By Roger Fritz
Every business has problems. But entrepreneurial survivors solve their businesses' problems as they arise, and grow by converting those solutions into future opportunities.
Dr. Roger Fritz has more than 40 years of experience as an educator, manager, corporate executive, university president, small-business consultant and author of 28 business and management books.
This month in Dr. Troubleshooter's waiting room, we discover the importance of test-marketing your product.
Problem: You're very enthusiastic about your new product. But before you spend lots of money to lauch it, how will you know your target market will be equally enthusiastic about it?
Diagnosis: A little test-marketing can be very helpful. What you do with the information you gather from test-marketing can be crucial.
Prescription: The purpose of test-marketing is simple: to produce and attempt to sell some of your new product to see if real people will actually spend real money to buy it. Ask potential purchasers:
- Do you like my product?
- What would you be willing to pay for it?
- If it were available at the price you have said you would be willing to pay for it, would you:
(a) Definitely buy it?
(b) Possibly buy it?
(c) Not buy it?
- How many times a year would you buy it?
- Are you buying a similar product now?
- Are you happy with the present product?
With the responses to the pricing question, throw out the top 10 percent and the bottom 10 percent of the figures mentioned to you. Mid-range answers are more realistic; they indicate the potential customers' "perceived value" of your product, which should influence your sales price.
Next, gather the data from your "Would you buy?" question. Count all of those who said that they would definitely buy your product and half of those who said that they would possibly buy your product. Compare that figure to the total number of people interviewed. If the result is:
- 85 percent or higher: You have a winner!
- 65 percent to 84 percent: Your chances are good.
- 50 percent to 64 percent: There's a possibility.
- Less than 50 percent: Back to the drawing board.
Excerpted with permission from Roger Fritz's The Small Business Troubleshooter: 152 Solutions to the Problems Faced by Every Growing Company (Career Press, $16.99, 630-420-7673).