Marketing Management: Why Some Companies
The growing demand for large businesses’ success in the market is now challenged by stiff competition.This particular competition then drives large organizations to find alternatives of testing the society whether they are going to accept the newly launched products or not.One particular type of such process is market testing.
What is market testing?
Market testing refers to the way by which the organizations try to find out if their products that is to be launched in the market be accepted and be well patronized or not. Of course, launching a product without actually knowing at least an overview of the results is much risky especially for newly established production companies. For several years, market testing has been treated by business organizations as a large disadvantage for large companies. However, through years of observation, market testing has also been noted to have some certain flaws that reduce its advantage for producing companies. This particular information shall be given deeper discussion within the paragraphs that would follow.
There are at least three major disadvantages of market testing that makes it less-appealing to producing companies of the modern economy:
Hints of product characteristics to the competitors in the industry: it could not be denied that among the people who are to be given samples of the product for the sake of testing may come from other companies who are competing with the organization. Once they get hold of the product, it is not impossible that the knowledge that they gain about it shall be used against the organization itself. Thus, the hints of the product’s strengths and weaknesses may be used by other companies to sabotage its formal launching to the market.
Excess of production expenses spent for the samples: Most often than not, this is considered to be part of the production budget. As part of marketing, creating samples for the public indeed costs the company certain percentage of expenses. This is supposed to be eliminated to control the production excess. Certainly, this particular aspect of expense could be reduced if market testing is not utilized by the organization.
Unsure Results from the Test: Usually, those who respond to the promotional period are not a hundred percent interested in the product. Moreover, they intend to appreciate the product at the time because of its being free. Hence, the statistical reports done after the testing is not anymore that assuring to the company.
Since there are major disadvantages in the usage of market testing methods, survey analysis are more effective at the present system of industrial and commercial advancement of business organizations. From this particular method, they are not only able to protect the entities of their new products but they are also able to take good care of their reputation and trademark as they keep it secret from their competitors in their own field of business.
It is the aim of market analysis procedures to lessen the expenses of the organization from promotional activities and at the same time increase the possibility of their production success in the market. Hence, to do so, several organizations try to do away with the utilization of Market Testing and shift to its alternative of market survey analysis which is gained from ample research.
Bert Vermeulen. SIMPLE MARKET TESTING. (2003).