How To Do Market Research?

How To Do Market Research?

You probably do some market research every day in the course of your routine management activities without being aware of it. You check returned items to see if there’s some pattern. You ask one of your old customers, who has stopped coming to your shop, why he hasn’t been in lately when you run into him on the street. You look at a competitor’s ad to see what that store is charging for the same products you’re selling. The internet brings a significant amount of secondary research as well as allowing primary research on your website. How to do market research starts with knowing your benefits to customers and then using the internet and marketing techniques to understand how the customer sees your benefits in regard to the competition.

 Marketing research simply makes this process more orderly. It provides a framework that lets you objectively judge the meaning of the information you gather about your market. The following flow chart shows the steps in the marketing research process:

  Define problem (limit and state clearly)

 Assess available information

 Assess additional information, if required: internal records and files

 2.Interview employees

 3.Consult secondary sources of information (Internet and the library)

 4.Interview customers and suppliers

 5.Collect (or have collected) primary data


  • Organize and interpret data
  • Make decision
  • Watch the results of the decision


Defining the Problem

This, the first step of the research process, is so obvious that it is often overlooked. Yet, it is the most important step of the process.

 You must be able to see beyond the symptoms of a problem to get at the cause. Seeing the problem as a “sales decline” is not defining a cause; it’s listing a symptom.

 In defining your problem list every possible influence that may have caused it. Has there been a change in the areas your customers have traditionally come from? Have their tastes changed? Put all the possible caused down. Then set aside any that you don’t think can be measured, since you won’t be able to take any action on them.

 You must establish an idea of the problem with causes that can be objectively measured and tested. Put your idea of the causes in writing. Look at it frequently while you’re gathering your facts to keep on track, but don’t let it get in the way of facts, either. (Incidentally, while this Guide speaks of “problems,” the same techniques can be used to investigate potential opportunities too.)

 Assessing Available Information

Once you’ve formally defined your problem, you should assess your ability to solve it immediately. You may already have all the information you need to determine if your hypothesis is correct, and solutions to the problem may have become obvious in the process of defining it. Stop there. You’ll only be wasting your time and money if you do further marketing research.

 What if you aren’t sure whether or not you need additional information at this point? What if you’d feel more comfortable with additional data? Here, you’ve got to make a subjective judgment to weigh the cost of more information against its usefulness.

 You’re up against a dilemma similar to guessing in advance your return on your advertising dollar. You don’t know what return you’ll get, or even if you’ll get a return. The best you can do is ask yourself how much making a wrong decision will cost and to balance that against the cost of gathering more data to make a better informed decision.

 Gathering Additional Information

Think cheap and stay as close to home as possible. Before considering anything fancy like surveys or field experiments, look at your own records, files, and search the internet. Look at sales records, complaints, receipts, or any other records that can show you where your customers live or work or how and what they buy.

 One business owner found that addresses on cash receipts allowed the pinpointing of customers in his market area. with this kind of information he could cross reference his customers’ address and the products they purchased. From this information he was able to check the effectiveness of his advertising placement.

 Your customer’s addresses alone can tell you a lot about them. Obviously you can pretty closely guess your customers’ life-styles by knowing what the neighborhoods they live in are like. Knowing how they live can give you solid hints on what they can be expected to buy.

 Credit records are an excellent source of information about your markets, too. In addition to the always-valuable addresses of real live customers, they give you information about customers’ jobs, income levels, marital status. Granting credit, so it can be seen, is a multi-faceted marketing tool – though one with well-known costs and risks.

 When you’ve finished checking through your records, go to that other valuable internal source of customer information – your employees. Employees may be the best source of information about customer likes and dislikes. They hear customers’ minor gripes about your store or service – the ones the customers don’t think important enough to take to you owner-manager. They are also aware of the items customers request that you may not stock. Employees can probably also give you pretty good seat-of-pants customers profile from their day-to-day contacts.

 Going Outside for Marketing Research Data

Once you’ve exhausted the best sources for information about your market, your internal data, where do you go? Well, the next steps in the process are to do primary and secondary research on the outside.


Secondary research first.

Naturally, since it’s called secondary research, you do it before you undertake any primary research. Secondary research simply involves going to already published surveys, books, magazines and the like and applying or rearranging the information in them to bear on your particular problem or potential opportunity. Treat all internet data except that you collect from your website as secondary data.

 For example, say you sell tires. You might reasonably guess that sales of new cars three years ago would have a strong effect on present retail sales of tires. To test this idea you might compare new car sales of six years ago with the replacement tires sales from three years ago.

 Suppose you found that new tire sales three years ago were 10 percent of the new car sales three years previous to that. Repeating this exercise with car sales five years ago and so on, you might find that in each case tire sales were about 10 percent of the new car sales made three years before. You could logically conclude that the total market for replacement tire sales in your area this year ought to be about 10 percent of the new car sales in your locality three years ago.

 Naturally, the more localized the figures you can find the better. While, for instance, there may be a decline nationally in new housing starts, if you sell new appliances in an area where new housing is booming, you obviously would want to base your estimate of market potential on local condition. Newspapers and local radio and TV stations may be able to help you find this information.

 There are many sources of such secondary research material (while the internet is great, so information is NOT on the internet, so check other souces). You can find it in libraries, universities and colleges, trade and general business publications, and newspapers. Trade associations and government agencies are rich sources of information.


Primary research, the last step.

Primary research on the outside can be as simple as your asking customers or suppliers how they feel about your store or service firm or as complex as the surveys done by the sophisticated professional marketing research giants. It includes among its tools direct mail questionnaires, telephone or “on the street” surveys, experiments, panel studies, test marketing, behavior observation, and the like.

 Primary research is often divided into “reactive” and “nonreactive” research. The “peanut shell study” at the beginning of this Guide is an example of nonreactive primary research: it was a way of seeing how real people behaved in a real “market situation” (in this case how they moved through the store and which displays attracted their attention) without influencing that behavior even accidentally.

 Reactive research (surveys, interviews, questionnaires) is probably what most people think of when they hear the word “marketing research.” It’s the kind best left to the experts, since you may not know the right questions to ask. There’s also the danger that either people won’t want to hurt your feelings when you ask them their opinions about your business or they’ll answer questions the way they think they are “expected” to answer, rather than the way they really feel. If you feel you can’t afford high-priced marketing research services, ask nearby college or university business schools for help.


What is Marketing Research?

What is Marketing Research?

Basically, marketing research is understanding your potential and actual customers. Find out what catches customers’ attention by observing their actions and drawing conclusions from what you see. To put it more formally, in the words of the American Marketing Association, marketing research is “the systematic gathering, recording, and analyzing of data about problems relating to the marketing of goods and services.”


Marketing research is an organized way of finding objective answers to questions every business must answer to succeed. Every business owner-manager must ask:


  • Who are my customers and potential customers?
  •  What kind of people are they?
  •  Can and will they buy?
  •   Am I offering the kinds of goods or services they want – at the best place, at the best time, and in the right amounts?
  •  Are my prices consistent with what buyers view as the products’ values?
  •   Are my promotional programs working?
  •  What do customers think of my business?
  •  How does my business compare with my competitors?


Marketing research is not a perfect science; it deals with people and their constantly changing likes and dislikes which can be affected by hundreds of influences, many of which simply can’t be identified. Marketing research does, however, try to learn about markets scientifically. That simply, is to gather facts in an orderly, objective way; to find out how things are, not how you think they are or would like them to be; what people want to buy, not just what you want to sell them.


Why Do It?

It’s tough – impossible – to sell people what they don’t want. (Remember the Nehru jacket?) That’s pretty obvious. Just as obvious is the fact that nothing could be simpler than selling people what they do want. Big business has to do market research to find that out. The same reason holds for small business.


Business owners often have a “feel” for their customers – their markets – that comes from years of experience. Experience can be a two-edged sword, though, since it comprises a tremendous mass of facts acquired at random over a number of years. Information about markets gained from long experience may no longer be timely enough to base selling decisions on. In addition, some “facts” may be vague, misleading impressions or folk tales of the “everybody knows that…” variety.


Marketing research focuses and organized marketing information. It ensures that such information is timely. It provides what you need to:


  • Reduce business risks,
  •  Spot problems and potential problems in your current market,
  •   Identify and profit from sales opportunities,
  •  Get basic facts about your market to help you make better decisions and set up plans of action.

Advertising and Selling mix depends on Channels

Advertising and Selling mix depends on Channels

It is axiomatic that as channels lengthen, the need for advertising to the end user increases and personal selling effort declines. Thus, long channels and heavier advertising effort are  inseparable. Or, it may be said that since product sales effort (or quality of communication) decreases as the channel lengthens, the firm’s need for direct communication with the end user increases accordingly, for the personal sales effort is diluted by local and personal economic interests and distractions.


Decisions regarding channels, sales talents required, and advertising effort are dependent on the requirements and demands of the purchaser for technical information, display and merchandising aid, and the amount of money involved in the typical transaction. The results are these, simply stated: highly complex and big ticket items are sold (and serviced) directly by a sales engineer while standard low priced goods purchased in small quantities go through longer channels and are “sold” by a good-will builder, an order-taker. The selling is actually “preselling” which is done by advertising.


Planning the Persuasion System-The Sales Promotion Mix

The sales promotion mix should be based on the following considerations:


Be realistic in terms of purposes to be achieved.

Respect the effectiveness of advertising, selling, and display separately and in coordination.

Respect all parties of interest, including middlemen and salesmen.

Involve all marketing management personnel, permitting early participation.

Permit a general plan which can be tentatively approved before final details and cost are determined.

Permit individual and group judgment to be employed in conjunction with quantitative techniques.


The following steps are needed to create a sales promotional distribution effort. This pattern can be based as much on judgment as experience will permit and can utilize modern models and systems methods as desired.


1. Analyze and determine customer attitudes, company and product “image.” Consider company age, stage of product life cycle, channels of distribution.


2. Review customer buying motives, desires of middlemen, salesmen, all parties involved, as customer-users or participants.


3. Establish resulting objectives, purposes of “persuasion system,” and parties to be influenced, including middlemen.


4. Summarize attitudes to be developed or created by the program or system (with no indication at this point as to which promotional medium is expected to achieve each purpose).


5. Rate the product as to its technical complexity and amount of typical sale; determine approximate balance of advertising, selling, and display required.


6. Outline the purposes of advertising (and possibly display) in terms of objectives to be achieved by each medium for each participant or group.


7. Outline the purposes of personal selling in terms of objectives to be achieved by each salesman (or type of salesman).


8. Draw up general recommendations, including probable effectiveness of advertising, selling, display.


9. Develop reasonably reliable estimates of costs of advertising, by types, media, time period, purpose.


10. Same, personal selling. Define the salesman’s job.


11. Same, display.


12. Review marketing department organization, in terms of its appropriateness for general plan.


13. Review general program with participants and with parties influencing budget.


14. Draw up program in detail, present it for final general approval.


During the training period, it would be an excellent idea to see that all salesmen are grounded in the details and objectives of the marketing plan. Additionally, the role of the salesman in making the plan work should be emphasized.

Advertising-Selling Balance and Sales Talent Requirements

Advertising-Selling Balance and Sales Talent Requirements

Of all the marketing functions, selling is the dynamic and creative one. As someone has said: “Nothing happens until something is sold.” Selling can be done through personal contact, or by advertising or display.

Some products are best sold by advertising. These include soap, cereals, cigarettes, beer – goods that are low-priced, broadly used, and highly standardized. They are mass-produced, serve a mass market, and call for mass selling methods.

In the industrial field we depend more on personal selling, for these goods are more technical, higher priced, less standardized and often built to exacting specifications. Advertising cannot tell the complete story of a specialized product to a discriminating engineering-minded industrial buyer.

We may conclude, therefore, that the more technical, high-priced, and built-to-order the product is, the more we must depend on personal selling to analyze the potential buyer-user’s needs and to communicate its merits and values to him; also to convey to his own plant exactly what is wanted.

We must also assume that prevailing patterns exist because the experiences of successful firms have shown that, depending on their products’ characteristics, an optimum economical allocation of sales effort between the various methods or media is possible. Where advertising has been used more effectively, the need for personal selling has declined, and vice versa.

Ten Levels of Selling

As we review, therefore, the results of these relationships, that is, the balances of effort between advertising and selling (“the promotional mix,” or “persuasion system”), we find that as product technicality and typical dollar amount of sale have varied, these levels or grades of salesmen have emerged. As the owner-manager of a small plant, you are probably already familiar with the ten levels of selling. Your sales trainees may not be. In training them, you will want to emphasize levels 7, 8, 9, and 10.

The lowest form of “selling” is the “Coin-Machine,” a purely mechanical process. It is exchange of money for value, but is it selling? It is neither advertising nor selling; but it is marketing.

The second level might be the “Variety Store” – display is the actual sales force and the transaction nearly a mechanical process. The salesperson is almost an automaton.

A third level might be the “Finder” – a clerk, at the customer’s request, locates and exhibits the product for sale. The premium here is on locating the merchandise.

A fourth level could be the “Order Taker – an effortless way of learning from the customer what he might need as of a particular moment, and than providing it.

The fifth level would be the “Suggested – someone who makes some effort to get the customer to buy more as of the moment. Drug and department stores seek to develop this kind of selling.

The sixth would be the Presser” – the high-pressure artist who seeks to sell a maximum order on his first try – since he will probably not see the same customer twice, he is often ruthless.

The seventh might be called the “Adviser” – for he can be of assistance to the customer who knows his problem and states it clearly.

Eighth in rank is the “Problem Solver” – who, given the problem by the prospect, has the necessary training or experience to analyze it and to help solve it.

Ninth is the “Discoverer” – who seeks out obvious sales opportunities, possibly unknown to the prospective purchaser and explains how his product will solve them.

Tenth is the “Creator” – the salesman who, working with the customer, discovers, isolates and defines the problem, and presents a solution; all based on professional approach, procedure, and ethics.

Please Note:

1. The lower eight, from bottom to top, are primarily restricted to retailing, to the consumer goods or services field. The upper levels involve industrial goods primarily.

2 .In these first eight levels, the buyer usually approaches the seller – typically, he already knows what he needs and wants.

3. Only as we approach the top levels do we begin to see the analytical services required of the typical salesman of industrial goods.

4. Only the upper two are truly analytical, technical in approach; only these two call for truly professional knowledge and methods.

Rifle vs. Shotgun Advertising

Let’s consider the advertising program’s contribution to the promotional mix – not so much in terms of message but of media, since the purpose is to reach the right people; the method is to use the right medium or media to reach each of these effectively. We must therefore, figure out who reads, sees, and listens to what, then plan the advertising campaign accordingly.

We know generally, and publishers are continually researching for accuracy, who reads (in terms of business duties and responsibilities) each business or technical publication. The task, therefore, is to aim at a particular group or groups, depending on goal and budget. All of us know that assuming correct choice of target, a solid shot at the right one is better than scattered shots at a flock.

Appraising Market Potential and Planning

Appraising Market Potential and Planning for a Product

1. Performance of the product. What will it do? With what result? What particular features, advantages does it have? Appraising Market Potential and Planning for a Product should be done every six months in todays business environment.

 2. Uses. In what situations can it be used? Applications? What problems will it solve? In other words, how can this performance be utilized?

 3. Users. Who has those situations and problems? What kinds of firms, products (and who are their users)? Are they our present customers? Many or few users?

 4. Buying motives. What is user buying? Low cost? Employee safety? Fast production? Dependability? Flexibility? Convenience? Personal self-expression?

 5. History. Has a product like this been attempted? If any failures, what were the reasons for them? Do those reasons still exist?

 6. Buying habits. How often would users buy this product? In what quantities would they buy? Is it a seasonal item?

 7. Price. Can we make it and sell it at a profit? Are material costs reasonable, competitive, in quantities necessary? Can we afford the marketing costs?

 8. Location. Where are the people who could use the product? Are they concentrated or scattered?

 9. Numbers. How many possible users are there? How are they sorted by types of users?

 10. Channels. How do we get the product to these people? Are our present channels adequate? How about discount schedule for any middleman? Can it be attractive?

 11. Sales facilities. Can our present salesmen sell this item? Is our present sales organization suitable? Would special training be necessary for our salesmen? Dealers?

 12. Advertising. Can it be advertised along with our present lines? How much “education” would be necessary? (Consumer acceptance of the idea as well as the product.)

 13. Packaging, transportation. Is there any packaging and shipping problem, in terms of breakage, spoilage, storage, freight rates?

 14. Outlets. Would our present dealers accept it? Could their salesmen sell it? How much missionary work necessary? Exclusive dealerships? Any credit problems?

 15. Service. Will service facilities be required? What channels of handling such service are necessary? Can our outlets handle such service?

 16. Competition. What quality, performance, price shall we produce? What similar products are now on the market? How are they selling? What new items, substitutes are on the way? How about patents, other legal restrictions?

 17. Long-run considerations. Will this be an item with a long future vs. hit-and-run? Will it give us prestige and good will? Could we add related items to advantage?