Avoid Using Focus Groups for Managerial Decisions

The Columbus Dispatch will launch an incrementally innovative product this fall. This product will be roughly 50% smaller than the current product. Assuming revenue remains constant, costs should fall because the Dispatch would be producing a smaller product and margins should increase as a result. The issue, though, remains the seemingly over reliance on a qualitative method to make a managerial decision. At the 42-second mark, the fun begins.

Dispatch management did not listen to readers. They did not collect data through quantitative methods such as observation and survey. Instead, they rely on a room full of people who agreed to give up an hour or two of their day to talk about the Dispatch. They could have been more market oriented. Simply relying on a group people to state their opinions remains insufficient. Managers remain enthralled with data from focus groups because the data is authentic. You can see the people, managers exclaim. It is better than those anonymous surveys.

Groups are plagued with problems. One or two people dominate the conversation. Most people offer no comments that provide value or insight. The comments quickly become ditto . The attendees of a focus group are hardly representative of any population unless the population is defined as bored people who have nothing better to do with an hour or two of their day. Don Draper seems non-pulsed when a focus group goes to hell in a hand basket.

Furthermore, both videos include shots of the members who comprised various focus groups. No person appears to represent people who are not currently using the product, which is the second flaw. To increase revenues, a company either raises the price per unit, attracts new consumers, or both. A price increase appears doubtful given the Dispatch will decrease the size of the product. Middle age and older people buy newspaper. People under the age of 40 do not. In the making of these focus groups, everyone appears to have been alive during the Carter administration.

Finally, the Dispatch - not surprisingly - includes the comments that were favorable to senior management's decision. The more interesting comments were those that were not included. Did other attendees share negative comments? Were they silent while one or two attendees dominated the discussion? That is, did the problems associated with focus groups afflict the Dispatch?

Commentator wrneff provides the money summary:

Smart. You keep using that word. I do? not think it means what you think it means.

Focus groups are one of many qualitative methods that should be used only for exploratory reasons. Conclusive reasons - when management wants to make a decision - should rely exclusive on quantitative methods.