The key to any successful business is to understand what it is that your customers want and giving this to them in a way that is profitable for you.

To find out what exactly it is that your customers want you must undertake a process called ‘Market Research.’

 

Three main reasons to doing market research are:

Market Research provides consumer needs & wants

Market Research helps firms discover consumer opinion on a  whole host of issues: e.g., views on product pricing, packaging, and feedback on advertising campaigns.

Market Research reduces the risk of product & business failure

There is no guarantee that a new idea will be a commercial success. Therefore it is invaluable that businesses make informed decisions using accurate and up-to-date market information. This market understanding is critical to providing products that consumers want in sufficient numbers to achieve commercial success.

Market Research forecasts future trends

Not only does market research provide knowledge of the current market state, but it can also be used to anticipate future customer needs. Businesses can then make the adjustments necessary to their product portfolios and levels of output to remain successful.

 
 

Types of Market Research

There are a variety of market research methods; primary vs secondary research, quantitative or qualitative research, and syndicated research.

Secondary Research

The most common type of research is Secondary Research. Published, publicly available, and free; Secondary Research encompasses information from websites, magazines & publications, the government, census data, and of course search engine results. These (often cheap & easy) sources make secondary research is hugely time/cost effective. The big downside of Secondary Research is that the data may be quite generic an therefore not specialised to your purpose.

Primary Research

Primary Research is knowledge collected straight from the source. Typically, it is customised to the specific project and includes surveys, interviews, and focus groups. Primary Research is targeted & specific to its purpose, but is typically time-consuming & costly. However, conducting surveys has become more straight-forward with the use of online polls.

Qualitative Research

Qualitative Research uses open-ended questions typically with interviews or focus groups. This personal engagement allows you to discover more information with a smaller number of people which may be less expensive. However, due to a lack of statistical data, it is difficult to make widespread assumptions.

Quantitative research

Quantitative research uses statistically significant sampling and closed-end questions (typically surveys). A large sample of the population must be studied which means more statistically accurate results, but a higher cost.

Syndicated Research

Syndicated Research sees specialist research agencies conduct the research. These firms sell their research to several users on a fee or subscription basis. By syndicating their data, the cost is spread amongst the subscribers; making it cost-effective. However, the research's buyer has little control over the data collected by the research agency.

 

Market Research methods

Despite many ways to perform Market Research, most businesses will use a selection of these five common research methods: 

  1. Surveys
  2. Focus groups
  3. Personal interviews
  4. Observation  
  5. Field tests. 

How much you’re willing to spend, and the type of data you need will determine which techniques you choose for your business.

Surveys

Concise and straightforward, survey questionnaires allow the analysis of a sample group that represents your target market. The more significant your survey sample, the more reliable the results.

  • In-person surveys are one-on-one interviews conducted in high-traffic locations such as on a busy street. The personal contact allows you to present people with product samples, packaging, or advertising and gather immediate feedback. In-person surveys generate response rates of over 90 percent, but they are costly. Time and labour costs are higher, in exchange for improved accuracy and detail.
  • Telephone surveys are cheaper than in-person surveys but costlier than Mail. With response rates of 50 to 60 percent, they remain a useful option. However, telemarketing (or cold-calling) has gained an awful reputation. Thus, convincing people to cooperate in phone surveys has grown difficult and - poorly done - can be a detriment to your brand. 
  • Mail surveys are an inexpensive way to reach a broad audience. Much cheaper than In-person and Phone surveys, they only generate response rates of 3 percent to 15 percent. Despite this low return, mail survey's cost-effectiveness makes it a sensible choice for smaller companies.
  • Online surveys usually generate unpredictable response rates and unreliable data, because you have no control over the pool of respondents. But an online survey is a simple, inexpensive way to collect anecdotal evidence and gather customer opinions and preferences.

Focus groups

In focus groups, a moderator uses a scripted series of questions or topics to lead a discussion among a group of people. These sessions take place at neutral locations, usually at facilities with videotaping equipment and an observation room with one-way mirrors. A focus group usually lasts one to two hours, and it takes at least three groups to get balanced results.

Personal interviews

Like focus groups, personal interviews include unstructured, open-ended questions. They usually last for about an hour and are typically recorded.

Focus groups and personal interviews provide more subjective data than surveys. The results are not statistically reliable, which means that they usually don’t represent a large enough segment of the population. Nevertheless, focus groups and interviews yield valuable insights into customer attitudes and are excellent ways to uncover issues related to new products or service development.

Observation

Individual responses to surveys and focus groups are sometimes at odds with people’s actual behaviour. When you observe consumers in action by videotaping them in stores, at work, or at home, you can observe how they buy or use a product. This gives you a more accurate picture of customers’ usage habits and shopping patterns.

Field trials

Placing a new product in selected stores to test customer response under real-life selling conditions can help you make product modifications, adjust prices, or improve packaging. Small business owners should try to establish rapport with local store owners and Web sites that can help them test their products.

 

Why is Market Research key to business success?

The key to any successful business is to understand what it is that your customers want and giving this to them in a way that is profitable for you.

Many entrepreneurs make a mistake early on in thinking that they know what their customers want without ever asking them. These presumptions can result in some costly mistakes later on.

To find out what exactly it is that your customers want you must undertake Market Research.

 

Do I need Market Research?

By now, we hope you understand the importance of market research for your business. Understand your audience to sell products and services people want to buy. 

 
 
 

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