Focus groups involve gathering a group of customers together to discuss in detail their consumer attitudes, habits and behaviour. A focus group is similar to a survey except you talk to a group of customers together and ask open-ended questions. If the customers in the focus group are fairly typical of all customers, then it can give an entrepreneur useful and detailed information. If the members of the focus group are not representative of the market, then the results may be very misleading.
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Test marketing involves trying out the product or service on a small scale to evaluate customer reaction. Positive and negative reactions are then used to refi ne the design, price and promotion of the product. Test marketing is very important, as launching a new product can be expensive and risky due to the large production, advertising and opportunity costs involved. If a product idea successfully passes the
test marketing stage, then full-scale production can begin. The choice of target market (who the target customers will be) will determine what price should be charged and where it should be sold. It will also determine the best promotional strategy to use to persuade potential customers to buy the new product.
After completing all the market research, the entrepreneur will have to make a decision about whether or not to proceed with the business idea.
