Core Concepts of Marketing

180 CHAPTER 7 INTRODUCINGANDMANAGINGTHEPRODUCT

product'sprobabilityofsuccessandallowforfinaladjustmentinthemarketingmixbefore

theproductisintroducedona largescale.

However,runninga testmarketingisnotwithoutinherentrisks.First, therearesub-

stantialcostsinbuyingthenecessaryplantandmachineryneededtomanufacturetheprod-

uctoriocatingmanufacturerswillingtomakelimitedruns.Therearealsopromotionalcosts,

particularlyadvertisingandpersonalselling.Althoughnotalwayseasytoidentify,there

areindirectcostsaswell.Forexample,themoneyusedtotestmarketcouldbeusedfor

otheractivities.Theriskoflosingconsumergoodwillt~oughthetestingofaninferiorprod-

uctis alsoveryteal.Finally,engagingina test-market mightallowcompetitorstobecome

awareofthenewproductandquicklycopyit.

Becauseofthespecialexpertiseneededtoconducttestmarketsandtheassociated

expenses,mostmanufacturersemployindependentmarketingresearchagencieswithhighly

trainedprojectdirectors,statisticians, psychologists,andfieldsupervisors.Suchafirmwould

assisttheproductmanagerinmakjngtheremainingtestmarketdecisions.

1. Durationoftesting:theproductshouldbetestedlongenoughtoaccountformar-
   ketfactorstoevenout,allowforrepeatpurchases, andaccountfordeficiencies
   inanyotherelementsinthenewproduct(threetosixmonthsoftestingmaybe
   sufficientfora frequentlypurchasedandrapidlyconsumedconvenienceitem).


2. Selectionoftestmarketcities:thetestmarketcitiesshouldreflectL1enowsfor
   thenewproductinsuchareasasadvertising,competition,distribution~ystem,and
   productusage.


3. Numberoftestcities:s110uldbebasedonthenumberofvariationsconsidered(i.e.,
   varyprice,package,orpromotion),representativeness, andcost.


4. Samplesize determination:thenumberofstoresusedshouldbeadequatetorep-
   resentthetotalmarket.
   Evenafterallthetestresultsarein,adjustmentsintheproductarestillmade.Additional
   testingmayberequired,ortheproductmaybedeleted.

Step8:Commercialization

Atlasttheproductis readytogo.Ithassurvivedthedevelopmem processanditisnowon

thewaytocommercialsuccess.Howcanit beguidedtothatmarketingsuccess?Itisthe

purposeofthelifecyclemarketingplantoamwerthisquestion.Sucha completemarket-

ingprogramwill,ofcourse,involveadditionaldecisionsaboutdistribution,promotion,and

pricing.

MARKETING CAPSULE •

1.Newproductstrategies beginbyputting"new"ona

continuum.

2.Therearebothinternalandexternalsourcesforacquiring

newproducts.

'.1.Thenewproductdevelopmentprocessincludesthefol-

lowingsteps:

a. Generatenewproductideas

b. Screenideas

c. Performa businessanalysis

d. Technicalandmarketingdevelopment

e. Manufacturingplanning

f. Marketingplanning

g.Testmarketing

h.Commercialization