Definition of offer test

promotion test that evaluates response to different prices and/or terms or quantities. It is critical in a direct-mail offer test that only the offer portion of the package be changed, so that any difference in response to the test package versus the control package can be attributed to the different offer. Offer tests are especially important when introducing a new product to the market to evaluate how price sensitive the market is for that product. For example, a new magazine might have one offer of 12 issues for $15.95 and another of 12 issues for $19.95. For some products, a higher price generates more sales. For example, expensive perfume sells better than cheap perfume because the consumer believes expensive perfume is better. Small differences in price can sometimes generate big differences in response. In practice, consumers seem to prefer odd prices, ending in 9 or 5, over even prices. For example, $19.95 will probably produce a higher response than either $20.00 or $19.92.