Test Your New Products--Without Spending a Fortune

Can small companies really expect to do the same level of product testing as large corporations with multi-million dollar marketing budgets?

While they usually can't spend the same amount of money, owners of small businesses have significant advantages not only in product testing, but in the whole area of market research: They usually have extensive familiarity with the marketplace.

Owners can use their experience to develop product testing programs that aren't necessarily very expensive. Still and all, business owners should be prepared to conduct research that includes the following components:

1. Doing a survey. This requires constructing a questionnaire, locating prospective customers, and getting their answers to the questions (typically by telephone or via a mailed questionnaire). Some major corporations even conduct these kinds of surveys in supermarkets or shopping centers. With some representative sampling of several hundred prospects, it is possible to draw conclusions about what they want or don't want. Unfortunately, this is an expensive and time-consuming approach to market research that most entrepreneurs don't have either the money or the patience for.

2. Interview potential customers. The focus group approach entails getting five to ten prospective or existing customers together in a group for an hour or two to probe their feelings about a particular product or service. While the results aren't statistically reliable because such a small group is being sampled, the input is extremely valuable. Many successful entrepreneurs lean toward the second approach, trying to compensate for the absence of statistically meaningful responses by listening carefully as people respond to questions and ideas.

3. Assessing the competition. If there is one area where successful entrepreneurs agree that academic type research can be useful, it is in the area of competitive information. They know that it is essential to know as much about the competition as is humanly possible, and the best place to get that aside from on-site observations is at libraries, through electronic data bases, and via literature put out by competitors.

4. Learning from others. Has your competition already tried your idea? Are they still using it? Why or why not? Answering such questions can help you avoid errors and learn from the mistakes of others.

5. Testing a prototype. A prototype of a product or service is basically a trial version--a single model or small batch of product or an experimental version of a service. Prototypes become more important as the expense of the product or service rises. The last thing a new company with a $10,000 or $20,000 product wants to encounter is a serious flaw or customer complaint after hundreds or thousands of the product have been produced.

Clearly, owners of small businesses can compensate for their lack of major marketing budgets with careful planning and close listening. The key for owners is to use their knowledge of the marketplace to ask the right questions and fill in the missing data that leads to successful decisions.