A market test allows an organization to try a new product in a small area to predict its success, but it risks competitors interfering and other factors like economic changes affecting the results.
With a market test, an organisation launches a product in a specific preselected limited
market to test how the market will react to the product. The data gathered from the
market test can then be extrapolated to the full market. One of the main concerns
Sales Management
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in using market tests to gauge the potential for a new product is that competitors
can see what the organisation plans to launch and take pre-emptive action. Many
researchers also have concerns about this method of sales forecasting, since there are
several marketing environment factors that can influence the results obtained. A good
example is the situation where, while the organisation is busy with its market test, a
competitor begins a massive promotional campaign – this can have a major impact
on sales of the product being tested, and thus on the sales forecast. Other elements,
such as changes in the economy, can also have an impact on the results
paraphrase to one short sentence and use simple vocabulary
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