Following are some of the disadvantages of test marketing:
Even the largest test market is not totally representative of the national market, and the smaller ones may introduce gross distortions, Test market results therefore have to be treated with reservations, in exactly the same way as other market research.
In many cases the major part of the investment has already been made (in development and in plant e.g.) before the product is ready to be test marketed. Therefore the reduction in risk may be minimal; and not worth the delays involved.
3. Competitor Warning
All test markets give competitors advance warning of your intentions, and the time to react. They may even be able to go national with their own product before your own test is complete. They may also interfere with your test, by changing their promotional activities to the extent that your results are meaning less.
Although the main objective of test markets is to reduce the amount of investment put at risk, they may still involve significant cost.