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  • Writer's pictureFlorian

Market experimentation

Gone are the days when producers didn’t worry about marketing because the supply of a product was less than the demand (think pre-industrial revolution). Back then, if your family farm produced 6 dozen eggs, you knew you would be able to sell them because you were the only supplier in town. Also, gone are the days when producers marketed their products to everyone and anyone because supply was greater than demand. Why market a new line of diapers in a retirement community? Mass marketing became pricey, and marketing dollars were wasted promoting products to people who would never buy the products. Marketing today focuses on the actual customer, the one who is likely to have a need for the product and will buy it. This is called targeted marketing.

That’s all well and good, but how do marketing managers know what forms of marketing activity are most likely to result in sales? Below we will present what are the steps and what this experimentation really means.

First, organisations segment their market by either geographic, demographic, psychographic or behavioral categories. This allows them to precisely reach a consumer with specific needs and wants. In the long run, it might even benefit the companies because they will be able to use their corporate resources more effectively and make better strategic marketing decisions.

After the segmentation is done, the testing part takes place. This method helps organisations discover new challenges and opportunities. By controlling conditions in an experiment, they will record and make decisions based on consumer behaviour.

We think an example would be easier to better understand the process. Let’s say you own a well-known chain of beverages, either alchoolic or non-alchoolic and you plan on launching a drink that’s really different from your range of actual products. You already have an established clientele, so what should you do next? Some might go for the easy way and pop the new product on the market, but that might not be totally safe and there is a high chance that customers won’t be too fond of it. Instead, you can present the idea or description of the new product (concept testing) to your potential buyers and afterwards the product itself in final or prototype form (product testing) in order to obtain their reaction. This will help you in knowing what the target market wants and what you could do to increase the appeal of the product.

A similar example and maybe a more interesting one would be the case of Orville and Wilbur Wright, the famous American duo responsible for inventing the world’s first airplane. As brilliant as the Wright brothers were, they understood the dangers of failure. They knew that if something went wrong during a manned flight one or both of them might not be around to make a second attempt.

Of course this type of research is not easy, but at least it’s safe. It involves thoroughly gathering, recording and analyzing data and can often take a large amount of time. Experimentation is essentially risk management. Would you rather move forward with your multi-million-dollar campaign strategy with the foundation for success resting on nothing but a hope and a prayer? Or would you feel far more confident in a massive business initiative if you’d already found enormous success within a test sample?

Experimentation as a business tool has spread in recent years in more and more modern organizations as a necessity in a competition fueled workforce. Even 2 of the most used platforms today have implemented this test mode; Facebook has formed their own research unit (Facebook research) and Microsoft’s ExP Platform is dedicated to the continued launch, analysis, and theoretical exploration of online experiments.

If we were to talk about how profitable this actions is, it’s interesting to find out that according to different studies, this is the best method for maximizing revenues while also acquiring new customers.

But what is the best way to test you’re wondering? We’re here to tell you that email marketing is the most popular because it is more targeted and there are many testable features such as font, colour and pictures. Email tests can be deployed very quickly to a wide audience. Oftentimes these tests can return powerful results in short amounts of time. Many email delivery solutions like MailChimp, Bronto, and Campaign Monitor all have A/B functionality built into their programs.

Another way would be via usability testing. Usability testing is the process of measuring how real users interact with the interfaces and designs of your online or offline properties.

One more way would be via surveys. When you conduct a survey, what is it that you’re really doing? Unless you plan to receive a response from every single person in your audience population (which is impossible if your audience is still growing) you are making a statistical inference based on a sample. That means you should be running tests on survey data too.

According to Mark Zuckerberg and Jeff Bezos, experimentation is one of the key drivers of innovation and success within both Facebook and Amazon. In order to spread a culture that embraces testing as business north star, you must take the time to explicitly share your results widely within the organization. It’s not only important to share wins but to demonstrate how experimentation can answer questions, evolve, and adapt to new business challenges over time.

Keep in mind that a good testing program will not be an overnight success, but that’s the point of it! In order for it to be successful, you must face the ups and downs of it. In the same way it took Orville and Wilbur Wright many years to create their history altering invention, true positive change comes about through many repeated tests, a discerning mathematical eye, and the imagination to create something new.


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