Testing and Experimenting Markets

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DEI111 / CEI111
DEI111 / CEI111
Introduction to Entrepreneurship
Billbrain Institute of Technology
Copyright @ 2021 • www.bit.ac.ug • All Rights Reserved

Facilitator: Mr. Erastus Mwenda
Email:erastusmwenda79@gmail.com
+254727082569
TESTING AND EXPERIMENTING IN MARKETS
Test marketing is used to ascertain various product uses, the class or
category of users, and the motives that prompt the users or buyers.
This helps organizations gauge the nature of general competitive situations,

the latest trend in demand, etc. This test is conducted to know consumer
behavior in terms of:
● Trial: If the potential customer will try out the product at least once.
● Repeat: Whether the consumer will repurchase it after the trial.
● Adoption: Whether the customer positively receives the product and
repurchases it.
● Frequency: How frequently will the customer purchase the product.
Test markets offer marketers the opportunity to test new ideas before
incurring the expense and risk of a national introduction.
Marketers use test markets to experiment with:

● Brand positioning
● Product improvements and product cost reductions
● Advertising campaigns and spending levels
● Consumer and trade promotion strategies
● Distribution strategies
● Pricing strategies
Benefits of test marketing
1.Having a great product can serve as a marketing tool. It gives the
product the chance to sell itself:
Great products sell themselves. Over time, customers will rely on the
product they are using and decide to stick to it.
2.Competitive edge over similar competitor products: For some

industries, providing a free product trial may help test the reception of the
product before its produced in large quantities.
3.People can invest time into the brand: Money is valued more than
time. But, from a marketing perspective, time with the test products and
brand message is more valuable than cash inflow.
4.Critical feedback is received about the product: The idea of test marketing is that a
product trial allows the brand to see how the product will react in natural consumer
environments.
5.Offer incentives: Product trials generate opportunities for the brand to better the deal if
their customers are on the fence. Once customers try a product and think of purchasing it,
offering a discount or an incentive may help gain the customer.
6.It gives consumers a sense of urgency: One of the benefits of test marketing is when
prospective consumers are faced with a sense of urgency, they quickly evaluate the pros
and cons of keeping the product. Urgency is important because it forces decisions.
7.It aligns customer interests with company values: Once a trial is offered on the
product, it helps the company set expectations on its offerings. Brands can communicate
clearly to prospective customers, letting them know what to expect from the product and
how to use it properly.
8.Data provided is from actual customer spending: Replicating the sample selected for
test marketing helps the brand understand the trends that may arise once the product is put
up for sale. The buying patterns can help the brand tweak the price, size, packaging, etc.
9.Risk of a full-scale launch eliminated: Huge costs can be saved on branding,

manufacturing, and marketing if the product doesn’t pass the test. The pitfalls found during
the test launch can be rectified by the brand.
What is product experimentation?
Product experimentation is the process of continually checking for ways to improve your
product. It’s a scientific approach to product management, geared towards understanding
how customers use your products and identifying ways to improve them.
The components of a great experiment
1.The problem
A good experiment solves a real user problem. But deciding what to work on shouldn’t be
a shot in the dark. Use data analysis, market research, and customer and product
experience insights to identify user problems and prioritize your roadmap with unbiased,
reliable user data.
2. The (possible) solution

What features or changes can you offer to solve the problem for your users? Valuable
experiments provide one or more solutions that you believe will create value for users. Be
open-minded—you know there’s a chance your experiments will flop, but you’ll still
learn, even if they do.
3.The benefit
What is the outcome you’d like to see for your users? Or what business goal are you
trying to change? Experiments need an upfront definition of success. Good experiments
know the benefit they’re giving to users, understand what customers want and care about,
and see how results point to flaws with your current product strategy.
4.The users
Who are you trying to help? How big is that audience segment? And how do they
typically behave on or interact with your site? Good experiments begin with a clear
understanding of users' current behavior, and a definition of the cohort who will
experience the test.
5.The data
How will you measure success? Good experiments are built around an ultimate goal or
metric you want to improve. Meaningful, actionable customer feedback about the impact
of your product changes is the ‘secret sauce’ of a valuable product experiment.
Benefits of product experimentation?
● Identify what users love, hate, and feel indifferent about so you can fix issues fast
and spot product opportunities that’ll really move the needle.
● Save money and resources by understanding the real impact of your changes and
getting a quick response, with minimal investment and disruption.
● Reduce the risks of future releases by seeing the connection between the trends in
your user cohorts and the real human behavior driving those trends, validate your
hypotheses, reduce assumptions, and increase confidence in your ideas.
● Get wider stakeholder communication by convincing stakeholders to prioritize the
experience over the aesthetics and getting buy-in to prioritize product opportunities
that you know will create emotionally engaged users.
When to run product experiments—and when not to
● When you need to understand how your product can do an even better job of
satisfying your customers' needs
● To understand how your customers' needs have changed since you initially launched
your product
● When you need to validate ideas for future projects with reliable data, based on
unbiased experiences
● To troubleshoot issues with reliable user insights and make the right prioritization calls

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Billbrain Institute of Technology

Copyright @ 2021 • www.bit.ac.ug • All Rights Reserved

This helps organizations gauge the nature of general competitive situations,

Marketers use test markets to experiment with:

2.Competitive edge over similar competitor products: For some

9.Risk of a full-scale launch eliminated: Huge costs can be saved on branding,

2. The (possible) solution

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