Dollinger index

212 ENTREPRENEURSHIP

use of a new product or service. Subjects may use the product briefly and even take it

home for a more intensive test. Product testing is less abstract than concept testing, so

the responses it generates are more reliable. However, some products are so expensive

to manufacture, even as prototypes, that product testing is unrealistic.

Market testingis the most complex and expensive approach, but it is also the most

realistic and most likely to produce reliable results. In a market test, the product or serv-

ice is introduced using the full marketing strategy in a limited area that is representative

of the broader market. It attempts, in essence, to actually market the product, usually in

a limited geographic area. For ventures inherently limited in geographic reach, the mar-

ket test is the actual beginning of business operations. Small manufacturing operations

seeking broad product distribution are candidates for the market test research.

Each of the three types of test has costs and benefits, and proper selection requires a

fit between the entrepreneur’s needs and resources and the type of product or service

under consideration. Table 6.1 summarizes each test and its appropriateness in a variety

of situations. An indication of high appropriateness means that the test fits the need.

Moderate and low appropriateness levels indicate that the test might not deliver the neces-

sary information.

Step 3in market research is the development of the data collection instrument or

test. Market research data can come from one or multiple sources. Results are more like-

ly to be valid if various sources are employed. For customer studies, personal and tele-

phone interviews, focus groups, and direct observation might be appropriate. Mail stud-

ies and surveys are common data sources. Whichever method is chosen in step 2, a prop-

erly designed data-collection instrument is required. This is self-evident for interviews

and surveys research, but it is also important for secondary-data sources. These data

sources can overwhelm the market researcher because the abundance of data tends to

make the researcher believe that all of it is important. Too much data can be as danger-

ous as too little, and it also translates into extra expense and extra effort in coding and

analyzing large data sets. Researchers should know precisely what sort of data they need

Table 6.1 Marketing Research: Appropriateness of Primary Data Collection Methods

*High appropriateness means a good fit between the test and the characteristic of the venture. Moderate and low appropriateness

indicate that caution should be used because the test may not generate the type of information required.

New-Venture Characteristic

Single-product venture

Multiproduct venture

Importance of pricing strategy

Importance of promotion

Importance of distribution

Introduction of innovations— continuous

Introduction of innovations—occasional

Concept Test

High*

Moderate to low

High

Moderate to low

Moderate to low

High

Low

Product Test

High

Moderate

High

Moderate to high

Moderate to high

High

Moderate

Market Test

High

Low

High

High

High

High

High

SOURCE: Adapted from G. Hills and R. LaForge, “Marketing and Entrepreneurship: The State of the Art.” In D. Sexton and J. Kasarda
(eds.), The State of the Art of Entrepreneurship (Boston: PWS-Kent, 2006): 164-90.