There is as much usefulness as there are limitations in test market data as a source for marketing information.
Market Research is a multi-billion dollar industry dedicated to providing valuable data to companies who provide products and services. Market testing is used to gauge buyer’s responses to new products or services and to evaluate different market strategies. It is impossible to sell people what they do not want. Market research and testing is essential in helping manufacturers find out what the consumer is looking for.
Some of the effective uses of test market data include a high visibility to the prospective consumers of the new goods or services. Most market tests involve a full-scale marketing assault that therefore increases the visibility of the product to the consumer. Manufacturers can gain insightful knowledge of the need for and success of their products. Solid customer feedback is essential to refine the effectiveness of the goods or services provided by the manufacturers.
Some of the limitations of the usefulness of test market data include competition awareness, costs and accuracy of test data. Manufacturers do not want to tip off the competition of a new product or service. This level of visibility can sometimes work to the disadvantage of the manufacturer. There can be extremely high costs associated with marketing a new product in a test region. The most costly method of test marketing is conventional test marketing such as product sampling. Lower costs methods of test marketing include Simulated Test Marketing, which is the practice of recruiting potential buyers while they shop, and Scanner Based Marketing, which is the practice of tracking what consumers purchase in a small test environment. Accuracy of test data is also important because one would presume that in the testing of new products consumers may not be as informed as needed in order to make accurate judgements of these products. External factors such as competitor counter attacks and unusual economic conditions can also skew the results of market test information.
In conclusion, I believe that test market data can be successful in launching a new product or service but much research and verification is also needed to validate the market data before any final market analysis can be made.