How to Use Focus Groups to Test New Products or Services

When you develop a new product or service, it’s difficult to know whether customers will like it or how well it will sell.

Large corporations typically hire research companies to test an offering before it goes to market with a sample of potential customers. These focus groups give honest feedback regarding what they like and dislike about a product or service, which can then be incorporated into its design or implementation. Although expensive (thousands of dollars), the process can save a company big bucks because it gets the offering right the first time.

Your small business may lack the marketing budget to hire a traditional market researcher, but you can use the same principles to develop your own focus group — and get feedback on your products or services before you offer them to customers. Here’s how.

  • Select a group of participants. Enlist someone you know well to help you with this. Participants shouldn’t know you or be overly familiar with your business. The most important part of the process is to select an objective group of six to 10 people. An inexpensive way to gather a focus group is to post an ad in a free local newspaper or on a website like Craigslist. Offer a nominal amount of money ($20 or less) for participation. Send each person who responds a brief questionnaire to identify his or her age and interests. With your helper, select participants who most closely match the profile of your customer base. (Note: Doing this alone can allow bias to creep in without you even realizing it.)
  • Choose a moderator. From this point on, you will be hands-off in the focus group process: A group moderator should present your product or service, ask questions, and collect data. This moderator should be someone who is not connected with your business and can operate independently. Choose an acquaintance who has business acumen and relates well to people. Focus group members need to feel comfortable enough to share their opinions.
  • Collect the data. Decide ahead of time what it is that you want to know about your product or service. Do you want feedback on your price point? Do you want to know whether people find your offering useful? Design a series of questions that solicit this type of information. You can either videotape the group sessions or hand out written questionnaires to each participant. The benefit of taping the session is that you can hear voice inflection and see body language, which will give you further clues about how potential customers may react.
  • Incorporate the feedback. Once you’ve collected feedback, what do you do with it? You may get wildly different opinions in your focus group, and you don’t have to make changes to accommodate every one of them. However, if, for example, six of your 10 participants say that they wouldn’t buy your product at its proposed price, you should consider changing your pricing strategy. Likewise, if most group members mention that your product was difficult to use, you may want to consider altering its design to make it user-friendly.

Setting up a focus group to assess your products and services can help your small business develop new offerings and predict revenues more accurately. It can also help you avoid costly product launch mistakes.

About Angie Mohr

Angie Mohr is a Chartered Accountant, Certified Management Accountant, and financial consultant. She has worked with thousands of clients over the years from mom and pop startups to rock bands and celebrity chefs. She is the author of the best-selling Numbers 101 for Small Business series of books and writes for Forbes, MSNBC, the Globe & Mail, Yahoo! Finance, Investopedia, and Motley Fool, among other financial publications. Her new book, Piggy Banks to Paychecks, helps parents teach their children how to be money smart. She splits her time between Canada and the United States and currently lives by the ocean with her husband and two children, who have finally learned that money doesn’t grow on trees. For more, go to www.piggybanks2paychecks.com.
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1 comments
mender
mender

Such a great post. I really happy with your post. it is very effective for us............

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