Two Approaches To Testing
The issues to be addressed in this chapter can be divided into two broad areas: (1) advanced concept testing and (2) product test marketing. Each of these tests of market acceptance has advantages as well as disadvantages, but each has its use and application based on the circumstances of the product and the bank in question. The end result of the product testing stage of the framework is to reach a go or no-to decision relative to proceeding to full-scale commercialization. This is the final chance the bank will get to evaluate the efficacy of the product in the marketplace, or a segment thereof, prior to taking the product to the total market.
Both of these approaches, therefore, have the primary aim of providing the bank with an answer to how the targeted market actually views the product after more complete development. There are two basic ways to do this. First, the product can be assessed under market like conditions without actually introducing the product to the market. This is what we refer to as testing under experimental conditions, an approach that has the advantage of allowing the bank to control the variables rather closely. However, this may also be viewed as a disadvantage in that unrealistic conditions may prevail in the experimental setting. Basically, potential customers would be asked to consider use of the product under controlled conditions and rate the product relative to its need-satisfying attributes. The second approach to testing involves subjecting the actual product to a market evaluation under real marketing conditions. Data are subsequently gathered from a sample of the total targeted market, then analyzed and interpreted.
Obviously, the second method of testing is much more rigorous and leads to a much clearer evaluation of the product’s attributes as they are presented. This method is, of course, much more costly, but the cost may be justified depending on the characteristics of the product and the strategic implications for the bank.
Testing a product under market-like conditions prior to the actual presentation to the market is what we refer to as advanced concept testing. By contrast, testing a product under actual prevailing marketing conditions is referred to product test marketing. The testing of a product under each scenario is a function of several characteristics and conditions. For example, some products will lend themselves more readily to advanced concept testing than others. The development of a tax seminar for upscale customers or the addition of the seminar to the offerings of an Asset Management Account would be a product more suitable for advanced concept testing. On the other hand, the introduction of ATMs or POSs would probably more readily lend itself to the product test marketing scenario. The introduction of ATMs or POSs is potentially far more risky and requires considerably more investment by the bank than the tax seminar. Hence, the cost of product failure will be significantly greater with ATMs or POSs at the full-scale commercialization stage. A go or no-go decision is absolutely essential when the cost of failure is great. The time and resources expended at the testing stage may, in fact, represent considerable savings to the bank if such efforts prevent an ill-advised introduction of a product or suggest major revisions to meet market expectations.
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