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What is market testing?
One thing we know about any launch is that it comes with a boatload of different test phases.
Sure, we do it to mitigate risk, but also to see if something will actually be successful at disrupting the industry and driving the bottom line.
So, how do we know what testing tests what?
Various testing phases in an agile market research strategy aim to answer different questions. The main distinction between them is what market researchers seek to find out. Not only does this warrant the need for rich data, but also the need to ask the right questions.
One means of testing that market researchers are all too familiar with is market testing. Market testing is the holy grail of data which generally paves the way for the critical objectives for other types of testing as well.
What is Market Testing?
According to Entrepreneur’s encyclopedia definition, Market Testing is defined as a way “to test multiple marketing scenarios and select the most promising for expansion.”
In layman’s terms, market testing is a way to test the waters to see how well a product, service, or offering will perform…or not.
Market testing itself is made of trials of research that aim to answer such questions as:
- What is the demand for my product or service?
- Who are my customers? What do customers think about my product or service vs. my competitor?
- What are the projected sales figures within a market for my product or service?
- Where and how can customers buy my product or service, so I can establish effective distribution and marketing channels?
- What’s the optimal price point?
- Who is my competition?
- What legal obstacles stand in the way of launch?
- Which sales, advertising, display, and promotion method(s) are most effective?
Essentially, all the questions surrounding how the market will react to the product launch.
The Difference Between Product Testing vs. Market Testing
Market testing is often confused with product testing. While it’s easy to see why there are a few differences that are important to note.
Research professionals are all too familiar with product testing. The unique difference here is that product testing entails observing the performance of a product by gaining feedback from consumers. This involves employing various research methodologies to attain data related to testing a product prototype with a sample of a target audience. Product testing is typically present in every new product development.
Market testing, on the other hand, tends to be saved for products whose performance would be difficult to predict. It could also be used when products have inconsistent or inconclusive feedback. One rather large distinction between market testing and product testing is that market testing does not involve communication with consumers.
Different Types of Market Testing
Now that we know the difference between the two most prominent testing methods, let’s dive deeper into what market testing looks like.
A lot of times, researchers will test the waters by gaining feedback from friends and family about whether or not they’d be interested in purchasing a product that solves a specific need. Having those candid conversations is a great way to learn whether or not there’s an interest, and if there is, is it big enough to drive purchasing.
This type of feedback is relatively informal. It can be a discussion over dinner, a brainstorming session, or just a sit-down. The idea isn’t to gather any super-conclusive data, more so just to see if there’s potential (i.e. would people want it.)
Online Market Testing
The internet is a vast network of resources that can help researchers gain the insight they need to move forward with product ideas. Social media, online forums, and online social groups are some of the best places to drop questions about a product idea to see if it’s worth pursuing.
Additionally, the internet has plenty of other tools for market testing as well. Google Trends, Google Insights, and Google Keyword Planner are generally used for SEO but can be helpful in discovering whether or not customers are looking for similar products. For help defining who your target audience might be, Qualcast and Market Samurai are a common go-to’s for information about the demographics of the consumers who would be most interested.
Small-scale testing is exactly what it sounds like. A tiny soft-launch to see how well a product initially performs in a small sample. Business Know-How suggests that “If you’re creating a physical product, have prototypes made so that people can test it out and give you feedback on its design and functionality. Alternatively, if you’re creating a service, online business or mobile app, make a simple, streamlined version and have people start doing beta testing, providing thoughts on the interface, ease of use and overall satisfaction. Use all of this feedback to your advantage. Don’t outright dismiss criticism without considering it, and remember that if multiple testers have the same complaint, it’s probably a problem worth solving.”
Small scale testing also allows you to mitigate risk. If a product doesn’t do so hot during small-scale testing, you can go back to the drawing board without wasting a ton of resources.
Never let competition scare you. In fact, it can be a good sign that there is, in fact, a market for your product idea. Plus, consumers like choices and who’s to say your product won’t be the best one? Your competitors are gold-mines of market testing information. Take a look at the performance of their products for areas of opportunity. Often, you can discover weaknesses that you can capitalize on with your product. One way to analyze your competition is through SWOT Analysis.
Key Takeaways on Market Testing
Market testing is a way to test the waters to see how well a product, service, or offering will perform…or not. It generally is made of trials of research that aim to answer questions around how the market will react to the product launch.
Market testing differs from product testing as product testing focuses more on gaining feedback regarding how well a product is performing, whereas market testing aims to predict the market potential of a product concept.
Successful market testing means using various methods to create a conclusive analysis of whether or not a product launch will be successful. Some of the most common are close feedback, online market testing, small-scale testing, or competitive analysis.
The bottom line is that market testing is an effective tool in determining whether or not a product has success potential in the consumer market. To learn more, request a Fuel Cycle demo.