What Is Market Research?
What is market research? Think of it as a way to determine whether or not something will work for any given business. Many people employ some form of research in their everyday lives such checking to see if the running water in the sink is too hot or cold to wash one’s hands with, accepting a taster of ice cream before deciding which flavor to purchase, or trying on clothing to see if it fits properly before buying.
As a consumer, this type of market research data is crucial to many buying decisions. As an entrepreneur, the same information – but with a slightly different focus – can make or break a business.
Why Is Market Research Important?
Market data collection can involve a whole variety of information invaluable to new business owners or veterans alike. Some forms could include:
- Finding out what shape the local economy is in to see whether or not a high end retail establishment would be a useful (and profitable) addition to the community;
- Checking patents before investing $50,000 into a specialty fabric;
- Seeing if any buyers would be interested in purchasing a handmade doohickey for $29.99 before making 100 of them;
- Determining if an item that sells for less than a dollar can turn a profit;
- Asking current customers if they would be interested in having an additional product or service added to the current offerings before looking into zoning restrictions and requirements.
How Did Market Research Come About?
Before the industrial age, market research wasn’t necessary. If a consumer required something, they found someone who had the skills to create whatever was needed from scratch, and catered the item or service to the person’s specific wants and needs. There was no such thing as assembly lines or wondering whether or not inventory would sell, and service providers knew pretty quickly when demand would increase based on their very personal relationship with clients.
Why Perform Market Research?
Market research can be daunting, especially when first starting out as an entrepreneur. The following reasons to perform market research should, if nothing else, provide some reasons as to why it is important for any business to pursue. Make sure to have paper and pen at the ready as well, as many of the questions that follow will lead to more information required in the start a business process.
The Purpose Of Market Research #1: Evaluating The Market
Market research assists business owners by demonstrating market demand, either in the form of a service or product. Research marketing can also help along the same lines with determining the best location for a business. Other questions that can be answered with regards to evaluating the market are:
- What kinds of people, demographically, are a part of the target market today and in the future?
- How many people are a part of this target market, and how many people can reasonably be captured by this business? How many of those customers are already being serviced by competitors?
- Are there enough people in this target market and geographical region to make the business a sound investment?
- Where will the customers come from, and how will they be cultivated and contacted?
- How can the business attract more customers?
The Purpose Of Market Research #2: Determining Market Response
When using marketing research for this type of analysis, it is to determine the potential for a product or service in the marketplace, and therefore should be checked out before introducing it to customers in general. Some of the marketing questions to answer in this category are:
- How often and how much do the potential customers buy this product or service?
- What kind of price will the customer pay for this product or service? Combined with the information gathered in the question prior to this one, at that rate can a profit be turned?
- What are the target customers’ needs for this product or service? Are competitors meeting these needs already?
- How are the customers changing as time progresses? How are their needs changing in turn? How can the product or service change to meet those needs?
Although these questions sound similar to a market analysis survey, there are differences. Market analysis studies more of the overall information with regards to the market, whereas this type of market research looks at the product or service specifically, and how it will fare in the marketplace.
The Purpose Of Market Research #3: Checking Ad and/or PR Effectiveness
This type of market research allows the entrepreneur to see whether or not their marketing message is being heard as it was intended to. It can also flesh out the costs associated with a specific marketing plan. Some of the questions to answer:
- What kinds of advertising would be the most effective in reaching the target market? Of those types, which are most likely to promote positive purchasing decisions?
- Is the current advertising promoting the kind of image that the business requires?
- What promotional materials and mediums are the best to increase sales?
Market Research – Importance, Goals and Methods
Marketing managers have to make decisions about products, pricing, promotional tactics and distribution channels in a complex environment. General economic conditions, technology, extent and strength of competition and political conditions can affect the market for their products. And the behavior of their consumers is influenced by numerous factors. It is continuing market research that helps marketing managers take sound decisions in such an environment.
Information Provided by Market Research
Market research should provide marketing managers a clear picture of the market, including:
- Customer information, such as their locations, age, gender, buying behavior and motivations
- Competitor information, such as their identity, marketing network, customer focus and scale of operations
- Product information, such as how customers talk about it, and likely impact of technology developments
- Industry information, such as volumes of demand and supply, trend of sales, seasonal demand patterns
- Competitive opportunities, such as under-served consumer segments and unmet consumer needs
Market Research Approach and Methods
The acronym ‘DECIDE’ outlines the approach of market research:
D – Define the marketing problem or opportunity being researched and the specific research objectives and constraints
E – Enumerate the controllable and uncontrollable factors that affect marketing decision making
C – Collect relevant information based on the above scenario
I – Identify the best alternative on the basis of chosen success criteria
D – Develop (and implement) a marketing plan
E – Evaluate the decisions against results, and also look at the decision-making process
There are a number of tools and options for carrying out market research. Firstly, market research can be primary ‘field’ research or secondary ‘desk’ research.
Primary research can be qualitative market research intended to bring out customer motivations, views, opinions and beliefs. Qualitative research is done using depth interviews, focus groups and projective techniques. Primary market research can also be quantitative research done through surveys, field tests and observations.
Primary research yields new, up to date, relevant and specific information. However, it is expensive and time consuming, and requires considerable expertise.
Secondary market research is done using published resources related to the industry and product. Numerous resources such as government and industry publications, news from the press, Internet and competitor publicity materials are available for desk research. Though easier and less expensive to get, secondary research information can be old, not specific enough or even be biased.
Market research can also be advertising research where the focus is on measuring the efficacy of advertisement copy. This is done by changing some elements of the copy and measuring the resulting change in response.
Market research seeks to identify customer needs and views, and to analyze their buying behavior. It also looks at competition in the market, trends in the industry and business environment. Information is gathered from published resources or through field research.
How Does Market Research Help in Brand Analysis?
The main object of a strategic brand analysis is to improve strategic decisions about the brand such as the brand position, the product classes with which it shall be associated, its role within the organization and the level of investment it would attract.
The analysis requires three view points; namely, customer analysis, competitor analysis and self analysis. The degree of analysis varies from one brand to another. Market research reflects the customer statistics on various factors while brand analysis improves brand positioning in the market.
A brand wins only when the customer remembers the brand at the time of purchase. In a competitive market scenario, one product has several competitors. Every competitor would try to occupy the minds of their target audience. Brand analysis requires studying the minds of the target customers while the same is achieved through market research.
Market research is a tool to know the competitor’s strength and weakness. This creates opportunities for a brand to improve over its competitors’ weaknesses. One brand’s weakness is another brand’s strength. A brand can achieve brilliance in execution, if it is backed up with an excellent, accurate quality market research report.
Investing to monitor a brand’s position is very important to the success of the brand position. Tracking can be either quantitative, in which case structured questionnaires can be made with a set of questions that would tell the impact that the brand position has created. Or it can also be qualitative, finding out the impact of the brand position through in-depth interviews or focus groups.
Investing in market research to collect the data required to process accurate marketing analysis information results in brand success.
A brand that wins is the one that makes its target customers remember the brand name all through the day. The various techniques a brand adopts for achieving this leads to brand success.
Market research creates opportunities for companies to launch their brands and execute until the brand is positioned at the top of the customer’s mind. Every loop for failure can be overcome when the market research report is relevant and accurate.
Self analysis is empathy. To impress others one must get impressed. No one can know one’s company better than oneself. Hence self assessment is required, in addition to a market research report.
When the vision is clear, when the objective is set, when mission is defined, when goals are measured, when opportunities and threats are best analyzed, when the weak links are measured and set right, when overall planning is improved and finally when the whole process is in control… Nothing can stop any brand from winning in any competitive market scenario.
How to Conduct Internet Market Research
Market research is a continuous process that focuses on understanding the relationship between consumers and a particular product or business. Internet marketing research just means that the whole process is carried out online. It involves the systematic gathering and interpretation of consumer and economic data from economic reports and industry trends analysis available on the web as well as consumer attitudes and behaviors via online surveys and focus groups.
Armed with vital market and economic data, businesses can adjust their policies, strategies, and goals so that they reflect current market realities. Here are a few ways, small business owners can harness the power of the Internet to conduct market research:
Use the Internet to Acquire “Secondary” Market Research Data
Secondary data refers to any information about the market or the economy that has been collected by another party. It often includes data from governmental sites, non-profit organizations, trade journals and even the research from other companies. It is referred to as secondary because the business is not directly interacting with their current or potential market.
Using Keyword Research for Market Research
Anyone familiar with the web has most likely at some point used Google or Yahoo to conduct an Internet search. This is a rudimentary form of keyword research. Today, business owners can easily see how different keywords are performing and get an idea of what their customers are looking for. Some of the best tools for this process are free. Small business owners should be sure to check out Google Anaytics, and for those who uses social media, there is a range of helpful Internet research tools, such as Mention that allows users to set up email alerts anytime someone mentions a brand or any other specified keywords on Twitter.
Keeping In Touch with the Competition
By using the Internet, business owners can usually glean a lot of information regarding what their competitors are doing. For example, doing a Google search of a company’s name, will provide a snapshot of who is linking to their site and what consumers are saying about the company. Business owners can also take a look a their competitor’s website to see what the customer experience is like and get information on the kinds of products and/or services their competitors are offering
Using Website Analytics in Market Research
Any small business owners who maintain a web presence should be measuring and qualifying how people are using their site. As mentioned previously, Google Analytics is the way to go for this kind of information.
Conducting Online Surveys and Virtual Focus Groups
There are several sites that offer software to help business owners create effective online customer surveys. Many of these options are even free. Those looking for a survey creator should check out Survey Monkey and Question Form.
For online focus groups, a business can invite several individuals to participate in a structured, moderated discussion that generally lasts about an hour. There are numerous applications available specifically created for online focus group moderation that pack some neat features, such as video streaming, drawing tools, and remote website navigation.
In short, small business owners should not avoid conducting marketing research. Not only is it a vital part of running a successful company, but the web significantly simplified and lowered the cost of online data collection.