TEST MARKETING
Test marketing or market testing is the controlled experiment done in a limited but carefully selected part of the market place. The basic aim of test marketing is to predict the sales or profit consequences, either in absolute or relative terms of one or more proposed marketing actions. It is essentially the use of market place as a laboratory and of a direct sales measurement which differentiates these tests from other types of marketing research. Test marketing is an ultimate test to experience and experiment with actual selling and purchase of the product. Test marketing is the actual conduct of a marketing campaign within a limited market, for a period that is hoped to be long enough to indicate its probable success on a large scale and indefinite basis.
Test marketing is the stage where the entire product and marketing programme is tried out for the first time in a small number of well chosen and authentic sales environment. Test marketing is normally the last step in the development process before a new product is launched either on regional or national level. Test marketing or market testing is to validate the results obtained from prototype testing and early consumer research by extending these results to a representative sample or actual markets.
According to Mr. Gold J. A., test marketing is “a research technique in which the product under study is placed on a sale I one or more selected localities or areas, and its reception by consumer and trade is observed, recorded and analysed.”
Test marketing is a means of minimizing the risk of national or regional launch. A good test marketing operation is a marketing plan carried out in a miniature and scaled in every detail as to its relationship to the total intended market. It confirms the management’s expectations about the product by testing those variables in the marketing planning or plan other than the product.
WHY TEST MARKETING?
Market testing is a managerial control tool because, a market test can serve as a piliot operation for the large scale marketing activity. This is particularly true for marketing new products and new brands. Further, test marketing is a predictive research tool because, it is employed in two, broad and dissimilar situations namely,
The introduction of new products or brand and
The evaluation of alternative marketing variable.
BENEFITS OF TEST MARKETING
To improve the knowledge of potential product sales.
Those firms that do undertake test marketing of new products seek essentially to try out the product in miniature to hedge against the potential disaster of an ill considered product introduced prematurely. Their concern in testing with gaining an insight into the product market potential as well as with ascertaining what supporting promotional, pricing and distributional strategies are likely to work best. If a product sales fall below break even expectations, in the test markets, then the company is wiser. It is because the results are only a part of the total results.
To pretest alternative marketing plans.
To achieve a given target, alternative marketing programmes can be possible. However, the question is one of the best or most suitable alternatives. For instance, marketing appeals may be tried out say , by Colgate Palmolive – in four cosmopolites of India as:
a. Average amount of advertising with heavy samples.
b. Heavy advertising with limited samples.
c. Average amount of advertising with offers, and
d. Average amount of advertising with special introductory offers.
It may so happen that after a trial, the company may find the third alternative as most effective. Thus, test marketing helps in assessing the worth of alternative marketing programmes.
To predict product faults:
Some times the company may discover a product fault that escaped its attention in the product development stage. As a prototype or a model product is pretested and retested that gives improved perceptions of market segments should enable the company to bring about various aspect of marketing programme into finer focus. The product testing done earlier gives a partial solution to the problem, while test marketing puts the product to acid test of cold facts and determines its real standing-as its true nature is made known.
To know reactions of competitors.
Whenever the new product is introduced in the market, it is quite natural that the competitors have a fear of reduction in market share that they are already enjoying. With this they try to change their marketing strategy in an attempt to reposition their products as something stronger to counter impact the new product so launched. These reactions of competitors can be exploited and enchased on by gathering, analysing and interpreting for company’s benefits. Thus, the company can neutralize the competitive combat and this build up is the outcome of market testing.
PROBLEMS IN TEST MARKETING
Not all companies believe in test marketing. That is, test marketing, by no means meets with universal approval; even from in those industries where it is used in great deal. There are certain problems which arise in conducting test marketing that have reduced its importance. The basic problems are:
Inaccurate results.
Many of the new products that have achieved favourable test marketing results have not achieved commercial success. Even though test marketing is used extensively, the results are often neither useful nor accurate, especially as a predictive device. Many studies conducted on the predictive value of test marketing have indicated very large margins of errors. This makes it mandatory to be very careful to ensure greater congruity between the results of a test marketing and final launch in the national market.
It is an expensive exercise.
The unreliability of market test results is not only the problem, the cost of this technique is also another problem. Test marketing a new product not only requires huge investments in the produce itself, but also in the remuneration and expenses of the members of the company, outside agency and the distribution network. That is why, test marketing is skipped off easily on the ground of high cost.
It is a time consuming affair.
Another problem with test marketing is that it consumes time. If the test market period is too short, the distribution strategy adopted may be based on inaccurate, incomplete or inconclusive data. If a new product is tested for a long period of time, competitors may respond with substitute product. Normal period of test marketing is six months and these six months are more than enough for dangerous developments to occur. Thus, the distinctiveness of the product innovation can decay drastically so much so that the so called new product so tested will remain no longer new product when it enters national market after its launching.
It lets the tips to competitors
A test marketing efforts is very visible and any good marketing intelligence system will report its existence to a competitor’s management almost immediately. Competition can be a problem in test marketing a new product by distorting the test results with heavy, abnormal promotional expenditures in the test area or by actually purchasing very large quantities of the product. In case strong competitive activities are implemented in the test area, the new product test results are of little value. Te least that can happen is that competitors will be ready to meet the threat of new products when it enters the national market.

ESSENTIALS OF SOUND TEST MARKETING
To make test marketing an effective one, the following factors are to be given due weightage:

Representative test market.
The test market to be selected must be such a geographical area that represents the national market. In our national market, the places that have congregation of people coming from every nook and corner can be best chosen as test markets. These can be Mumbai, Kolkata, Chennai, Bengaluru and so on. Normally two or four places are selected to assess the consumer relations.
Perfect projection of results
The marketing reactions in the form of achievements in these test markets should be properly recorded and scientifically projected on nationwide base. If a test marketing is conducted over a period of six months and in particular month the sales account for say Rs. 25000 for a particular product, and if it works out 4 per cent of the national sale volume, then the monthly sales volume on national basis will be Rs. 6,50,000. Later o these projections can be made for a period of one year etc.
Demographic validation
The test market area should be large enough to accommodate divergent demographic features such as number of people-sex-age group-special class-caste-religion-rural and urban classification-level of education and so on. Such a unity in diversity makes the data more representative and meaningful.
Competitive validation
As the strength of competition has its upper hand in validating the test market results, the area selected for test marketing should be such that there is existence of competitors who are more or less of equal strength. Even if the competitors are strong, the test marketing company should be prepared to face the same with strength and vitality.
Behavioural validation
The test market area selected must be one that provides for the large scale use of close similar products and substitutes to the new product to be tested. The real life reactions of consumers are known only when the market releases not only the new product but the existing close and substitute products. It gives a clue to find out consumer behavioural changes in the market.
Strategy validation
Successful test marketing also takes into account the strategies applied in each component of marketing mix. The company should be sure of what strategy it wants to follow in test marketing and how far it is going to refine them in commercialization stage. It is of top importance because change in strategy and change in situation will distort the possible results.