The purpose of market testing is to find out if your money-making idea stands a chance of becoming a reality. Market testing is how an aspiring entrepreneur learns how to best attract consumers to her product or service.
What Market Testing Will Tell You
One of the first keys to success in any sort of business is meeting demand. No matter how great you know your business plan is, nothing can come of it unless other people think your plan is good enough to spend money on. Market testing is where you learn how your service would be received. It familiarizes you with your customers, and so much more. You will learn about the competition in your field, how different restrictions might affect your work, and what are the best methods of reaching the public with your idea.
Research is the First Part of the Test
Whether your idea centers around goods or services, it isn't likely that you are the first game in town. Learn everything you can about your competitors. Even if their businesses are only tangentially related to yours, there is a wealth of information to be gathered from close observation. Pay attention to their customer base, and find out what their service lacks (that yours can provide). Before you begin to shop your idea around, make sure you know exactly what you're offering. Know the cost of production, labor and shipping. Know intimately all the steps that need to occur before your dream can turn a profit.
All About Feedback
Market testing is all about feedback. First, you must construct a prototype of your product or a thorough description of your service. Then, the search for exhaustive feedback begins. Present your idea to prospective buyers, the people who make purchasing decisions for a company that would supply your product. Attend trade show specializing in your area of concern, and see how your prototype stacks up against the competition. If the buyers are uninterested, the reasons why are invaluable to your goal. Dealing with buyer's concerns will help you see where your product needs improvement, as well as sharpening your very necessary salesmanship skills.
A modern option for the Internet savvy business woman is multivariate, or "split" testing. Split testing allows you to alternate pieces of your advertising or product to see which is most effective with an audience. If you run two websites, advertising the exact same service in the exact same manner, split testing will tell you if the green background or the blue background draws more hits. Similarly, you can learn if more people are more interested in your "free shipping" option or your "reward points" option, by which respective site sees the most business. This will tell you more about what your customers want, and allow you to tailor your business to their needs.
Market testing is a process. It begins with you becoming totally aware of your own product, its place in the market, and its weak spots. Once those concerns are addressed, the process ends with your customer's awareness and approval of your product. That is the result of good market testing.