667:. In a virtual test market, new products or marketing and distribution strategies can be tested without the risk and time constraints discussed above. Another advantage is the ability to test many different products in one Virtual Test Market as the computer simulation can always be reset to the original situation before the introduction of a new product.
569:- Test markets can give competitors advance warning of a company's intentions and time to react. They may even be able to go national with their own product before the test is complete. They may also interfere with a test, by changing their promotional activities (usually by massively increasing them) to the extent that results are meaningless.
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independent from any cost & time considerations. To overcome these limitations a new type of test markets, so called
Virtual Test Markets, was devised. Virtual Test Markets are computer simulations of consumers, companies and the market environment. The technological basis for this kind of test market is a
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One form of new product launch, which is little discussed, but is probably the most prevalent - and hence most important - of all, is that of replacement of one product by a new one; usually an "improved" version. The risk levels may be much reduced, since there is an existing user base to underwrite
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Being first into a market carries considerable risks. On the other hand, the first brand is likely to gain a major, leading and ongoing, share of that market in the long term. Pioneering is often the province of the smaller organizations, on a small scale, since their investment can be that much less
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The test market ideally aims to duplicate "everything" - promotion and distribution as well as "product" - on a smaller scale. The technique replicates, typically in one area, what is planned to occur in a national launch; and the results are very carefully monitored, so that they can be extrapolated
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It has to be recognized that the development and launch of almost any new product or service carry a considerable element of risk. Indeed, in view of the ongoing dominance of the existing brands, it has to be questioned whether the risk involved in most major launches is justifiable. In a survey of
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did in the US and New Persil did in the UK). Such an introduction will be complicated by the fact that, at least for some time, there will be two forms of the product in the pipeline. Some firms may opt for a straight cut-over; one day the old product will be coming off the production line, and the
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Clearly, all test markets provide additional information in advance of a launch and may ensure that launch is successful: it is reported that, even at such a late stage, half the products entering test markets do not justify a subsequent national launch. However, all test markets do suffer from a
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The effects of this time-based advantage are devastating; quite simply, American companies are losing leadership of technology and innovation ... Unless U.S. companies reduce their product development and introduction cycles from 36-48 months to 12-18 months, Japanese manufacturers will easily
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In some markets, such as fashion businesses for example, time is a luxury which is not available. The greatest risk here is not having the "product" available at the right time, and ahead of the competitors. These markets consequently obtain less benefit from the more sophisticated new product
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The considerable amounts of time and resources necessary to conduct test markets, restrict the amount of test markets which can be conducted by companies. The risk to reveal a new product design too early is another concern for companies in fast moving and highly competitive markets, which is
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reported an average new product success rate (after launch) of 65 percent; although it had to be noted that only 10 percent of these were totally new products and only 20 per cent new product lines - but these two, highest risk, categories also dominated the `most successful' new product list
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next day the new product. Most will favour parallel running for a period of time, even if only because this is forced upon them by their distribution chains. This ensures that the new really does, eventually, replace the old; and it may reveal that both can run together.
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To a certain extent this discussion has now long since been overtaken by events. Japanese corporations led the way in reducing development time dramatically, and even to halving it in the very mature car industry. To quote George Stalk of the Boston
Consulting Group:
557:- Even the largest test market is not totally representative of the national market, and the smaller ones may introduce gross distortions. Test market results therefore have to be treated with reservations, in exactly the same way as other market research.
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New product development has therefore to be something of a numbers game. A large number of ideas have to be created and developed for even one to emerge. There is safety in numbers; which once more confers an advantage to the larger organizations.
563:- In many cases the major part of the investment has already been made (in development and in plant, for example) before the `product' is ready to be test marketed. Therefore, the reduction in risk may be minimal; and not worth the delays involved.
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The simple go or no-go decision, together with the related reduction of risk, is normally the main justification for the expense of test markets. At the same time, however, such test markets can be used to test specific elements of a new product's
542:; possibly the version of the product itself, the promotional message and media spend, the distribution channels and the price. In this case, several `matched' test markets (usually small ones) may be used, each testing different marketing mixes.
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This offers the reverse strategy. The risk is minimized since the pioneer has already demonstrated the viability of the market. On the other hand, the related reward, that of becoming the market leader, may also be
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Accordingly, the choice to pioneer or to follow no longer exists in a number of industries. The only way for an organization even to survive may be to shorten development times below those of its competitors.
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Most of the stages of testing, which are the key parts of the new "product" process, are designed to reduce risk; to ensure that the product or service will be a success. However, all of them take time.
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When to enter a market with a new product should, in any case, be a conscious decision. In relation to competitors there are two main alternatives:
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575:- Although the main objective of test markets is to reduce the amount of investment put at risk, they may still involve significant costs.
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prior to a wide scale roll-out. The criteria used to judge the acceptability of a test market region or group include:
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ranked best to worst as to how well they reflect the US market as a whole. (accessed
September 13, 2005)
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to projected national results. The area may be any one of the following:
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467:, in the field of business and marketing, is a geographic region or
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group used to gauge the viability of a product or service in the
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Stalk G. Jr; "Time --the next source of competitive advantage",
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relative isolation from densely populated media markets so that
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A number of decisions have to be taken about any test market:
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sales (as long as the new product doesn't alienate them - as
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a population that is demographically similar to the proposed
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processes, and typically do not make use of them at all.
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to the test audience can be efficient and economical.
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687:(traditional United States test markets)
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581:700 consumer and industrial companies,
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731:New Products Management for the 1980s
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27:Limited population for market study
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631:out-innovate and outperform them.
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729:Booz, Allen and Hamilton Inc.,
693:(one of Germany's test markets)
738:New trends of Global Marketing
709:and other product innovations)
533:What are the success criteria?
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1:
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586:(accounting for 60 percent).
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757:ACXIOM 150 USA test markets
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766:by David Mercer, Chapter 6
375:Promotional representative
699:(for UK product releases)
671:Traditional test markets
663:as well as methods from
614:than that of the majors.
513:Residential neighborhood
744:Harvard Business Review
717:pop-tarts & Sunny-D
665:artificial intelligence
370:Promotional merchandise
355:Out-of-home advertising
144:Account-based marketing
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179:Horizontal integration
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527:What is to be tested?
365:Product demonstration
217:Corporate anniversary
654:Virtual test markets
507:Internet online test
380:Visual merchandising
310:Behavioral targeting
184:Vertical integration
164:Influencer marketing
640:Product replacement
583:Booz Allen Hamilton
330:In-game advertising
320:Display advertising
196:Promotional content
791:Product management
746:(July-August 1988)
661:multi-agent system
567:Competitor warning
524:Which test market?
413:Marketing research
350:Online advertising
340:Native advertising
335:Mobile advertising
287:Sex in advertising
104:Consumer behaviour
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423:Consumer research
304:Promotional media
292:Underwriting spot
267:Product placement
247:On-hold messaging
237:Loyalty marketing
154:Product marketing
149:Digital marketing
16:(Redirected from
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697:Northern Ireland
685:Peoria, Illinois
677:Albany, New York
594:Risk versus time
530:How long a test?
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418:Mystery shopping
315:Brand ambassador
252:Personal selling
242:Mobile marketing
222:Direct marketing
207:Ambush marketing
174:Annoyance factor
159:Social marketing
109:Consumer culture
89:Brand management
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134:Segmentation
59:Distribution
53:Key concepts
488:advertising
473:mass market
469:demographic
465:test market
227:Franchising
202:Advertising
169:Attribution
94:Co-creation
775:Categories
724:References
546:number of
385:Web banner
272:Propaganda
79:Activation
43:Management
764:Marketing
617:Latecomer
516:Test site
510:Test town
345:New media
277:Publicity
129:Promotion
114:Dominance
34:Marketing
781:Aptitude
713:Carlisle
402:Research
257:Premiums
212:Branding
139:Strategy
703:Swindon
691:Haßloch
621:missed.
610:Pioneer
74:Service
64:Pricing
733:(1982)
707:Mondex
683:, and
262:Prizes
124:Ethics
69:Retail
483:; and
232:Label
573:Cost
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463:A
719:)
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