Focus Groups to Determine Market Pricing
Steps to Running an Informal Focus Group
- Friends and acquaintances are OK as long as they are potential users of the product. You can have anywhere from three to 10 people.
- Have people sign a non-disclosure form, it shows you are protecting your idea. You can go to the web site http://www.biztree.com/non-disclosure-agreement?ppc=1&gclid=CPaJ-8iPl7MCFYpFMgodk3UABA for a variety of non-disclosure forms you can choose from.
- Select five to eight products for people to evaluate. You don’t need products that accomplish the same goal, but do include products just from the same industry. If you have a kitchen product, you should have some kitchen products that do other jobs. All the products should be in a price range of 50% to 150% of what you feel is your targeted retail price. For example if you are targeting a price of $10.00, try to have products that vary from $5.00 to $15.00 in value.
- Decide how you want to present your product–a “looks like works like” prototype is best, but other options include drawings, rough prototypes or sales flyers. If you have a sales flyer, either obtain flyers for the other products or print out one of their web pages.
- Have people first rate all the products by how likely they are to buy the product. You want to see that your product is at least in the top 50% of how likely people are to buy a product. After the vote, ask people why they gave the products the rankings they did. Often people’s comments will give you a better understanding of how people view this category of products, which will help you in your product’s final design and also in your future marketing efforts.
- Next have people rank the products by value, with the product they feel is highest value first, and the lowest value last. This helps you determine how consumers value your product. Since you will know the price of the product just above your product and just below, you get an idea of what price your product should have. Again ask participants why they ranked the products as they did to get a better idea of how consumers think.
Most inventors are disappointed if their product isn’t the hands down rankings winner both in value and desirability. But it is not necessary to be first, only in the top half. Remember you are competing with products that already have had market success, and in many cases, products your focus group members were already aware of. A successful product doesn’t need to be better than every other product on the market, just some of them. However, that doesn’t mean you should ignore comments or rankings by participants that are negative towards your product. Instead look at those comments as an opportunity to improve your product so it can be a true market winner.