The New Market Research

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Lurking behind shoppers is one way to get the skinny on the habits of the average Joe. Another is to watch potential customers actually use your product. That's why many companies pay a high price for behind-the-glass focus groups. The trouble is, consumers rarely act in real life the way they do in a "laboratory" setting.

So some clever entrepreneurs have replaced focus groups with small gatherings in more lifelike surroundings. There they combine anthropological observation with the sort of open-ended questioning you might hear in a therapist's office. The bonus is that real-world focus groups often don't cost much. In fact, if you're smart, they may just earn you some extra cash.

In 1991, Brendan Boyle and Fern Mandelbaum created Skyline Products Inc. to invent and license new children's toys. The twosome knew little about toys and even less about children. Boyle had been a product designer for David Kelley Design, in Palo Alto, Calif., developing items such as water bottles and other sports accessories, while Mandelbaum prospered as a marketing guru for Giro, makers of bike helmets. To get a boost up the learning curve, the two cleared a path straight to their target audience and created a focus play group.

Silicon Valley's harried parents are all too willing to enroll their children in Skyline's six-week play-group sessions. Six to eight kids get an hour with the latest games and toys on the market, and Mom or Dad gets an hour off. The groups typically meet at local parks or schools; Boyle and Mandelbaum appear as the Santas of summer, carrying a slew of toys.

Boyle admits that as an adult, it can be pretty easy to lose touch with a child's perspective. "You learn so much just by getting down on the ground with the kids," he says. "You can really forget how small their hands are or how much bigger your wingspan is."

Throughout the hour, the two owners probe the children, asking why certain toys are more appealing than others. "We're searching for a range of opinions," says Boyle. "Many kids will give that to you. They'll say, 'This sucks,' or 'This is awesome." On the other hand, some children hide their true likes and dislikes with strangers but reveal all in the car ride home. That's why Mandelbaum and Boyle frequently follow up with parents.

The parents themselves provide a trove of information. Just watching their facial expressions as their child gallops around with a newfangled toy can indicate whether they'd be likely to buy, says Boyle. Occasionally, Mandelbaum gathers parents into informal groups for brief grilling sessions. There, once again, the striking contrast between the consumers' words and actions becomes apparent. "We ask them in the beginning if color matters, and they all say a resounding no," recalls Mandelbaum. "Then at the end, when we give them something for Johnny or Suzie, they all clamor for the purple one or the blue one."

Sometimes the information has a direct impact on product development. Boyle might discover that a prototype is simply too unwieldy for small children or is not particularly enticing. But more often the information provides only hints into a child's sensibility. "You never know where the next blockbuster will come from," says Mandelbaum. "There's no formula, but if you work with the kids long enough, you start to develop a kid sense."

The focus play groups have another distinct advantage over traditional focus groups: payment. Whereas most companies must offer focus-group participants some incentive, Boyle and Mandelbaum reverse the charges. The play group is a valuable service for which parents pay $30 per child. "In the beginning it was actually a line of revenue on our P&L," says Mandelbaum.

The play groups have had a positive effect. In an industry in which designers come as fast as they go, Skyline has licensed 70 products and grown to eight employees. The company expects revenues of $5.7 million over the next two years. Today the duo isn't as dependent on the play-group cash to make payroll. Last January the $50-million product-development company IDEO, based in Palo Alto, acquired Skyline as an independent subsidiary.

For other entrepreneurs, though, the action can't be caught in a passing glimpse. When the shopping is hectic and consumers are in and out of a store in minutes, critical experiences can be lost forever. Here's where a video camera has value beyond your child's birthday party.

Consider Judy George, the CEO and founder of Domain Stores, a fast-growing $50-million chain of 23 furniture stores headquartered in Norwood, Mass. George has been a presence in her local stores for more than 10 years. But on the bustling floors, she can overlook the subtle nuances of the shoppers' experience. "People know me here, and I can get very easily distracted," she says.

Although she had previously operated video cameras in the stores on her own, George recently hired Grid II, a market-research firm based in New York City, to place one camera in her Short Hills, N.J., location for just six hours. The Short Hills location attracted picky customers, and it was far afield from George's home turf in Massachusetts, where customers were bound to know her. Later, in the privacy of her home, George pored over the tape. And suddenly, she saw something that more than 10 years of experience had not revealed: people shop for furniture in twos. Of the 1,034 customers who entered the store, 954 came in pairs.

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