Under what conditions are market tests

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Under what conditions are market tests

Under what conditions are market tests useful for sales forecasting? What are the advantages and disadvantages of market tests?

Answer & Explanation (1)

Test marketing is a sales forecasting method that makes the products available in various areas to measure purchases and consumer feedback. It is most helpful when a firm plans to sell new products or old products in a new location. Test marketing can be both advantageous and disadvantageous-

The main advantage is to get the feedback directly from the market thus, the organization can plan their launch. It also helps in deciding the marketing mix elements that should be used.
The disadvantages can be that large scale test marketing sometimes exceeds the marketing budget as it is expensive and involves a lot of time. It also may not depict the total market response or that the same response will be received even in future.
Verified Answer
Test marketing is effective for forecasting sales of new products or existing products in a new geographical area.

The main advantage of test marketing is that it depicts actual rather than intended sales. It also allows marketers to verify the success of the various marketing mix elements. Whereas the disadvantage is that it is time consuming and expensive and may not represent the total market response.

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