In test marketing, a product is marketed/made available for sale on a limited scale or in a sample market, whereafter sales are measured. In this way, the exporter can collect market data and measure the public's reaction to the product before incurring the expense of a full-scale regional or national sales launch.

Shop testing is the simplest and least reliable method of test marketing. It is normally used to find out which of two possible alternative characteristics is preferred, i.e. one of two price levels, display packs, bottle sizes etc. The method involves selecting two matched groups, each comprising 20 to 24 shops in one or the other form, and the resultant sales are compared after a number of weeks have elapsed.

The principle of test towns is much the same as that for shop testing except that two matched towns are chosen for the purposes of running the test. The method is most valuable when it is used as a basis for establishing preferences about advertising schemes or price levels. One of the problems associated with this technique is finding towns which are typical of the country as a whole. Regional differences in consumer attitudes and behaviour often make a valid selection almost impossible.

In area testing, certain geographical areas - usually selected in pairs - are used as a basis for comparing two different approaches to launching a new product. The product is put on the market in almost final form, sales results are monitored, and at a later stage, a consumer attitude survey is conducted.

The geographical regions chosen as test areas must be reasonably typical of the country as a whole and they must be big enough to produce sales figures that can be multiplied upwards to arrive at a national sales forecast. While area test marketing is a very useful tool, it can be very costly and its results can sometimes be misleading.

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