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McGraw-Hill/Irwin
© 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.
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CHAPTER NINETEEN
MARKET TESTING:
PSEUDO SALE METHODS
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What Is and Is Not Market Testing?
• Market testing is not concept testing, prototype
testing, product use testing--or test marketing!
• Test marketing is one of many forms of market
testing – including simulated test markets,
informal sale, minimarket tests, and rollouts.
• Test marketing is also a much less common
form now due to cost and time commitments
and other perceived drawbacks.
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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 in the province of
the market research department.
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Decision Matrix on When to Market Test
High
Low
Cost and Time
Savings
Figure 19.1
Scope of Learning
and Accuracy
Low
High
Stages of the product development cycle
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How Market Testing Relates to the
Other Testing Steps
Figure 19.2
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Two Key Values Obtained from Market
Testing
• Solid (or at least better) forecasts of dollar and unit
sales volume.
• Diagnostic information to allow for revising and
refining different aspects of the launch.
----------------------------------------------------------Also:
• Data to help persuade management, distributors,
dealers and other influencers
(such as the trade press)
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Deciding Whether to Market Test
• Any special twists on the launch? (limited time or
budget, seasonality, need high volume quickly)
• What information is needed? (expected sales volumes,
unknowns in manufacturing process, etc.)
• Costs? (direct and indirect costs 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)
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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?
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10
Methods of Market Testing
and Where Used
Figure 19.3
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11
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
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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.
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Simulated Test Market (STM)
• Create a false buying situation and observe
what the customer does (purchase intentions
or actual choices)
• Follow-up with customer later after product
usage to assess likely repeat sales
• Often used for consumer nondurables
• Does not measure all parts of ATAR model
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Simulated Test Market Procedure
• Mall intercept (typically)
• Self-administered questionnaire
• Advertising stimuli (usually)
• Mini-store shopping experience (usually)
• Post-exposure questionnaire
• Receive trial package to take home
• Phone follow up--and maybe offer to buy more
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Possible Drawbacks to STMs
• Mathematical complexity
• False conditions
• Possibly faulty assumptions on data, such as
advertising budget or number of stores that will
make the product available
• May not be applicable to totally new-to-themarket products, since no prior data available.
• Does not test channel member response to the
new product, only the final consumer’s