How to Use Test Marketing: 3 Benefits of Test Marketing

Test marketing is an effective marketing strategy between the development process and the product launch. During this beta testing period, companies share a product or service in limited target markets so product development teams can collect market research about the product or service. The product’s performance and feedback from real-world customers help brands refine the product’s mechanics and viability before the full launch.

Test marketing may follow different methodologies depending on the company at hand. In general, the process follows these steps from the initial product idea and development:

1. 1. Alpha testing: Development teams will conduct internal alpha testing, checking the product for functionality and bugs. From there, sales teams and business owners will determine cost-effective pricing for the product before seeing how consumers respond to the price tag.
2. 2. Identifying key groups: Marketing professionals will then establish what demographics and key groups the product to advertise. These groups will not know that the product has not been officially released yet; their unbiased opinion is key to further development.
3. 3. Beta testing: Companies will optimize advertising through specific marketing channels—such as emails or social media—to clock real-time reactions to the product from potential customers. The product will also have a small-scale release in stores or online so the brand can better understand how it performs.
4. 4. Sales wave research: Companies can give out free product samples in waves as they continue to refine the product. Companies can package products as time and resources allow; the end goal is to gauge customer interest in the product itself and build lists of those accepting the freebie as each new wave unfolds.
5. 5. Simulated test marketing: This step is to gauge market demand. Companies will place products in stores or online sites alongside older ones, then invite customers to explore a shop or webpage’s offerings. How the new product performs alongside the old ones will help brands better forecast sales and understand consumer trends.
6. 6. Analyzing consumer behavior: Brands will look into customer satisfaction, complaints, and feedback and take those crucial responses into account to improve the product.
7. 7. Full launch prep: After the product completes its final stages of development, marketing teams will prepare for the official launch, creating content and advertisements. The advertisements build on the initial beta testing phase and the information about the product’s perception and sales.

There are a few ways companies can use a test marketing plan to understand how a product will perform. Consider the following examples:

1. 1. Click through rates: To share news about a product to a select list of people via email, you can track the message’s click-through rate or CTR. This may be indicative of how the launch email performs, giving brands a better understanding of what to expect and how to finesse sales predictions.
2. 2. Social media reactions: Putting some ad spend behind social media ads will help brands see how potential customers engage with the product online.
3. 3. Customer service hotlines: Track how customers react to the purchased product by analyzing customer service calls. Identify repeat questions or comments and address the customer needs in the next round of testing.
4. 4. Managed test marketing: Brands might show products in select stores in different regions to see how it performs, or test various locations within the store and price points to see how customers react to each variable.

Test marketing can be a valuable tool for your company. See how to make the most of this technique with these tips:

1. 1. Choose your test sample wisely. The sample of people you select for test marketing the product should be a subset of the actual demographic you plan on eventually selling it to. This ensures there are fewer surprises in terms of performance and reaction when the actual launch comes.
2. 2. Analyze competitors’ products. Analyze the functionality of competitors’ services and products, and look at how these companies advertise. This can help you better serve your potential customers’ needs.
3. 3. Be open to criticism. Part of test marketing is learning what works and what doesn’t. Customers can be vocal, and it is essential to listen to their needs. Feedback will help strengthen the product.
4. 4. A/B test some prices. You can try out special incentives to see which sales strategies are best. For example, your A test may lead with copy that reads, “Buy one, get one free,” and your B test may read, “Buy two for the price of one.” Determine which copy performs better so your launch can be more successful.
5. 5. Establish test objectives. Identify the critical metrics and decide which goals your test marketing campaign should accomplish. This will help you better measure the success of your effort.

Companies employ test marketing because of its many benefits, including:

1. 1. Built-in buzz: Engagement, word of mouth, and buzz ahead of an actual release can only help generate interest in the product.
2. 2. Risk mitigation: Some brands may find that a product does not perform during the test; while not ideal, it is better for this to happen than during the actual launch. A test failure helps inform why a product was not a strong candidate for a full release.
3. 3. Data collection: Tests provide companies with new customer data, including spending habits, marketing preferences, and product needs.

There are some disadvantages of test marketing. Consider the following drawbacks before launching a test marketing campaign:

1. 1. Time: Test marketing can take a lot of extra effort and time. It can take many months to identify how a product organically performs.
2. 2. Price: Test marketing campaigns combine the works of marketing, research, and product development teams, which can be a significant expense.
3. 3. Inconclusive results: Research from a test campaign is invaluable, but it may be inconclusive. Factors may change over time, affecting how consumers respond to an actual product release.

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