Test Marketing- De-Risk New Product Introduction

In New Product Introduction on June 1, 2011 by John Kenmuir

Seven out of 10 new product introductions fail. This includes entries from the packaged goods industry who have bigger marketing departments than many companies have total employees, multi-million dollar advertising budgets and hundreds of thousands of distribution points. Not surprisingly, it is this sector who pioneered test marketing – the risks of failure on a national scale for them are just too large.

Despite the well documented risks of new product introduction, time and again I’ve encountered industries who, armed with what seems like a good idea, blow their brains out from sea to shining sea in one fell swoop, only to be badly mauled by the result. Many a good product idea has fallen victim to poor or over-ambitious introduction.

A test marketing program replicates a full national or regional program, normally in one or two metro markets. The product is launched with all the marketing and promotion bells and whistles that would normally be associated with a national launch. This can make some production costs seem very high given a relatively low universe of potential customers for the test; however, these costs are nothing compared to the cost of failure on a national scale. Test marketing allows you to identify mine fields without mortal danger, project and calibrate with confidence and fine tune products and plans, as nothing is ever perfect out of the starting gates.

On one end of the scale, test marketing enables you to avoid large scale disasters and on the other, it is certain to lever up your chances for success with a roll out. Think you’ve got a better mousetrap? Take a baby step first to make sure the market agrees.

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