Sample Questionnaire for a Product

When starting a new business or developing a new product offering, you should find out if the product is marketable to your target market.  Will they want to purchase it?  How much would they want to pay for it? Where will you advertise your product to inform the potential customer of its benefits and value?

One of the tools that we can use is a Questionnaire.  You will see by reading the example below that it contains three main sections:  

1. interest of the consumer for your product with regard to price and utility; 
2. profile of the consumer; and 
3. communications - what materials does the consumer read or what does he watch on television or listen to on the radio.

Whether you are contemplating a product-oriented business or a service, you will find that a questionnaire if very useful in planning your marketing plan.  Here is an example of a new board game:

I am developing a new product and am contacting a few people in your neighborhood for an important and quick survey.  I hope you will take a moment to tell me how you feel about board games.

1.    Do you play any board games?  Yes ____ No ____ (If no, please go to #7)

2.    What is your favorite board game?

       Backgammon ___          Checkers ____             Pictionary _____       Life _____

       Clue ____                     Monopoly _____           Sorry ____  Other ____

3.    On the average, how often do you play board games?

      Less than once per month ____  Once per month ____

      Twice per month ____     Once per week _____ More than once per week ____

4.   Would you consider playing a new board game about the stock market?

      Yes ____    No ____       Maybe ____    I don't know

5.    How much would you pay for board game about the stock market?

      $10 to $15 ____    $15.01 to $20 ____    $20.01 to $25 ____    Over $25 ____

6.    What is the first word that comes to mind when you think of the stock market?

       ________________________________________________________________

7.     On the average, how many hours of television to you watch per week?

        Less than one hour ____    1 to 3 hours ____    3 to 6 hours _____

        6 to 9 hours ______     9 hours or more _____

8.     Do you clip coupons from the newspaper?  Yes ____  No ____

9.     What radio station do you listen to most often?  _________________________

10.   What is your age group?

        18 to 24 years ____    25 to 34 years ____    35 to 44 years ____

        45 to 54 years ____    Over 55 years ____

11.    What is your household income?

        Under $40,000 ___$40,000 to $60,000 ___$60,000 to $80,000 __ Over $80,000__

           Thank you for your response.  The following information is helpful to my study but is optional:

Name:______________________________________________________________

Address: ____________________________________________________________

City/State/Zip: ________________________________________________________

Phone:  _____________________________________________________________       

How to Talk to a Venture Capitalist

Many times I have been asked by my entrepreneur students and those who have small businesses about talking to and impressing a venture capitalist.  What questions should I ask them;   how I should respond to the questions they ask of me, they ask.

There are a few things you should keep in mind when discussing your business with a venture capitalist.  What a venture capitalist wants is to hear the story of how your business is doing, how profitable it is.  Telling them how many downloads you have or how many customers visit your site will only generate a “yawn” from them.  So make sure that you have read and re-read your business plan and be able to answer the critical questions of what your profit margins and gross margins are.

Other than the above, the following are some things that you should not say to a prospective investor:

1. “The Market is huge.”  Never say this.  This merely indicates to the listener that you haven’t done your market research.  Be able to indicate how large your target market is for your product or service.  You must be able to carve out of the total market your market segment so that you can focus on their wants and needs.  Remember, you must know everything about your target market, right down to the size shoes they wear!
2.  “I have no competition.”  This also indicates that you haven’t done your competitive analysis well enough to identify your closest competitors and to examine their strengths and weaknesses.  There is always competition, whether direct or indirect.  What is your strategy to capitalize on your competitors’ weaknesses and gain market share?
3.  “I am going to capture 1% of the market.”  This is the kiss of death to the listeners’ ears.  A venture capitalist wants to invest in a business that will grow and yield a return on their investment of, say,  10, 20 or even 30 times.  These sophisticated investors have to reach their goal or hurdle rate targets and want to invest in a business that will achieve their hurdle rate.
4.  “Our product is viral.”  Believing that word of mouth will help the entrepreneur increase his sales is not the way to go.  A venture capitalist wants to hear the plan that will take in not only viral marketing but also other forms of communication and advertising.

Ponder this:   how are you going to mitigate the risks involved in starting any business.  Many students will gloss over this in writing their business plans.  They either aren't aware that there are risks or think better of not addressing them.  Clearly, different businesses have different risk profiles, but what is yours?  Be able to identify the risks or threats involved in starting your business and relate how you will overcome them. By being able to communicate the risks/rewards of your business will offer comfort to a venture capitalist and generate his keen interest.

WHAT MAKES A GOOD BUSINESS PLAN?

At my former job in a major investment banking firm, I had the responsibility of developing new business for the firm.  In that position I received about 40 business plans a week from entrepreneurs and senior managers of companies seeking financing, and I reviewed about 25 per week.  Why didn’t I read all 40 plans?  Here’s why.

The opening section of a business plan is the business description probably written in two paragraphs.  Here the writer describes his business and product and indicates what his target market is.  If after reading the opening paragraphs I do not know what his business is or what he is talking about, I reject it and move on to the next business plan.  A writer has to write his business plan in a way that is easily understood and is simply written.  If you are an engineer and cannot relate your business in simple terms, then get someone else to write it.  There is no excuse.

I also look at the sentence construction, grammar and spelling.  If there are spelling mistakes or grammatical errors, it indicates to me that the writer has exhibited a level of care which is not conducive to managing and growing a company.  He is neglectful and pays no attention to detail.  If you have a shot at having a professional investor look at your plan, then by all means make sure that you have done your research accurately, use proper grammar and your financial information is added correctly.

When I have a business plan to read I look at the presentation.  Is it neat and attractively done so that it would make you want to open it up and begin reading it?  Does it indicate what the business is and what the product is, how you are going to make money and what your profit will be?  Is what you say in the first section of the plan supported by the financial information in the second section of the plan? Are your profit margins comparable with similar companies in your industry?

When you are constructing your business plan, heed the above and you will be sure to interest an investor in reading your plan.

STP and Feasibility

Segment, Target & Position ("STP") Identifying those certain variables which are relevant to our product is called "Consumer Profiling". We indicate the age range, gender, income, educational level, psychographics, hobbies, interests, or other pertinent information identifying your group or market. Can you determine from looking at the U.S. Census how many people fill that profile? (See  http://factfinder.census.gov/home/saff/main.html?_lang=en ).

Once you have made the profiling, you can target your efforts on a more focused group within that segment and to winning them as your customers. We need to know what they buy, how they spend their time, and how to reach them and communicate with them. Which marketing vehicle can we use to best reach them: direct marketing, advertising on the TV, radio, newspapers, magazines or what?

Positioning is the act of designing the company's offering and image so that they occupy a meaningful and distinct competitive position in the target customers' minds. We must develop a market-focused value proposition as to why the target market should buy our product. We may consider the proposition on service like quick delivery of the product, or selling tender meats and poultry, or in the case of a car, reliability and safety.

Feasibility
Once we have determined whom our potential customers are, we need to know if it is worthwhile to target this group. Are there enough profiled customers out there to buy enough of our product so that it is feasible to go into this business? We wouldn't want to start a business and find out that the targeted group is not interested in our product or there aren't enough of them when they do buy in order to satisfy our own goals and profit levels.

We must also consider the price at which we expect to sell our product. When all is said and done will the quantity sold at the price offered be enough to make a profit. In order to determine this we must know how much it will cost to open our doors. What will the start-up costs be? Will we need to rent or buy space? Purchase equipment and supplies?

Operating Budget
Once you have established how much you will need to start your business you will have to create an operating budget. Determine from your start up costs those that will recur over time, such as your rent, electricity, salaries, advertising, etc. These recurring expenses are the start of your operating budget. These recurring expenses will mostly be Fixed Costs. These Fixed Costs will be used to determine your breakeven point, that level of sales at which you don't make a profit or a loss -- you come out even. Mathematically the formula is
Breakeven point (units) = Fixed Costs divided by (Selling price minus the Unit Variable Cost)
This means that you have to determine a sales price.

Target Market

In order to be effective marketers and effective entrepreneurs we must decide to whom it is that we will be selling. Why would someone want to buy our product? What need are we fulfilling when they do buy from us? What is motivating them to buy our product? We can only learn this by studying the consumers we want to sell to.


You Cannot Cater to the Masses


The old cliché says that "we can't be all things to all people". There's another which says "give them what they want!  "We must focus our ideas toward a specific group which has wants and needs for that product which have not been met previously. So we must isolate the consumer group that we will eventually call our customers. We must separate that certain group from the masses. We must segment the market. A market segment consists of a large identifiable group within a market. If we practice segment marketing we recognize that customers differ in their wants, purchasing power, geographical locations, buying attitudes, and buying habits.

Bull's Eye - Focus

Segment Marketing    

The benefits of segment marketing or segmentation are that it can create a more fine-tuned product/service offering and a more appropriate price for the target audience. Segmentation leads to specialization. And specialization leads to expertise with that market. Niches are subsets of the segmented market.

We can segment along several different lines, for example, by ethnicity, gender, age, geographic location, hobbies, occupation, etc.

The benefits of segment marketing are that it can create a more fine-tuned product/service offering and a more appropriate price for the target audience. Segment marketing leads to specialization. And specialization leads to expertise with that market. Niches are subsets of the segmented market.


Niche Marketing

 A niche is a small market whose needs are not being met. Niches typically attract smaller companies. Niche marketers know their customers so well and provide them with what they want that they are able to charge a premium for their products and the customer is willing to pay that premium. Since the niche marketer knows his customers and products so well he is able to benefit by economies of scale. He is able to change his product/service offering because he is watching the changes in the niche market as the niche markets develops over time. The niche segment is not likely to attract other competitors, or the nicher is able to defend itself, and is able to grow and profit from catering to the target market.