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:

 1.review 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.

 

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