Traditional approach to test marketing

Traditional test marketing is marketing under 'normal' conditions and the company's own salesforce gets retailers to stock the product, give it good shelf position and provide in-store promotion and cooperative advertising. The sales staff also make sure that the shelves remain stocked.

HOMELINK

A new process, Homelink, enables accurate and effective targeting to be achieved in a few hours. The process makes use of a database of over 10,000 adults and is one of the most comprehensive, nationally representative research samples available. It makes use of demographic variables and explores the way in which people live, the products they use and the beliefs they hold.

Thousands of new products are launched every year but many of these initiatives fail to come to fruition. Arguably, by fully researching a target audience in the first place, much waste can be avoided. After all, ensuring that products or services match with customer wants, needs and expectations is a critical element in the new product introduction process. Discussions with potential users of a new product, service or sales campaign is an essential part of getting projects of this type off the ground.

Unfortunately, launchers of new ventures often perceive the research process to be over-complex. They often feel that the more targeted the respondents are, the harder they are to locate and the more complex the process of finding meaningful and manageable market data becomes. With Homelink this type of thinking can be shown to be completely out of date.

In order to ensure that the fullest picture can be drawn from their new market research facility, the designers of Homelink have included a wide range of product and service categories. These include such things as baby products, household equipment, pet food, skincare products, home leisure/entertainment equipment, types of food and much more. This enables people who use specific products and services or who lead particular lifestyles to be identified quickly and cost-effectively. Establishing a baseline from which all aspects of research can be compared is the fundamental question to be answered before the research can begin and Homelink enables this to be done very effectively. Moreover, the framework and database enable information to be gathered from the same respondents over a long period of time which in turn means that sample variability can be reduced. Homelink facilitates the researching of products with both large and small market shares in a cost-effective manner.

Homelink can be used for:

• product or advertisement concept testing

• evaluating market potential for new or revitalised products or services

• testing new or reformulated products to discover how the current users of those products or users of competing brands rate a new or reformulated product

• discovering how products are used in the home environment

• uncovering customer attitudes towards a particular company and its products.

In the case of Homelink, no one remains in the database for more than two years, no one tests more than six concepts or products over the course of a year and no one ever tests more than two products from the same product category.

Source: Research Plus5

Traditional test marketing rests on the premise that if a few reasonably typical communities throughout the country are selected, and the product or marketing method is tried there, results will pretty well predict what will happen when there is a roll-out on a regional or national basis. Moreover, if a simultaneous series of parallel markets is set up, it will be possible to predict which of two or more product variations, copy approaches or the like will work better. One of the greatest problems is the selection of test areas. The idea is to select test markets not too different from the country as a whole.

Matching local markets with national data on sales may not assure comparability. Change may creep in even without the introduction of any known marketing variables. Matching test cities with one another on the basis of causal variables such as regular price, national advertising, couponing, displays and in-store flyers might help matters.

Other important factors include demographics: per capita income, racial composition, etc. The business nature of the community must also be considered. The area should roughly parallel the business composition nationally, by type of business and, usually, medium-sized cities are selected. The advertising media should be representative. The media should be self-contained: they should not have much coverage beyond the test market.

The duration of a traditional market test depends on the nature of the product and the consumers' buying habits. The rule of thumb for packaged goods is an average of three purchases (trial and two repeats). If the product is one with a slow but continuing purchase pattern, the test period has to be long. Competitive pressure also affects the length of the test. A strong competitor means that the marketer must stay in there longer to find out whether it is possible to make inroads into the market.

Competitive action is one of the great risks and uncertainties of the traditional test market. Once a major competitor recognises what is happening, it may decide to make an effort to kill the test by spending heavy marketing funds on advertising and coupons to distort the test results.

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