Why Focus Groups are a Valuable Tool for New Companies and Entrepreneurial Ventures

Entrepreneurs find that there are a number of different approaches to conducting marketing research as they go about gathering data that is vital to the success of their new venture. Conducting surveys is the classic approach, which has frankly been overused by both new and established companies. Basic marketing theory and practical experience both tell us that one of the biggest disadvantages in using surveys is that they are limited in the information that they can offer. Most subjects taking surveys are going to be too impatient to answer numerous questions, and as a result researchers must limit themselves to the most important questions.

But there is another major disadvantage for new companies that are trying to understand their target market. Surveys are only valuable for receiving feedback on existing products or opinions on future products. Entrepreneurs can use surveys as a tool to gauge the interest of potential customers in purchasing their products. However, the responses are going to be limited to their expectations of future products and can easily be distorted by the respondents' imaginations. Favorable responses may be meaningless if entrepreneurs fail to address the needs of their customers.

The survey takers also cannot adequately address their expectations for a couple of reasons. Since the market researcher is limited in the number of questions they are able to ask, they cannot adequately understand all of the various features that the customer is going to want in their products. They may make erroneous assumptions as to what features are most important and focus on the wrong information as they structure the survey. Another problem with surveys is that most questions only allow for respondents to answer them in the way that they have been structured by the researcher that put it together. This results in very basic feedback that may not tell the company much more than they already knew or could have guessed.

The obvious advantage that focus groups have for established companies is that they allow for more detailed responses by the participants. But an overlooked value that they hold for new ventures is that they enable researchers to receive detailed feedback on their actual products rather than confirming assumptions that the researchers may have already made. Rather than being biased by expectations or prejudices, focus group participants will be able to tell researchers what their experience with the product was and can let the researchers know about additional features that they may not have considered.

The challenge with operating a focus group is that the researchers must work with a much smaller sample of participants than would be available through distributing surveys. The key is to make sure that the participants adequately represent the target population. A good strategy is to identify potential candidates for a focus group and ask them to participate in a screening survey. After conducting the survey, the researchers can then remove any outliers who do not adequately represent their target market and select the best participants for the focus group. By ensuring that the sample of participants is a good representation of their target market, they are able to develop a focus group that will give their company a much better understanding of the desires of their target market than they would receive from only conducting a survey. Many entrepreneurs do not think to conduct a focus group when they are launching a new venture, and as a result they are limiting their understanding of their target market.