4.0 Target Mkt. Research

How to Start a Business >> Each section contains key Action Items located within the downloadable Action Guide >> Click to Download Action Guide.

4.1   What features and benefits do your customers want in your product or service?

Compare and contrast your final answers from 2.1, 2.2 and 2.3 with your competitive research findings in 3.4.

ACTION ITEMS: Complete the Action Items in your Action Guide.

WRITE a clear and concise description of your product’s best features and benefits. Describe your product as if you were the customer reading about your product or service in a magazine advertisement.

4.2   How much will customers pay for your product or service?

The goal of this lesson is to understand that supply and demand for your product or service will often establish a “fair market” price.

Numerous entrepreneurs base their initial price on what it costs to produce their product plus a reasonable markup for profit.  When competitors are involved, entrepreneurs begin to set their prices close to a nearby competitor’s price to be “competitive” in the marketplace.

In our upcoming target market research, we want to understand “what” the customer is “willing” to pay for a product that provides great features, benefits and value to them.

In some target market research, you may use “open ended” pricing surveys to uncover the lowest and highest prices that prospective customers might pay for your product or service.

In other target market research surveys, your product or service may be in a rigid and extremely competitive market environment.  In this case, you may choose to provide a range of predetermined prices with a range of product or service features and benefits to uncover new price points for your market.

Your research may find your specific target market is willing to pay a lot more than your competitor’s price and therefore your product or service could demand a higher market price.

However, depending on the “sample” target market customer prospects that you have chosen, you may find they want a lower priced product.

You may find that your target market customer prospects know the costs of your competitor’s products and services and are only willing to pay a competitive price–this is what is commonly called “the price the market is willing to bear” or “fair market” price.

Therefore, it is extremely important to validate your specific “test” or “sample” target market customer prospects since you will be formulating your initial business decisions based in part on your research from their responses.

As you conduct more and more surveys and refine your research, you will find a price that will be acceptable to the “majority” of your prospective customers.

How much do you think your customers are willing to pay for your product or service?

ACTION ITEMS: Complete the Action Items in your Action Guide.

PROVIDE the “average price” that YOU would pay for your product or service

PROVIDE your COMPETITOR’S “average price:”

PROVIDE the “average price” that you hope PROSPECTIVE CUSTOMERS will pay:

4.3   How can you get in front of the exact customer that will buy your product or service?

Compare and contrast your final answers from 2.4 with your competitive research findings in 3.3 including your telephone research with your competitor’s “Customer Service” and “Marketing” departments.

You need to determine specifically how you can get in front of your “ideal” customers.

ACTION ITEMS: Complete the Action Items in your Action Guide.

CREATE a clear and concise description of your ideal customer.

LIST the top five areas to locate your ideal customers:

1)

2)

3)

4)

5)

4.4   Product and Service Introductions – Intellectual Property, NDA’s and Sell Sheets

Telling others about your “proprietary” or “confidential” idea can be a very scary experience for the first time because you feel like someone may steal your idea.

Generally speaking, unless you are providing your idea to a DIRECT competitor, most people will simply say, “Wow, that’s a cool idea” and then move on with their day.

As you can see through this Action Guide, starting a business can be overwhelming without a step-by-step action plan.  With this in mind, most people will not even consider stealing your idea because they are too busy with their own life.  It’s that simple.

However, how can you prevent your idea from getting stolen?

Intellectual Property

Intellectual property is defined as patents, trademarks, copyrights, and trade secrets. Consequently, it is important to recognize what might be considered your intellectual property.

Copyright – this protects original works captured in a tangible medium: written or recorded songs, lyrics, tunes, artwork, pictures, websites, articles, etc. This right is granted to the author upon creation, but it is recommended the work be registered with the Library of Congress, especially if it will be used to generate revenue.

Take Action: begin adding “Copyright” or “©” the year and your name or company’s name to every document, web page, etc. This is not required to gain protection, but is recommended.

Ex: Copyright 2010 USCFE or © 2010 USCFE

Trademark – this protects your brand, logo, and tag line related to your service or product. Register your trademarks with the U.S. Patent and Trademark Office (USPTO) to gain full protection and receive the ability to apply the Registered ® mark to your items.

Take Action: begin adding TM signifying trademark to all your logos, brands, tag lines, and other unique words, designs, or phrases that relate to your product or service. This will give you some protection while you go through the registration process with the USPTO.

Ex: USCFE(TM)

Patent – this protects your unique inventions. There are many requirements that must be met for an invention/idea to be considered patentable.

Take Action: if you have an invention/idea that you feel is patentable, consult a patent lawyer or patent agent before disclosing it to others. The first meeting should be free. You may schedule a few meetings with different lawyers and agents. This might help you get more information for free and to get a sense of the individuals who may be helping you patent your idea in the near future. Don’t just go with the first one you meet, especially if you do not feel comfortable with them. You may find some speak very technically and others are easier to understand. Go with the one you feel will compliment you best and has the experience you need. Ask people in your network to see if any can connect you to a reputable patent lawyer.

Prior to your meeting: research www.USPTO.gov to learn about: patents, provisional patents, and related terms. There is a real strategy to patenting an idea. So go to the meeting prepared. Do not waste your time or the lawyer’s time with the definition of what is a patent? Research basic knowledge, so that you can gain the most from your meeting.

During the meeting: do not simply disclose your idea/invention. You are not seeking his or her help patenting your product just yet. Instead, ask how you can share your idea/invention with others and not jeopardize the patentability of it. This is VERY IMPORTANT! Do not proceed to disclose your idea/invention to others without consulting the lawyer or agent first.

Trade Secret – this protects things like secret recipes and processes. It only remains protected if it is kept secret. It is important to use non-disclosure and non-compete agreements to help protect trade secrets. Agreements should be drawn up by a lawyer and used for each individual that may be aware of a trade secret such as: employees, contractors, etc.

Non-Disclosure/Non-Compete Agreements

A Non-Disclosure agreement is a document that requires the recipient of confidential information to not disclose the information to third parties.  Most Non-Disclosure Agreements include a Non-Compete Agreement that when signed by the recipient, prevents them from acting on the idea that you supplied to them.  Speak to a lawyer to create one for you.

While in theory these agreements do what they are supposed to do, very few people are willing to sign NDA’s especially in a “random” test market survey.  Venture capitalists will not usually sign NDA’s and very few Angel investors will either, but you should still ask for it.

Typically, employees are required to sign these types of agreements before they can begin employment and they do work well in an employee situation.

If you’re willing to pay your test market prospective customers, then you can probably get them to sign a Non-Disclosure/Non-Compete Agreement.

However, since you are probably “bootstrapping” or doing everything at the lowest cost possible right now, you’ll probably find a way to conduct your test market research for free.

Sell Sheets

What’s the next best way to prevent people from stealing your idea?

Look Official.

One way to make your product or service appear to be already in production or actually on the market is by using a “Sell Sheet.”

WARNING: If you feel your product is PATENTABLE, consult a patent lawyer for assistance prior to disclosing your product in a Sell Sheet or web page.  Moving forward without consulting a patent lawyer may jeopardize the ability to get a patent.

A “Sell Sheet” may look like an advertisement in a magazine, an order form from a catalogue, a company brochure, a one page flyer or even an Internet website page.

Your first sell sheet can be a simple document that you create on your own computer or you may consider spending a little bit of money to hire a graphic designer to create a sell sheet or website page for you.

This page is designed to convey all of the important details that you have been researching about your product or service.  The sell sheet will present your product or service’s best features and benefits and describe who specifically can benefit from the product or service.

Suggested Price Included

If your research has uncovered an average price for your product or service, you can create your sell sheet with a range of prices higher than your competition’s average price to test the market’s highest price threshold.

In this example, you are testing your target market customer prospects to see how much they would actually pay for your product or service’s unique features and benefits.

Using a sell sheet with pricing can actually enable you to try and solicit and secure orders from these potential real customers for your product or service before it’s actually available.

When the customer decides to place an order with you, they must then be notified that you are collecting orders IN ADVANCE of delivering your product or service.  Fulfillment or delivery time would then be communicated to the customer.

This is an excellent way of demonstrating customer demand and a very shrewd way to uncover funding solutions for your business before you go into production or distribution of your product or service.

Alternatively, you can also bring the customer to the point of “buying” the product or service and then suggest to them that this was a test to uncover product demand.  You then ask the customer if you can contact them when the product is available in the near future.

Suggested Price Not Included

If your research has uncovered very little or no competition, you may create a sell sheet that is designed to look more like an official survey.  This can also work well for an Internet Website page or can be used with the online survey system in the next.

Keep in mind your goal is to see if customers will buy your product or service and at what price.  In this example, you will create a document that suggests your “company is surveying potential customers for a new product that will be announced in the coming months.”

Your wording may include, “(Your Company) has chosen to research potential customers to uncover the best customer price point for (Product/Service) launch in (? = 3 months ahead).”

Product, Service or Company Name

Have you determined a name for your product, service or company yet?  If not, come up with a generic name for your test market that can be changed in the future.

Your primary goal is to create a research method that simply looks official and can assist you with surveying your target market.

In 4.5, you will determine the target market research method that best reaches your target market in the most efficient manner.

ACTION ITEMS: Complete the Action Items in your Action Guide.

ADD “Copyright” or “©” the year and your name or company’s name to every document, web page, etc. This is not required to gain protection, but is recommended.

Ex: Copyright 2010 USCFE or © 2010 USCFE

PLACE TM on all your logos, brands, tag lines, and other unique words, designs, or phrases that relate to your product or service to signifying it is your trademark. This will give you some protection while you go through the registration process with the USPTO.

Ex: USCFE(TM)

SCHEDULE a meeting with an intellectual property/patent lawyer or patent agent.

OBTAIN and use non-disclosure and non-compete agreements.

DEVELOP a Sell Sheet and add relative information such as: product, service, and/or company name, and suggested prices, etc.

4.5   Survey Creation – Methods, tools, objective/subjective research, SurveyMonkey.com, etc.

Target Market Research Methods

A few target market research methods that can be helpful with your surveys include:

Live one on one or group interviews

  • Telephone surveys with one or several people on the call
  • Internet surveys via e-mail and website pages
  • Postcard Mailers
  • Recorded phone messages that require customer prospects to leave a voicemail

There is nothing like face-to-face or one on one research with a stranger who expresses interest in your product or service.  It’s an awesome feeling, however, when there is one that likes or loves your product or service, there will be numerous others who have no interest.

Your job is to stay motivated during this process through the ups and downs.

Each of these methods can help you uncover both “objective” and “subjective” information and details about your product, service, company, market and customer buying behaviors.

Let’s take a look at who, what, where, when, why and how you can complete your research.

Objective Research

Objective research might include questions to uncover information about your product or service’s market, competitors and other data that is not “personal” to the customer.

Sample Questions:

Have you seen similar products or services like this on the market?

Have you visited local establishments with similar product or service offerings?

What are the names of similar companies that offer this product or service?

How did you learn about these similar products and services?

Where have you seen ads for these similar companies, products or services?

Do your associates use this product or service?

Do your family members use this product or service?

Subjective Research

Subjective research will include questions specifically relating to the customer’s “personal” desires.  Examples include certain product or service features and benefits they would like to receive from using the product or service along with the prices they are willing to pay.

Sample Questions:

What do you like about this product or service?

What are the features of this product or service that are most important to you?

What benefits of this product or service do you like most?

What price are you willing to pay for this product or service?

If these (** list **) features were available with this product or service, would you pay more?

How much more would you pay for these additional features?

Why would someone want to participate in a survey?

There are numerous reasons why people enjoy providing feedback for surveys.  Sometimes, they just want someone to talk to them!  In all seriousness, many individuals do like to feel like they have contributed information to something new.  It’s just human nature.  Here are several concrete reasons why individuals are willing to participate in target market research.

Will your product or service solve a problem for them?

Will your product or service make their life easier?

Will your product or service make money for them?

Will your product or service save them money?

Could you pay a small sum of money for their feedback?

Could you give away your product to them if you received customer feedback from them?

Could you highlight the customer in an advertisement if they provided feedback for you?

Are there other companies that could benefit from your target market research?

Could you partner with an organization to give away something for free?

Could you buy something inexpensive and give it away with each survey?

Can you buy something in high demand (Sports tickets, etc.) and provide a chance to win the item if they take your survey?

Your job as an entrepreneur is to be creative in every aspect of your business.  Let your vision for success unfold and begin to realize that you have a solution for every challenge!

“Live” one on one or group Interviews

Most entrepreneurs are bold and will go to great lengths to uncover important information about their industry, product, service, company or target market.

If you can’t personally imagine conducting surveys in some of the examples below, then you must gather a team of people who can conduct the surveys for you.  Live one on one interviews can provide great information, so get the job done!

Can you contact ideal customers in advance to setup individual or group interviews at a local library, chamber of commerce, community center, conference room or other location?

Can you visit your ideal customer and “knock” on their front door at their home or office?

Is there a www.meetup.com group that includes your ideal customers?

Are there people on www.facebook.com or www.linkedin.com that you could survey?

Would your ideal customers be located at a tradeshow, conference or special event that you could visit and survey them at the event? (Be careful not to give away too much information if many of your competitors are located nearby at the event.)

Are your ideal customers located somewhere that you could survey them when they enter and exit a building?

Do they frequent a mall setting where you could stand near an escalator or elevator and ask them three to five brief questions?

Are there any stores with complementary products, but not competing products, that would let you survey their customers?

Could you go to a local college and survey their students?

Could you stand near a busy downtown intersection and conduct a survey?

Could you visit a busy city park to conduct surveys?

Telephone surveys with one or several people on the call

Can you look up your ideal prospects in the phonebook’s white or yellow pages?

Can you look up your ideal prospects via Internet search methods?

Can you find your ideal prospect’s website? Can you find hundred’s of them?

Does your ideal prospect belong to an industry association?  Can you buy their list?

Does your ideal prospect belong to a certain type of club?

Can you entice customer prospects to contact you via posters, displays, promotions, etc.?

Is your product or service general enough that you could call random phone numbers?

Can you find “List Companies” that will sell phone numbers to you? (Listed down below)

Internet surveys via e-mail and website pages

Can you acquire the e-mails of your ideal customers and send them a survey?

Can you refer your ideal customer prospects to a website page?

Can you work with an industry association to create a “co-branded” or joint survey to their members or prospects?

Can you partner with a large website to conduct a survey together?

Could you afford to create a “Google Adwords” online advertising test?

Could you purchase an e-mail list from www.lead411.com and link them to a survey?

Could you use www.surveymonkey.com to create an efficient e-mail survey?

Postcard Campaigns

Can you create a postcard mailer campaign and have customers call you?

Could you hand out postcards as a flyer and refer customers to an online survey?

Could you afford to participate in a www.valpak.com coupon direct mail survey?

Postcard printers:

www.modernpostcard.com

www.vistaprint.com

Mailing List Companies:

www.edithroman.com

www.infousa.com

www.lead411.com

www.hoovers.com

www.dnb.com

www.salesgenie.com

Recorded phone messages that require customer prospects to leave a message

Can you place an advertisement in a local newspaper, magazine, chamber of commerce newsletter or create a poster or flyer in a local establishment directing customers to call a local telephone number or a toll-free 800 number?

Defining Your Target Market Research

It’s time to think creatively and really learn more about the potential of your business!

You have learned numerous methods to survey your ideal customer.

You have uncovered your ideal customer characteristics.

You have determined where you can locate your ideal customer.

You must now determine the best way to reach your ideal customer for your survey.

Think about how you can access the most ideal customer prospects in the most efficient manner.  You really want to reach the most targeted customers that can provide the most valuable research.  Your primary goal is to uncover constructive positive and negative feedback to help with your decisions to advance your product, service or company.

Begin to think through each of the research methods above and carefully consider if you can reach your ideal customer through one on one personal interaction.  Interviews with people that you do not know will provide “non-biased” information, in other words, they will usually tell you exactly what is on their mind.  If you can get them to speak with you for a couple of minutes, they will let you know what’s good and what’s bad about your idea.

Instructions

Create a rough copy of your sell sheet or survey.

Determine if you plan to try and “pre-sell” your product or service, if so, you’ll need a sell sheet with pricing.  Otherwise, you can create a survey.  Do what feels right for you.

Visit www.google.com and click on “images” in the top left, then type “sell sheet” in the search field.  You will then see numerous examples of typical sell sheets.  You can also search “sell sheet prices” and you’ll find examples of sell sheets with pricing sections.

Basic Format

Company Name

Product or Service Name

Document Title

Product or Service Description

“Ideal Customer” Description – (Example:  Product/Service is…perfect for…’ideal customer’)

“Uses” Description – (Example: Product/Service…is used in…offices, homes, gyms, etc.)

Sell Sheet

1) Place your real or temporary company name in the top center of a blank sheet of paper.

2) Place your real or temporary product or service name below your company name.

3) Type “Product Pre-Sales” with “Month, Year” located directly below it.

4) Try to create or find a photo, image or design of your product or service to add to the page

5) Copy and paste your Lesson 4.1 answers

6) Copy and paste your Lesson 4.3 answers

7) Create a pricing section relevant to Lesson 4.2 that will “test” the market.

Product Launch Survey

1) Place your real or temporary company name in the top center of a blank sheet of paper.

2) Place your real or temporary product or service name below your company name.

3) Type “Product Launch Survey” with “Month, Year” located directly below it.

4) Try to create or find a photo, image or design of your product or service to add to the page

5) Copy and paste your Lesson 4.1 answers

6) Copy and paste your Lesson 4.3 answers

7) Ask, “Based on all of (product/service) features and benefits that are most important to you, how much would you pay for (product/service) that provides real value to you?”

8.) Create and list 3 to 6 customized (for your purposes) survey questions from Lesson 4.5

Now that you have the basic content on a separate page, begin to massage the information, so that it reads well to a prospective customer.   Ask a few people to critique it for you.

You can try to “design” the page to look as professional as possible on your own or you can start searching for a graphic designer in your network to make the page look a little better.

You can also hire a freelance designer at www.elance.com to design your page for you.

Since you already have most of the content together, you might spend between $30 and $130 to have a designer create a professional look for the page.

The sell sheet and product launch survey data sheet can be massaged or reworked for each of the test market research methods above.  In other words, use your basic content format for e-mail, website pages, mailers, etc.

Continue to rework your survey and update your questions or prices as you get feedback and suggestions from your target market.  Entrepreneurship is all about trial and error.

It’s time to get to work!  Good luck!

Next – 5.0 Profit Potential »