Last week we talked about the power of surveys, by discussing the ideal sample size and what types of surveys can be done to make business decisions.
We are going to examine the concept of a market test, the types of market tests, and real-life experience.
What is a market test?
I would define it as a marketing effort that tests a combination of the 4ps on a certain product or service on a specific location and time.
Market tests are considered field experiments, they are based on real-life situations. Therefore you will have real-life learning on your results and not something based on assumptions.
However, as a marketer, you must pay attention to extraneous variables that could affect your results. An example of an extraneous variable is the covid crisis that we are experiencing. Taking that into considerations there are three types of market test designs.
Types of market test designs
After only market test or post design: For example, when introducing a product to evaluate how customers react. You can benchmark against your market research objectives or other data available. After the test, you analyze results and evaluate if changes are required before the actual go to market execution.
One group before-after design or pre-post design: For example, a beverage company that is struggling to sell a product. You could spend 30 days measuring a specific location with your sales, leads or any indicator. Then introduce a series of changes like a new package, a new marketing ad campaign and/or a new price. After 30 days you evaluate your results and compare them to before to see if business improved or not. Again, there are some issues that could cloud results like seasonality.
Before-After with Control Group Design or Pre- and Post-test with Control: This is an ideal market test. You would need two similar locations for a period. First, you measure results on both locations and then implement changes in only one location while using the other as a control. Any effects of seasonality or economy are likely to be felt by the control group as well. Therefore, you have additional information regarding the effectiveness of your strategy.
My personal experience with market test
I worked on a product that was struggling to sell. We conducted market research and elaborated findings regarding pricing, promotion, and target market.
We decided to validate our market research by doing a market test in Miami. For a period of 90 days, we would change price, a first-time user discount, and would focus on a specific target market. By the end of the market test, Miami was selling more units than the rest of the United States combined!
After the market research experience, we were able to validate our findings and make a recommendation to implement our learnings.
Market testing is a cost-efficient way to mitigate the risk of a large scale launch of a product, or if a brand desires to make adjustments.
If you have any questions regarding market tests you can leave a question in the comment section below.