Explain how you will use test market research to
determine if your proposed product will succeed in a roll-out to a larger target audience/market. You will also assess any legal and ethical influences in your test
market that might affect your promotion, distribution, and pricing strategies.
Prompt: Review Chapter 9 (pp. 250–256) on test marketing and test marketing experiments and, in a 2- to 3-page paper, address the following:
○ Explain how you will select your test market for your new product concept.
○ How and why are your selection criteria appropriate for this product?
○ What legal and ethical influences in the proposed test market might affect your promotion, distribution, and pricing strategies?
○ How will you use primary and secondary, qualitative and quantitative research from this test market research to promote your product?
Test Market Research
There exist necessities and value for test marketing a product, hence a need to weigh the information related to the product as this helps determine whether to roll out the product. Test marketing can also be used to gather information about different markets strategies employed and the kind of products that do best in different markets. Market testing can also be used as a method of evaluating different market activities. The selection of test markets is appropriate as it helps to bring about the kind of reliability required that will match the projected results and the variables being examined (Citeman, 2009). Therefore, the number of test markets to be selected should be higher as this will enable the researcher to achieve a higher percentage of reliability hence decreasing any chances of errors. In carrying out the selection of test markets, the markets selected should be relatively self-contained; neither too small nor too large to help provide meaningful results and avoid making the testing process more expensive.
The procedure that I will use to select my test market for my new product is through considering the demographic composition of the markets to be selected and ensure that it matches and is similar to those that are targeted to attract a larger scale or consumers (Cooper, 2019). Another factor that I will consider while selecting my test market is the market’s ability to offer a wider variety of advertising media as this will help in reflecting my plans of reaching customers from a wider geographical area through product recognition. Moreover, evaluating existing distribution channels is another key factor that I will consider while selecting my test market. Evaluation of distribution channels will enable me to capture existing opportunities of resellers, retailers or any other indirect distribution channels within the market. Besides that, evaluation of distribution channels enables one to determine the types of retail support and incentives required to achieve the targeted stock levels, as well as point sate campaigns’ effectiveness (Moneywatch, 2007). Another key factor to consider while selecting the test market that I will use is evaluating my competitors’ responses. Some of the risks that arise from test marketing are that it can inform one’s competitors about the new product to be brought into the market.
My selection criteria are appropriate for this product as they will help me gain insight into my competitors’ perception and reactions towards my product. The criteria will also enable me to establish suitable markets for the product as markets to be selected will be the one that achieves the intended objectives and one that will enable the product to penetrate successfully into the market.
There exist ethical and legal influences in the proposed test market that have the likelihood of affecting my promotion, distribution and pricing strategies. Ethical influences comprise moral principles that guide how promotion, distribution and pricing should be handled. Ethical issues related to advertisement and marketing communication have the likelihood of influencing the test market concerning product promotion. Therefore, product advertisement should be seen from the consumers’ perspective, thus avoiding misleading information, unfair claims, and children’s persuasion. Ethical issues related to product pricing in the proposed test market is that the pricing strategy used should not be fraudulent or infringe the values such as honesty and transparency. Predatory pricing is considered unethical and not legally recommended as it is geared towards driving competitors away (Guo, 2020).
Carrying out test marketing research enables one to have information about testing the product in the market before the product is commercialized on a large scale. This enables the researcher to have a good understanding of the market, considerations required in the market like competition, needs and preference of consumers and the nature of demand in the market. Research enables one to identify different uses of the product and the class category of consumers of the product and drive the users to buy the product. The research also enables one to decide on the market strategies to be employed, considering pricing, promotions and systems of distribution.
The company itself majorly does primary market research as it has the objectives of information gathering from scratch to improve the product and its functionality. Secondary market research relies on readily available information relating to a particular product. Such information can be used to compare a product with that from the competitor’s, hence improving the product. Secondary market research can be obtained from newspapers, magazines and the internet.
Qualitative market research majorly takes into account targeted customers’ opinions and reactions towards a product. This research provides a mechanism of viewing a product from consumers’ point of view, enabling the company to identify what is missing to achieve customer satisfaction. On the other hand, quantitative research is based on facts and analyzed statistical data. Some of the quantitative research methods to improve the product include carrying out a survey, using questionnaires, and on-site fieldwork (Belyh, 2020).
Belyh, A. (2020). Marketing research Techniques: Primary and Secondary Market Research. Cleverism. Retrieved from https://www.cleverism.com/market-research-techniques-primary-secondary/.
Citeman. (2009). Selection of Test Markets. Citeman. Retrieved from https://www.citeman.com/5470-selection-of-test-markets.html.
Cooper, R. G. (2019). The drivers of success in new-product development. Industrial Marketing Management, 76, 36-47. Retrieved from https://fardapaper.ir/mohavaha/uploads/2019/03/Fardapaper-The-drivers-of-success-in-new-product-development.pdf.
Guo, V. (2020). Ethics and Pricing: 5 Must Know Pricing Ethics Issues and How to Avoid them. Price intelligently. Retrieved from https://www.priceintelligently.com/blog/bid/164830/5-must-know-pricing-strategy-ethics-issues.
Moneywatch. (2007). Conducting Effective Test Marketing. CBS News. Retrieved from https://www.cbsnews.com/news/conducting-effective-test-marketing/.