Test Marketing Purpose and Types

Kristen Rogers, Shawn Grimsley
  • Author
    Kristen Rogers

    Kristen has her Bachelor of Arts in Communication (cum laude) with certificates in finance, marketing, and graphic design. She is a small business contributing writer for a finance website, with prior management experience at a Fortune 100 company and experience as a web producer at a news station. She's covered a variety of topics including news, business, entrepreneurship, music, and graphic design.

  • Instructor
    Shawn Grimsley

    Shawn has a masters of public administration, JD, and a BA in political science.

Learn about test marketing. Understand what test marketing is, identify the purpose and types of test marketing, and see different examples of test marketing. Updated: 05/30/2022

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What is Test Marketing?

As new products are developed or current products are improved, businesses must also determine their performance in the market. When ideas and concepts for products are new to consumers, it can be difficult to determine whether they will be accepted by the market and whether they can be profitable to the business. To gain insight and understand the potential of the product, businesses use test marketing before fully launching the product.

The definition of test marketing refers to the process that takes place when a company essentially tests the effectiveness of its marketing campaign for a new product to determine the product's possible success in the market. This allows the business to get an idea of how well the product may perform in the market. Test marketing for new products works by sampling a portion of consumers to test the market before launching the product on a large scale. It is an important part of new product development since businesses need some insight into the product's potential before taking on the full production aspects of a product that may fail.

Purpose of Test Marketing

The purpose of test marketing is to determine a product's place within a market. Businesses aim to create products that provide a need or want for consumers. With test marketing, the company can determine the effectiveness of the product and determine whether the product has the potential to provide these needs and wants. Test marketing gives the product a test run with a sample portion to see if the product fits in the market. These results can help to provide insight into when the product is ready to be fully scaled at a national level.

Advantages and Disadvantages of Test Marketing

So, how can test marketing be helpful in launching new products? Test marketing can be helpful to a business in many ways. Some of the advantages of test marketing include:

  • Ability to gain insight into a product's potential in the market
  • Businesses can determine if their marketing campaign is effective
  • Flaws can be determined so improvements can be made

On the other hand, there are many disadvantages of test marketing that businesses should consider. Some of the disadvantages of test marketing include things such as:

  • Added expenses for tests that may not provide enough data
  • Competitors can make similar products since they are now public in the market
  • Employees using their time for testing rather than operational tasks that can bring in revenue

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Types of Test Marketing

There are several different types of test marketing methods that businesses can use to test their products. Some of these include consumer goods marketing, industrial goods marketing, marketing-effectiveness test, regional launch, alpha and beta testing, and direct marketing. Each of these methods provides a way to test the market before launching a national ad campaign or other larger marketing campaign. These test marketing methods differ in the way they are conducted and can provide insight into different aspects of the marketing campaign.

Consumer Goods Test Marketing

Consumer goods are the products in the market that are sought and purchased by consumers. These types of products are available in the market for any consumer who wants to make a purchase. These include convenience goods, such as groceries, shopping goods like electronics, and specialty goods, such as hybrid cars. Consumer goods test marketing allows the business to understand how consumers will respond to the product by launching the product in a small portion of the market.

Businesses may decide to use a test market and launch only in one store or only in one city. They may also opt for the sales-wave research by giving out free samples of the product to consumers in their target market. They may also use simulated market tests and controlled market tests to garner feedback from consumers. Consumer goods test marketing can provide insight into how the customer will react to the product and whether they have a genuine interest in the product that will prompt them to make another purchase. There are also drawbacks, in that other, larger companies can learn about the new product and gain a competitive advantage in areas where the testing has not taken place.

Industrial Goods

Industrial goods are the products in a market that are aimed specifically at certain industries and lines of work. Industrial goods are generally the capital products and expenses for business production, such as raw materials, equipment, parts, and supplies. While some of these products may be available to all consumers, industrial goods are typically classified as such due to their use and purpose. Industrial goods test marketing includes two main categories. Alpha testing and beta testing are two ways industrial goods can be tested in a market.

Alpha testing occurs when the company tests the products with their employees or others within the organization before presenting them to the market. Businesses that produce industrial goods want feedback about the products from a business standpoint. This is helpful in that it allows the business to understand how the product might be received by other businesses before putting it out to the public. However, it doesn't obtain data from real customers or business owners that might purchase the products.

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Frequently Asked Questions

Why is test marketing used?

Test marketing is used to gain insight about a new product's potential in the market. It allows the business to determine whether a product will be successful on a large scale by tracking its performance on a smaller scale.

What is the meaning of test marketing?

Test marketing refers to the methods that are used to determine the effectiveness of a business's marketing campaign for a new product. It is used to determine the product's possible success in the market before fully launching the product.

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