Test marketing for startups

The Opportunity

Business Modeling

Business Planning

Test Marketing

Test Marketing

The Vapor Ware Strategy

Marketing techniques such as mail order can be utilized to test market concepts before any actual dollars are expended on production. Many entrepreneurs, when uncertain about the level of market demand for a potential product, will advertise the concept before actually producing the product. They create a product mock-up for an advertisement and attach a description of its features, benefits, and price. Only after receiving a strong response to the ad will they deem it prudent to invest money in its production.

Due to its origins in the software industry this test marketing ploy is called the “vapor-ware strategy”—because if the response rate is low the project simply vaporizes. Larry Ellison of Oracle is especially well known for testing the waters
with this technique.

Today, websites and pay-per-click advertising can be combined to quickly and effectively determine the level of interest in a piece of vapor-ware. A website with traffic driven to it by Google’s Adwords advertising can gather data on customer interest levels. The website can record email addresses of interested parties and promise to notify them as soon as the “beta product” is ready for sale. Of course, if the test market results are a flop, the website is quietly pulled and no one will ever know the true identity of the party behind it.

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