when, from whom and how will you get it? Can you convert your objectives into a clear set of research questions and a formal research plan? What are the alternative ways of ascertaining what information you need and their benefits and costs? Are you going to gather a limited amount of data from a variety of sources using several techniques? How are you going to co-ordinate the whole process?

As the research progresses, you need to review whether it is generating the information you need. What adjustments need to be made to the research methods you have chosen, or what additional ones are needed? It should now be an ongoing process of data gathering and information assessment. This should lead to decisions by you and others, based on the information, about the products and services you provide to customers, their value and how you provide them.

Remember that market research is conducted to support decision makers during all stages of the decision-making process. You need to have cost-effectiveness in mind at all times when engaging in market research.

If market research is about supporting decisions, then the long-term benefit of the information it provides must outweigh the cost of gathering the information. Market research by walking around It is dangerous to think that market research is all about formal techniques and their co-ordination.

For all levels of management, much market research is very informal. The listening analogy we developed at the start of this session applies to formal focus groups, observations and questionnaires and to informal discussions, keeping your eyes and ears open and the informal questioning of customers.

Market research by walking around is shorthand for making the effort to keep yourself informed of all the different aspects of the service you provide, particularly its interface with your customers and their needs. ​

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