Why Conduct Market Research?
The goal of doing market research is to equip yourself with the information you need to make informed business decisions about start-up, innovation, growth, and the 4 P's:
Product — Improve your product or service based on findings about what your customers really want and need. Focus on things like function, appearance and customer service or warranties.
Price — Set a price based on popular profit margins, competitors' prices, financing options or the price a customer is willing to pay.
Placement — Decide where to set up and how to distribute a product. Compare the characteristics of various locations and the value of points of sale (retail, wholesale, online).
Promotion — Figure out how to best reach particular market segments (teens, families, students, professionals, etc.) in areas of advertising and publicity, social media, and branding.
Basic Questions to Answer with Market Research:
Who are your customers? Describe them in terms of age, occupation, income, lifestyle, educational attainment.
What do they buy now? Describe their buying habits relating to your product or service, including how much they buy, their favored suppliers, the most popular features, and the predominant price points.
Why do they buy? Depends on the product and its uses.
What will make them buy from you? Use detailed information about markets, sales figures, and consumer buying motivations.
Types of Market Research:
The goal of primary research is to gather data from analyzing current sales and the effectiveness of current practices. Primary research also takes competitor’s plans into account, giving you information about your competition.
How can you collect primary research?
Interviews (either by phone or face-to-face)
Surveys (online or by mail)
Questionnaires (online or by mail)
Focus groups gathering a sampling of potential clients or customers and getting their direct feedback
Some important questions might include:
What factors do you consider when purchasing this product or service?
What do you like or dislike about current products or services currently on the market?
What areas would you suggest for improvement?
What is the appropriate price for a product or service?
The goal of secondary research is to analyze data that has already been published. With secondary data, you can identify competitors, establish benchmarks and identify target segments. Your segments are the people who fall into your targeted demographic--people who live a certain lifestyle, exhibit behavioral patterns, or fall into a predetermined age group.
No small business can succeed without understanding its customers, its products and services, and the market in general. Competition is often fierce and operating without conducting research may give your competitors an advantage over you.
Types of Research
Experimental Research – involves manipulating condition and studying effects
Correlation Research – involves studying the relationships among variables within a particular group, and frequently suggests the possibility of cause and effect
Survey Research – involves describing the characteristics of a group by means of such instruments as interview schedules, questionnaires, and tests.
Two categories of data collection: quantitative and qualitative.
Quantitative (Experimental, Single-subject, correlation, causal-comparative, survey)
Qualitative (Ethnographic, historical)
Observation Techniques in Market Research
Common Market Research Mistakes
Using only secondary research.
Relying on the published work of others doesn't give you the full picture. It can be a great place to start, of course, but the information you get from secondary research can be outdated. You can miss out on other factors relevant to your business.
Using only web resources.
When you use common search engines to gather information, you get only data that are available to everyone and it may not be fully accurate. To perform deeper searches while staying within your budget, use the resources at your local library, college campus, or small-business center.
Surveying only the people you know
Small-business owners sometimes interview only family members and close colleagues when conducting research, but friends and family are often not the best survey subjects. To get the most useful and accurate information, you need to talk to real customers about their needs, wants, and expectations.
A Common Form of Market Research is Industry Due Diligence – for comparative purposes, consider:
Companies of relative size.
Companies serving the same geographic area, which could be global if you are planning to be a web-based business.
Companies with a similar ownership structure. If your business has two partners, look for businesses run by a couple of partners rather than an advisory board of 12.
Companies that are relatively new. While you can learn from long-standing businesses, they may be successful today because of their 25-year business history and reputation.
You’ll want to use the data you’ve gathered not only to determine how much business you could possibly do but also to figure out how you’ll fit into and adapt to the marketplace.
How to Budget Your Market Research:
1. Determine what you need to know about your market. The more focused the research, the more valuable it will be.
2. Prioritize the results of the first step. You can’t research everything, so concentrate on the information that will give you the best (or quickest) payback.
3. Review less-expensive research alternatives. Small Business Development Centers and the Small Business Administration can help you develop customer surveys. Your trade association will have good secondary research. Be creative.
4. Estimate the cost of performing the research yourself. Keep in mind that with the internet you should not have to spend a ton of money. If you’re considering hiring a consultant or a researcher, remember this is your dream, these are your goals, and this is your business. Don’t pay for what you don’t need.
Applications of Market Research
Marketing research activities can be divided into 4 main strategic categories:
Identifying and evaluating opportunities
Analyzing market segments and selecting target markets
Planning and implementing a marketing mix
Analyzing marketing performance
Market Research Steps:
Formulating the research problem
Extensive literature review
Developing the objectives
Preparing the Research Design including Sample Data
Collecting the Data
Analysis of Data
Generalization and Interpretation
Preparation of the report or presentation of results - formal write-ups of conclusions reached
Helpful Market Research Tools & Resources
Think with Google: Marketer’s Almanac Price: Free
Wish you had information on how consumer behavior changes in relation to the seasons, holidays, and other unique events? This tool offers interesting insights into how people browse and buy.
American Fact Finder Price: Free
A resource for searching U.S. census data. You can filter by age, income, year, race, and location.
Business Dynamics Statistics Price: Free
It takes census data and allows you to see economic data on job creation, startups and shutdowns, business openings, expansions, and closures.
FedStats Price: Free
It provides an up-to-date forum for finding data released by federal agencies, including agriculture, education, transportation, and energy.
Effective market research is essential to the growth of your business. From successful market research, business owners can make better informed decisions for their company, whether they address consumer preferences, competition, or marketing techniques. One can also perform market research by assessing customer feedback on their own product - click to learn more on customer feedback and maintaining customer relationships.
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