Class 18 – March 20 - Leeds

yardbellAI and Robotics

Nov 14, 2013 (3 years and 6 months ago)

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CHAPTER
NINETEEN

Market Testing I:

Pseudo
-
Sales Methods


What Is Market Testing?


Market testing is not test marketing!


Test marketing is one of many forms of market
testing
--

others include simulated test market,
informal sale, minimarket, rollout.


Test marketing is also a much less common form
now due to cost and time commitments and
other drawbacks.

Where We Are Today in Market
Testing


Scanner systems allow for immediate collection of product
sales data.


Mathematical sales forecasting models are readily available
that can run on a relatively limited amount of data.


We are “building quality in,” testing the marketing
components of the product at early stages (ads, selling
visuals, service contracts, package designs, etc.) rather than
testing the whole product at the end.


Increased competition puts greater pressure on managers to
accelerate product cycle time.


Market testing is a team issue, not solely the responsibility

of the market research department.

Decision Matrix on When to Market Test

Cost and Time

Savings

High

Low

Stages of the product development cycle

High

Low

Scope of Learning

and Accuracy

How Market Testing Relates to the

Other Testing Steps

Two Key Values Obtained from
Market Testing


Solid forecasts of dollar and unit sales
volume.


Diagnostic information to allow for
revising and refining any aspect of the
launch.

Deciding Whether to Market Test


Any special twists on the launch? (limited time or
budget, need to make high volume quickly)


What information is needed? (expected sales
volumes, unknowns in manufacturing process, etc.)


Costs (direct cost of test, cost of launch, lost revenue
that an immediate national launch would have
brought)


Nature of marketplace (competitive retaliation,
customer demand)


Capability of testing methodologies (do they fit the
managerial situation at hand)

Types of Information That May Be
Lacking


Manufacturing process: can we ramp
-
up from pilot
production to full scale easily?


Vendors and resellers: will they do as they have
promised in supporting the launch?


Servicing infrastructure: adequate?


Customers: will they buy and use the product as
expected?


Cannibalization: what will be the extent?

Methods of Market Testing, and
Where Used

Pseudo Sales Tests



Speculative Sale


STM (Simulated Test Market)

Speculative Sale


Often used in business
-
to
-
business and
consumer durables, similar to concept
and product use tests.


Give full pitch on product, answer
questions, discuss pricing, and ask:


“If we make this product available as I
have described it, would you buy it?”


Often conducted by regular salespeople
calling on real target customers.

Conditions for Speculative Sale


Where industrial firms have very close downstream
relationships with key buyers.


Where new product work is technical, entrenched
within a firm's expertise, and only little reaction is
needed from the marketplace.


Where the adventure has very little risk, and thus a
costlier method is not defendable.


Where the item is new (say, a new material or a
completely new product type) and key diagnostics
are needed. For example, what set of alternatives
does the potential buyer see, or what possible
applications come to mind first.


VIRTUAL REALITY

IN MARKETING RESEARCH

VIRTUAL STORE

IN MARKETING RESEARCH

VIRTUAL STORE

SHELF DISPLAY TESTING

Simulated Test Market (STM)


Create a false buying situation and
observe what the customer does.


Follow
-
up with customer later to assess
likely repeat sales.


Often used for consumer nondurables.

Simulated Test Market Procedure


Mall intercept.


Self
-
administered questionnaire.


Advertising stimuli.


Mini
-
store shopping experience.


Post
-
exposure questionnaire.


Receive trial package.


Phone followup and offer to buy more.

Possible Drawbacks to STMs


Mathematical complexity


False conditions


Possibly faulty assumptions on data, such as number
of stores that will make the product available


May not be applicable to totally new
-
to
-
the
-
market
products, since no prior data available.


Does not test channel member response to the new
product, only the final consumer