Test Market

Test Markets are very unfashionable in global marketing and large conglomerates. What would they know? Many large consumer goods firms won’t exist in a few years (especially FMCG in Australia). The retail duopsony will kill the majority as they perform classic backwards vertical integration. Large firms tend to have large national, if not global customers. Their customers demand homogeneous ranging. They desire scale and total geographic coverage. It’s all or nothing. I’m getting off the point here a bit….but the point is being nimble and without infrastructure can create a massive advantage.

Seth Godin’s latest book Small Is The New Big, espouses this clearly, because when you are small you can do things they can’t. Like test markets.

Test markets can:

–          iron out production problems

–          prove product with users

–          improve version 2.0 of your widget

–          prove revenue

–          facilitate supply contracts

–          assist in 2^nd stage financing

–          recruit sneezers

The cost of failure often morphs into a test market. If you build an effective test market with a foundation customer, it may well be the leverage you need for a significant contract to scale up.

Flip your thinking from a minimum cost per unit, to a minimum total cost. So long as you know the profit margins will be there when you scale up at V2.0.

We did this and found we could do a test market for 10% of the cost of a full scale launch. If we fail we save 90% of our cash, or the ability to fix why it failed. We succeed even if we fail.

Ask your ‘believers’ (people in your value chain putting in time and effort to make this happen before they get money out of you), how cheaply they could trial this concept. Could they do it manually instead? Get your supply chain working for you. Shift their minds from quotes, and capital required… ..to temporary methods that will make do. This isn’t about compromise. It’s about bridging, and the bridge must lead to your final ‘remarkable product.’

This works because your changed focus will change the thinking of your ‘believers’. That’s when they will think of ways how to. It worked for us.

How can you run a test market?