Don't Launch Blindly: How Test Markets Can Save Your Small Business Time and Money

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Ever wondered how a company like McDonalds knows a new menu item will be a hit before it’s released? They don’t guess. Instead, they use a strategic process called a test market to launch a product in a small environment. Big brands utilize test markets as a powerful tool for validating their business ideas and preventing risk. Utilizing this principle is very beneficial for small businesses to ensure your next big idea is a success.

The Big Business Example

McDonald’s created their Chicken McNuggets in 1979 and unveiled the product in select locations like Kansas City, MO and other large markets. This new item caused a lot of buzz and franchises wanted to bring in this new item. However, a full-scale launch was halted due to supply chain issues due to the demand.

In 1983, McDonalds solved the chicken supply chain issue and release chicken McNuggets across the United States. The product, like before, was a huge success and became the permanent menu item that we know and love.

Most recently, the company has taken a digital approach to understanding how their customers                Photo By Consumer Time Capsule 

 feel after many internet users made it clear that the company should bring back the legendary snack wrap. The company brought it back this past summer, which could possibly hint at the menu item becoming permanent.

McDonald’s gathers data from their process of market testing, customer feedback, operational suitability, and profitability to determine if an item will become permanent. The introduction of Chicken McNuggets shows that using test markets will help you gain a better understanding of how the general population will react to changes within your business and if it is profitable.

The Small Business Example

Now let’s apply this to a small business. Malik owns a chain of food trucks in Miami, FL He offers a wide range of Soul Food and is looking to add a new item to his menu but, he is unsure how well the product will sell if he makes it available.

Malik goes to the drawing board and decides what type of new food he should offer and how it will differ from what he has already. He decides to unveil a “Biscoff Cheesecake w/ Ice Cream” dessert. Malik feels that his customers will enjoy this item and begins to plan his steps of execution.

His first step of execution is creating social media posts that features the new product and asks his audience if they would like to try the new product. After receiving a lot of great feedback, he decides to offer the dessert in his food trucks for a limited time of two weeks. The small business’s social media engagement skyrockets as the algorithm pushes the video of the dessert and they begin to prepare for this highly anticipated menu item.

The dessert performed much better than expected and new customers would come and mention that they wanted to try that treat specifically. This market test helped Malik determine whether he should continue to offer this new menu item or ditch the idea all together. Malik used social media engagement and customer recommendations to make a well-rounded business decision.

Conclusion

Test marketing isn’t only for big corporations, this method can be applied to your small business to increase engagement and attract new customers. Think of a small step that will get you closer to testing your next big idea. You never know how your audience will react and what new audiences you can cater to.