Disadvantages Of Test Marketing

Test marketing, the process of putting a product and its marketing strategy into a realistic market setting and measuring its performance, can be a great way to measure how a new product will fare. It also has many downsides. While test marketing can help gauge potential success of risky profits, it also is very costly and is not as productive if the product is similar to a competitor’s product. When test marketing this lightweight bicycle, some advantages include measuring customer satisfaction of your product, predicting product life cycle changes and strategies for each, and building buzz and reputation. On the other hand, some downsides include the costs of doing test marketing, the inability to accurately represent the population, and …show more content…
This could save the company thousands if not millions of dollars if test marketing determines the product is a flop, and the company can recall the product before mass distribution. For example, when Mcdonald’s underwent test marketing for the Mclobster for New England locations, they found that product would not be successful enough to justify a national launch, thus saving money and resources. Customers can also tell you what they like and don’t like about the product, allowing you to make changes to the product, product features, price, or other areas of the marketing strategy before national launch to make it more appealing and successful. Companies can also predict the product …show more content…
For one, it is expensive. Legalzoom estimates that the marketing budget of a new product can equal 30 to 50 percent of sales. The test marketing process can be a long one, and while the company waits for the results, they are losing money. Since this bike is similar to competitor’s products, and the population has knowledge and a want for bicyles, the company could save money by minimizing test marketing. During the test marketing of this bike, if the company decides to give these bikes away, even more money would be lost. On the other hand, if the customers have to buy these products, results may be inaccurate. Consumers may be wary of a bike that is being “tested” and choose to go with an established bike instead. These are not the only types of inaccurate conclusions that may be drawn from test marketing. With such a limited scope to market, the company cannot be sure its whole demographic is represented in its test marketing population. By choosing two urban cities to test market, this problem will be minimized for the new bike, but other factors must be considered, like how will the bikes do in cities with metro lines and bike share racks? Another disadvantage of the test marketing process is that it takes time, and in the time the company gathers data, they have shown their hand to competitors and lost competitive advantage, while if the company didn’t do test marketing, a successful product would hit the