MKTG 492
Professor Sam Min

Lecture 6
Market Testing

Let’s say (_________) testing showed a need, and the (______________) test indicated the emerging product met that need, without serious drawbacks. And we have a marketing plan.

Now what do we do? Market the item quickly, before competition finds out what we are up to? Or find a way to check out what we have done, to see if it really looks like we will be successful, before spending what usually is a lot of money on the launch? The option open to us is called (_______________).

The basic idea of market testing is to test the combined package of product and its marketing plan. One way this has been done is test marketing:

Implement the entire plan in a few cities and see what happens in the real marketplace, against real competitors, being bought by real customers.

There are three ways to do market testing!

1. Pseudo Sale Methods
2. Controlled Sale Methods
3. Full Sale Methods (Test Marketing)

One experienced Procter & Gamble market researcher said he considers skipping the market testing if….

1. Capital investments are small and forecasts are conservative.
2. The use tests went well and consumer interest is high.
3. The company knows the market well and has been successful there.
4. Advertising is ready and successfully tested; sales promotion plan does not depend on perfect execution.

Any other reasons for skipping market testing?

Pseudo Sale Methods

Speculative Sale
We go to the customers, give them the full pitch on the product, in a version close to ultimate marketing, answer questions, negotiate prices, and lead up to the closing question, “Would you buy it?”

It sounds very similar to the techniques in concept testing. The difference this time is that the product is real, as are the price, delivery schedules, and so on.

Yet, there is no advertising at this time.

Simulated Test Market (Pre-market Testing)
Potential buyers are asked to pick the item off the shelf of a make-believe store.

It utilizes A-T-A-R model.

The central idea is to get estimates of trial rate and repeat rate.

Basic Procedure

1. Respondents are usually gathered in a mall intercept. If the respondent fits the criteria for sample selection, he is invited to step into a research facility.
2. In the facility, the respondent will be given a self-administered questionnaire asking for his attitude and practice in one or more product categories. The advertisements are couched in a TV presentation. Several ads are presented so the respondent isn’t sure what is being tested.
3. The respondent is then taken into another room, usually what appears to be a very small convenience store with shelves of products. The test manager gives the respondent some play money. Hopefully, the respondent entering the “store” will now purchase the new product advertised in the first room. This yield the key variable trial rate.

Note that the leading seller of Stimulated Test Market services does not use a pseudo store. Instead, it asks respondents buying intention and then simply gives trial product to those who express buying interest.

4. Most of the respondents are then free to go. None buyers are given trial (forcing) packages of the product as they leave.
5. Some time later, the respondent is contacted by telephone. Product usage, reactions, and future intentions are asked. At the end of the call, the respondent will be offered a chance to “buy” more of the product. This gives us the second key variable repeat rate.

ASSESSOR (Silk and Urban, 1978) is a pre-market test model designed to give a market-share projection for the new brand.

Long-Term Market Share, s is

s= p*r

s = ultimate market share p = ultimate penetration rate r = ultimate repeat rate among triers

The ASSESSOR model decomposes the penetration rate as follows:

p = F*K*D + C*U – (F*K*D)*(C*U)

F = trial rate
K = awareness rate
D