Entrepreneurship: An Innovator’s Guide to Startups and Corporate Ventures 2e
Marc H. Meyer and Frederick G. Crane Instructor Test BankEntrepreneurship An Innovators Guide to Startups and Corporate Ventures 2nd Edition
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Chapter 7: A Reality Check on the Venture Concept and the Business Model
Multiple Choice Questions (answer is denoted by an asterisk)
1. What framework contains the target customer, the problem to be solved, the difference from competitive offerings, and the benefits that customers will expect?
a. A industry focus description
b. A venture concept summary statement*
c. A positioning diagram for your venture
d. A business model framework for your venture
2. What should your venture concept summary statement address?
a. The target customer
b. The problem to be solved
c. The difference from competitive offerings
d. All the above*
3. Which of the following statements is true with regard to deciding the number of customers to target for the venture reality check?
a. You must select a large enough sample to be statistically significant
b. You should talk to at least 50 people
c. There is no magic number of potential customers with whom you should communicate*
d. None of the above statements is true
4. When do you “stop” talking to customers when gathering data on your venture concept reality check?
a. When no new significant information is being obtained*
b. After 30 customers
c. When customers stop answering your questions
Entrepreneurship: An Innovator’s Guide to Startups and Corporate Ventures 2e
Marc H. Meyer and Frederick G. Crane Instructor Test Bankd. After 10 customers
5. When carrying out your venture concept reality check, where is the best place to engage your customers?
a. In the place where customers use the product*
b. On a nearby street
c. Both places
d. Neither place
6. You can generate data for your venture concept reality check via _______________.
a. personal interview
b. telephone interview
c. online surveys
d. All of the above*
7. Which data collection technique has the major advantage of enabling you to ask probing questions or see the reactions of the respondents to your venture concept reality check questions?
a. Mail surveys
b. Telephone interviews
c. Personal interviews*
d. Online surveys
8. If you wish to get potential customers’ reactions to your prototype, what is the best way to do so?
a. Mail survey
b. Telephone survey
c. Personal interviews*
d. None of the above
9. When conducting your venture concept reality check what is one thing you want to do?
a. Confirm target customers’ core needs
b. Understand your target customers’ attitudes
c. Understand your target customers’ behaviors
d. All of the above*
10. Which of the following is very important to ascertain during your venture concept reality check process?
a. Customer satisfaction with existing solutions/alternatives
b. Whether customers perceive your solution as distinctive
Entrepreneurship: An Innovator’s Guide to Startups and Corporate Ventures 2e
Marc H. Meyer and Frederick G. Crane Instructor Test Bankc. Whether customers would be willing to pay more for your solution
d. All the above*
11. Which of the following is a fatal mistake entrepreneurs can make when doing their venture concept reality check research?
a. Talking to too many target customers
b. Failing to talk to that magic number of 100 customers
c. Failing to gain target customer insight with regard to the go-to-market aspects of the venture*
d. Failing to talk to all competitors
12. With regard to the go-to-market strategy component of the venture concept reality check it is important to uncover which of the following?
a. Discover the target customer’s frequency of purchase
b. Find out the target customer’s preferred place of purchase
c. Find out the target customer’s preferred information channel
d. All the above*
13. With regard to the go-to-market strategy component of the venture concept reality check, which of the following is an important aspect of this investigation?
a. To determine if target customers agree with the intended channel strategy
b. To determine where target customers get their information about products/services like yours
c. Both A and B*
d. Neither A nor B
14. What do we call a venture that has started successfully, figured out its business model, and has expanded its customer base and product or service offerings?
a. A venture concept
b. A prototype
c. A scaled-up venture*
d. An early startup
15. A customer-driven reality check can be used to:
a. Validate target customer preferences
b. Get a handle on key drivers for needed for financial projections
c. Validate competitive positioning
d. All of the above*
16. Why might you find a gap between target customers’ receptivity to buying a new venture’s products or services and actually buying the products or services?
Entrepreneurship: An Innovator’s Guide to Startups and Corporate Ventures 2e
Marc H. Meyer and Frederick G. Crane Instructor Test Banka. The concept sounded or looked better in the reality check compared to the reality in the marketplace
b. The concept was not demonstrated or communicated effectively to the target customer
c. The venture failed to execute effectively in the marketplace, including packaging and merchandising
d. All of the above could lead to this gap*
17. What does a classic “two-score score” in a venture concept reality check consists of?
a. The percentage of target customers responding they are likely and very likely to buy the concept presented to them*
b. The percentage of target customers likely to continue buying the existing solutions
c. The percentage of target customers responding they are not likely and very unlikely to buy the concept presented to them
d. None of the above
18. How can you gauge target customer purchase intent during the venture concept reality check?
a. Simply by asking if the target customer likes the concept
b. Simply by asking if the target customer is dissatisfied with existing alternatives
c. Simply by asking if the target customer is likely and/or very likely to purchase your presented concept*
d. You cannot gauge the purchase intent with any of the above methods
19. What is one of the big assumptions one makes when projecting revenue for the venture concept?
a. Assuming those who make an initial purchase will continue to be repeat purchasers*
b. Assuming customers currently satisfied with existing alternatives will switch to your offering
c. Assuming those who make an initial purchase will not continue to be repeat purchasers
d. None of the above
20. What is another key aspect of the venture concept reality check?
a. How target customers prefer to pay for your offering
b. What target customers are willing to pay
c. Both A and B*
d. None of the
21. In technology-intensive businesses it is a common flaw to focus too much on ______, which often causes them to short-change the ________.
a. Products / Go-to-Market*
b. Products / Target Customers
c. Target Customers / Price
Entrepreneurship: An Innovator’s Guide to Startups and Corporate Ventures 2e
Marc H. Meyer and Frederick G. Crane Instructor Test Bankd. Price / Go-to-Market
22. The reality check for your go-to-market strategy typically includes all of the following except for:
a. Typical “spend” for each purchase
b. Preferred place of purchase
c. Preferred information channel for product information
d. How they pay for each purchase*
Essay Questions:
1. Why is a field-based reality check important before writing a full business plan? Give an example of the types of learning and validation a reality check can provide and why this important to know before pitching to investors.
2. If an entrepreneur walks in with revenue projections without having talked to customers to validate purchase intent, price levels, place of purchase, and purchase frequency, how do you think he or she created those projections? How might the typical investor respond?
3. For your term project, what is your approach to conducting a reality check for your venture concept and your business model? Who are you going to talk to and what types of questions are you going to ask them? If you have already completed your reality check, what did your learn, and were there any surprises?