The tool for market research - Essay Example

The tool for market researchIn this hypercompetitive global business arena, the company’s success or even mere survival is directly related on its capacity to produce and sell products which will be strongly patronized by its market. Because of this, business organizations are compelled to undertake intensive market research in order to ascertain if their offerings are likely to succeed in the market. One of the most popular marketing research tools is test marketing which refers to the company’s efforts of designing and administering a “small-scale product launch used to determine the likely acceptance of the product when it is introduced into the wider market (Marketing Research 2002).

” Amidst its wide popularity and approval as an essential marketing tool, the efficiency of test marketing is dependent on the company’s internal and market situation. Marketers should be aware that using this method posts both benefit and drawbacks. Test marketing gives significant insight which is needed by a company in order to compete efficiently in its market. For one, this tool permits a business organization to test the impact of alternative marketing plans. Since a test market is typically smaller than the whole market, investing in a test marketing effort in 10 cities is more rational for a large company than getting into a full blown nationwide product launch.

Test marketing as the name implies provides companies with a clear idea on whether a marketing effort is strategic or not without shouldering the huge cost of the whole marketing campaign in the entire market. Test marketing also allows companies to test multiple strategies without affecting the overall image of its products. For example, a company which wishes to embark on a new marketing approach and is choosing on three different ones will find it impossible to launch the three strategies on the entire market.

Thus, it will opt to use test marketing in order to ascertain the best approach for its product at lesser cost. However, the utilization of test marketing as a market research tool is dependent on the internal competency and external market situation of a company. For a large company like Revlon which caters to a niche, test marketing is not undertaken. According to one of its executives, “In our field—primarily higher priced cosmetics not geared for mass distribution—it would be unnecessary for us to test market.

When we develop a product, say an improved liquid makeup, we know it’s going to sell because we are familiar with the field” (qtd in Kotler 368). Test marketing is also typically used only on high investment and high risk products, where the chance of failure is also high. In these situations, the cost of test marketing is only meager compared to the losses which can be incurred when the project becomes a failure. On the contrary, test marketing is deemed to be unnecessary if a product is added with an important feature like new flavor for a toothpaste brand.

Sometimes, this marketing research tool is also skipped if the company is under attack by a competitor who will launch new products. The time pressure will force the company to risk instead of losing distribution or market penetration on a highly successful product (Kotler 369). Works CitedKotler, Philip. Marketing Management. New Jersey: Upper Saddle River. 2005“Market Research.” Wikipedia, the free Encyclopedia. 2007. 11 August 2007