Do you want to test your new business idea’s viability? Find out what potential customers think about it by holding a focus group.
A focus group gathers a small group of people who fit your target market in a room to “focus” on discussing your product or service for a few hours. Big companies hold focus groups in special conference rooms with two-way mirrors, and have them filmed and moderated by marketing specialists. However, you don’t need to get that fancy to get good results.
Before you begin, know your target customers’ age, sex, occupation, income, and any other key factors. Next, look for participants. You can visit your local mall or shopping center and ask passersby who look like they fit the profile if they’d like to participate in a focus group. You can also ask friends, family members, and business colleagues to recommend people who might fill the bill. Or, you can buy lists of people who fit your target market from list-rental companies.
Some entrepreneurs start their market research with a focus group of family and friends. Although this can give you useful preliminary results, it’s a good idea to do a more impartial focus group as well. Friends and family tend to be overly enthusiastic about your ideas, so you are less likely to get honest responses from them.
Six to 12 participants is usually an optimal number for a focus group. It’s a good idea to sign up a few “backup” participants in case people drop out at the last minute. Typically, participants are paid between $50 and $125, depending on the length of the event.
Choose a time and setting that works for your group. A focus group of businesspeople may need to be in the evening. A focus group of moms of young children may need to be held when the kids are in school. Pick a comfortable, quiet place where you participants will be able to focus for anywhere from 90 minutes to three hours–your office, a local business center, even your living room.
Before you begin, have participants fill out forms with questions about themselves such as age, sex, marital status, number of children, household income, job title, industry, or any other relevant information.
Record your focus group in some way. You can put a tape recorder out on the table or use a video camera. Often, video recordings are more useful because they allow you to see who said what, and also show you things you didn’t notice during the event. For instance, maybe you thought that everyone loved your product name, but on viewing the video, you see two participants rolling their eyes and making faces while everyone else nods enthusiastically. (Make sure participants agree to being recorded and include a consent agreement clause in the form they fill out.) Since you will be busy moderating the group, enlist a friend or business partner to take notes.
Create a list of questions to which you want answers. For instance, if you’re trying to figure out the price point for your product, you might ask how much participants would expect to pay for such a product; what is the most they’d be willing to pay; how much do they typically spend on such a product; and how often do they buy such a product. If you’re trying to choose product packaging, you might show participants different options for logos, packaging colors or designs and see which ones they would be most likely to buy. Your questions should be both closed-ended (yes or no) and open-ended “What do you like about Logo X?”). You can also offer a list of options (say, four different possible prices) and let them select one.
Focus groups are interactive and lively. As moderator, you’ll need to follow up on tangents that are productive, but gently discourage unproductive topics and lead the group back to your key questions. You’ll also need to encourage quieter participants to speak up; otherwise, one or two opinionated people will dominate the conversation, and your results will be skewed.
As soon as the focus group is over, spend some time immediately writing down your thoughts and impressions and discussing these with your partners while the event is still fresh in your mind. Pay particular attention to negative comments.
While focus groups are useful, they are only one part of your overall market research. Combine them with other tools, such as email or phone surveys, to get a well-rounded picture of what potential customers truly think of your idea.
Karen Axelton is Chief Content Officer at GrowBiz Media (www.growbizmedia.com), a content and consulting company that helps entrepreneurs start and grow their businesses.