Articles
Help for Small Business : Market Research
by the Sloan brothers
Head Coaches, StartupNation
For your product to be a hit, you'll want to develop the right product at the right price to meet your market need. The first steps of product development should include testing of early illustrations (or renderings) of the product with your target market.
The big question is, will the product sell at your intended price? Before launching a product, an established company will spend tens of thousands of dollars to conduct market studies and focus groups to confirm that the product is "right" and that the product will sell at the intended price. Obviously market research can provide vital help for small business owners, but startups don't have that privilege due to limited funds.
According to Sam Zaidspiner at Slingshot Product Development Group, the best thing to do is create design renderings and product spec sheets/presentations so that you can obtain meaningful market feedback. "Armed with a professional presentation, you'll be able to meet with a discreet group of clients and prospects to obtain market feedback. You'll be surprised by how much you can learn - the feedback will be extremely valuable," according to Sam.
Key elements Sam recommends for your product presentation
- Clear rendering of the product: Preferably this is a photo-realistic rendering that shows what the intended production design would look like. The idea here is not to fully engineer the product. Instead, the approach is to develop the product to the point that your rendering is believable. A photo-realistic rendering is created through the use of a 3D computer file of a product with applied textures and lighting to make the product look real; this is the same basic process that is used for making animation films. Some people can react to a sketch of a concept to give you input, but most people need more help visualizing your product concept.
- List of benefits: The presentation sheet should include a list of benefits that you believe the end-user and buyer will value. Do not list features, instead list benefits; for example, do not say the toy car has a 3 HP engine (the feature), say the toy car can go 10 mph over grass (the benefit).
- Price: We suggest placing a price on your product marketing sheet. One of the goals of a market study is to assess whether people will value the benefits enough to pay the asking price. Establishing the correct price for your product is critical to making your business plan work.
Once you have a product presentation, it's time to ask important questions of your potential consumers through market research and listen to their responses. If you cannot afford to hire a qualified marketing firm to assemble a focus group and facilitate the study, then you should follow some basic rules for conducting your own focus group. Listen carefully to the answers and ask at least a handful of people. The feedback you get will be of great value in helping you to design the right product that will sell.
- Talk to end-buyers: The people who will actually make the decision to buy your product.
- Talk to at least 5 people: The more people you talk with, the more reliable the results. Talk to people that can be honest with you. Tell them that you are about to spend your hard-earned money on developing a product and that you need their brutal opinion.
- Assess the end-users: Do they value the benefits that you are excited about.
- Ask the end-users if they would buy the product for X dollars: If not, how much would they pay? Don't ask if they like the idea - most people don't want to hurt your feelings. Instead, ask specific questions regarding the price they would be willing to pay or how they'd improve the product.
- Ask the end-users what they see as the primary competition for this product: Why would they not buy this product?
Use the feedback to develop a product that better meets a market need. For example, you may have been excited about the ability to do a job more quickly but the real benefit to the consumer turned out to be the compactness of the design. You would then focus your development efforts on making the design more compact instead of increasing speed. You may find out that people are not willing to pay as much as you thought for the product.
Focus group feedback is not black and white - you will get differing opinions. When we're offering help for small business owneres, we look at focus groups as a way to minimize your risk before spending tens of thousands on development. If 10 people say that they would buy the product at your target price, then you could at least feel better moving forward with your business plan. On the other hand, if 9 out of 10 people say that they would not buy the product at all, then you may want to consider moving on to your next big idea.
Related Items
