After the product development, generally firms conduct a product testing that one could testify the accuracy of the information on the basis of which various stages were completed. These commercial experiments are necessary to verify earlier business judgements. Thus, the object of this stage is basically to assess whether the product meets the technical and commercial objectives at various levels in order to ascertain the product acceptability. There are three types of tests usually conducted :
- Concept Testing,
- Product Testing, and
- Test Marketing
Concept Testing
This is concerned with measuring customer reactions to the idea or concept of a product. In fact, it is a kind of research in which the product idea is screened before any money, time or labour are committed to making the prototype products. The idea of a product with as many details as possible is made known to the customers either verbally or through the use of suitable blue prints. The response of the customers is checked and only if it is found encouraging, then the development of product prototype is taken up. For instance, when the rest of the world had largely gone in for synthetic detergent in the powder form, it was decided by the Hindustan Lever Limited to test a detergent bar as a concept, because in India most people do not use washing machines or even buckets and are accustomed to using a bar to rub on the fabric.
Concept testing can tell whether the product is likely to be a success or not. To achieve better results, however, the product concept should include the finished product itself with all details, viz. packaging, price range, the brand name, etc. On the basis of these details, interviews are conducted to collect the opinion of the would-be purchasers.
The major advantage of concept testing is that the management could form early judgements on the likelihood of the market success of the new ideas. The other objectives of concept testing could be :
- To evaluate the relative merits of several new product proposals,
- To determine whether the product idea is to be abandoned or modified.
- To determine the size of the potential market, and
- To guide the management to adopt suitable marketing policies in advance.
Concept testing has the following limitations or drawbacks : It entails some risk of disclosing the company plans to competitors. There is time-lag in obtaining and assessing the results. Respondents may overstate their interest and encourage unsound development. The validity of any measure of potential market size obtained through early stage concept testing may often be dubious. Findings may also be misleading if the test is not carried out properly.
Product Testing
Once the concept test of the product is successful, the next step is to put the real product into a few selected markets. This test will prove whether the product performs as expected or whether it lives up to the promise of the concept. Such a test enables the management to pick out the likes and dislikes of the consumers towards the product. It also gives an opportunity to the buyers to compare the product with the competitive products.
The objectives of product testing are :
- To assess proper product performance,
- To minimize the risks attached to full-scale launching of a new product,
- To identify the most productive market segments, and
- To collect necessary data about the responsiveness of the customers.
However, this is not a foolproof system for predicting the future. It cannot help to forecast the market size, sales volume, brand share, repeat buying, etc. Correct pricing can also be assessed.
Test Marketing
Even the most favourable results from the two tests mentioned above are not a conclusive evidence for the success of a new product. For instance, even where the product is seen to possess a high quality, market failure is still a possibility if other important factors in the marketing mix show weakness. It is, therefore, logical to examine how the company’s total marketing mix may be tested by conducting test marketing. Under test marketing, the product is introduced in selected areas often at different prices in different areas. These tests would provide the management, an idea of the amount and elasticity of the demand for the product, the competition it is likely to face, and the expected sales volume and profits it might yield at different prices. Experience shows that the chances of a new product being successful are ‘significantly greater’ if it is first put into a controlled test market where it is exposed to realistic competitive conditions.
The objectives of test marketing are :
- To evaluate a complete marketing plan including advertising, distribution, sales, pricing, etc.
- To determine the promotional media mix, channels, etc., and
- To forecast the likely sales volume.
Though test marketing has definite advantages, there are some limitations as well :
- Competitors’ response and their defensive action may not allow test marketing to provide a conclusive result.
- Test marketing is a costly affair.
- It is a time-consuming method. Many firms avoid test marketing since they wish to be “the first in the market”.
Though test marketing is not a perfect simulation of full-scale production and distribution, yet it may provide very useful information for better planning of the full-scale effort. It also permits initial pricing mistakes to be made on a small rather than on a large scale. “Test marketing does not eliminate risks, it only improves knowledge, and reduces chances of expensive mistakes.” Therefore, most firms do resort to test marketing. For example, Liril Soap, introduced by Hindustan Lever Limited, was originally tested in two towns (Hyderabad and Lucknow). These towns were selected because of their different characteristics, which make them representative of a large spectrum of towns in India. The product was distributed in all normal outlets, in the whole town and supported by advertising to inform the improvements which were successfully incorporated before the product was nationally extended.
To make test marketing more fruitful, a ‘post-launching’ survey should be conducted. The survey will reveal whether the earlier satisfaction continues to be derived, whether people like the product and make re-purchase, whether the advertising is appealing, etc. On the basis of the findings, changes will have to be incorporated before the product is finally launched in the market.