Estimated duration: 2hrs
An Overview of Market research and its relevance to business activity and success
Whether you are just starting a new business or already managing one, conducting market research is one task that is not a “nice to do” option; it is a MUST DO. Your ability to succeed in a dynamic market, (or indeed in a difficult one) is based upon the quality of the information that you have. Without the correct information you are destined to make wrong decisions.
Perhaps you are thinking that undertaking market research is an expensive activity, you could be correct. Good information does cost money, but the cost of poor information (and acting upon it) or indeed not having any information has an even higher cost in the longer-term.
Market research is an investment that you shouldn’t take for granted. Do not miss out on learning more about your customers and the various factors surrounding your business, because they have the potential to make or break you. For companies of all sizes, the best market research is the research you do on your own. In-house market research might take the form of original telephone interviews with consumers, customised crunching of numbers from published sources or perhaps competitive intelligence you’ve gathered on your rivals through social media. You can gather detailed research on customers, including their likes, dislikes and preferences through Facebook, and use Google Analytics to sort out the numbers as they pertain to your web visitors. People are researching and making their opinions felt through their actions on the web, so you can gain a lot of marketing insight by looking closely at what is going on electronically.
Having accurate research is crucial in devising various marketing and advertising materials for your target market while taking into account their needs. Market research aims to understand the reasons consumers will buy your product. It studies such things as consumer behaviour, including how cultural, societal and personal factors influence that behaviour.
Market Intelligence
So, what is market intelligence?
A Market Intelligence system is a set of procedures and sources that you can use to obtain everyday information about developments in your marketing environment. It is a collection of data from within your company, its competitors, consumers, customers and the wider macroeconomic aspects of your industry that will impact your organisation. Not collecting market intelligence will leave your business very vulnerable. How will you know about your business environment – what your competitors are doing, and how is it that they compete? Gathering Market Intelligence involves a number of activities such as scanning newspapers, journals (on and offline), studying Government economic data and reports. Search engines and corporate websites are always a great source of information. It sounds so logical to be doing these things, but you would be surprised at how often businesses just like yours, being caught up in the actual day-to-day activities of running a business, fail to get involved in such activity.
The market intelligence system helps you to meet the needs of customers by gathering customer level information that assists in business decision making. This ability to gather information to assist in your decision making is fundamental to your current and future success.
What is involved in this Market Intelligence system?
There are six areas to consider:
- Train your salespeople, and anyone else that comes into contact with customers, to gather value-adding information.
It is critical that you actively encourage and train your salespeople to collect information about existing and emerging markets, the products, price and anything else that they consider to be important. It’s all to do with keeping your fingers on the pulse, knowing what is happening, knowing what will have the greatest impact upon your business. Keep in touch with your agents, customers, distributors, anyone that is in contact with you and your business. These contacts will form the basis of not just a valuable current business but may well provide you with knowledge about future market opportunities. Encourage everyone to share material.
2. Motivate your distributors, retailers and other intermediaries to pass along important intelligence.
Maintain great relationships with your intermediaries – distributors, retailers and so on – so that you can gather the information that will be of use to you.
3. Network, Network, Network!
Join Chambers of Commerce, attend conferences, subscribe to trade shows and journals. Get out there, meet people, strive to get as much deep knowledge as you possibly can. After all, this is YOUR business. Only your hard work will make it a success.
4. Set up a customer panel
No, these are not just for consumer products…this works for B2B also! You can get a lot of invaluable intelligence from those that engage with your business – your customers. Try doing this on-line, set up a LinkedIn page and ask for opinions about you and your business. It all helps.
You can set up systems like customer feedback/complaint sites, public blogs and discussion forums to find relevant online information about the competitors’ products strengths and weaknesses.
5. Take advantage of government data resources
Take full advantage of Government reports on industry activity, policy documents and so on. These are often made available on Government department websites and are almost always free.
6. Purchase information from outside suppliers
You can of course also purchase reports on your industry from the likes of KEYNOTE, Mintel, A.C. Neilson Company & Forrester…these can be expensive but your local library, trade association or University may be able to get extracts for free.
Your business success will depend upon your ability to generate adequate Marketing Intelligence. Businesses fail, not because the companies lack good ideas, but due to the fact that they make poor decisions based on improper information. A formal, well-structured Market Intelligence system will fulfill customer’s needs since it identifies their profiles, motives, habits, needs and wants.
Exercise
Spend 30 minutes reviewing your market intelligence gathering activity. Using the 1-6 headings presented above, complete as much of the required material as you can.
Market Research
“If you don’t know where you’re going, any road is the right one.”
Confucius
When you are starting out on any journey, whether it is a family holiday, a weekend away with your friends or a trip to a concert, you do the research. You check which hotels are available, what the price of airline tickets is, where is the best place to eat and drink, who is playing at the concert? What is it that you are attempting to do? You are getting information that will help you make a decision, and that is at the core, the very essence of why we undertake research – holiday research, hotel research, concert research, or…market research.
Market Research – a definition
Market research (MR) is defined as the collection and analysis of information about consumers, market niches, and the effectiveness of corporate marketing programmes. It is used to evaluate the potential of the commercial marketplace and to identify the short, medium and long-term potential for products and services. Market research targets viable solutions and identifies opportunities, alternatives and options, which can assist companies to plan their product/service programmes and corporate budget requirements. Market research, in its broadest sense, is concerned with the collection of such information, both in terms of perceptual and factual.
Marketing Research is vital to all business enterprises, and yours is no exception. To survive and progress it is necessary to understand the marketplace in which an enterprise exists. The vital fact about market research is that it must be viewed as a process, as a continuous activity and not as something which an enterprise engages in at a particular point in time to confront a particular problem, and then sets aside.
Exercise
Spend 30 minutes identifying the nature of the Market Research activity that you engage in at the moment. Be as specific as you can.
Spend another 15 minutes identifying the aspects of undertaking Market Research that you find most problematic? If you have not yet engaged in any research activity, what do you think will be the problem areas?
An Overview of Market research and its relevance to business activity and success
Whether you are just starting a new business or already managing one, conducting market research is one task that is not a “nice to do” option; it is a MUST DO. Your ability to succeed in a dynamic market, (or indeed in a difficult one) is based upon the quality of the information that you have. Without the correct information you are destined to make wrong decisions.
Perhaps you are thinking that undertaking market research is an expensive activity, you could be correct. Good information does cost money, but the cost of poor information (and acting upon it) or indeed not having any information has an even higher cost in the longer-term.
Market research is an investment that you shouldn’t take for granted. Do not miss out on learning more about your customers and the various factors surrounding your business, because they have the potential to make or break you. For companies of all sizes, the best market research is the research you do on your own. In-house market research might take the form of original telephone interviews with consumers, customised crunching of numbers from published sources or perhaps competitive intelligence you’ve gathered on your rivals through the social media. You can gather detailed research on customers, including their likes, dislikes and preferences through Facebook, and use Google Analytics to sort out the numbers as they pertain to your web visitors. People are researching and making their opinions felt through their actions on the web, so you can gain a lot of marketing insight by looking closely at what is going on electronically.
Having accurate research is crucial in devising various marketing and advertising materials for your target market, while taking into account their needs.Market research aims to understand the reasons consumers will buy your product. It studies such things as consumer behaviour, including how cultural, societal and personal factors influence that behaviour.
You can and should research many things that impact on your business.
There is almost no end to the types of things that you can set about researching. Remember it is vital that you get as much information as possible on all the things that are likely to impact on your business and its success.
Getting the right information
You may well be tempted to conduct your own market research – you think that you can do it or you are just saving money. Beware. Unless you really do know what you are doing, call the professionals. It is money well spent.
Before you conduct your research, you must first identify the types of information you will need and the methods you plan to use to collect them. There are two types of data* sources: primary and secondary. We will talk about these in section 3. For now it is enough to know the following:
- Primary data refers to data which has been generated for your specific purposes. The data never existed before you created it – hence the “primary”. It comes directly from the source, which means, for instance, your customers. Primary data while highly focused upon your needs, is nevertheless very expensive (or can be).
- Secondary data is data that has been gathered already and for a purpose other than what you require. Think of all existing information: Journals, academic articles, reports, surveys etc., all of these are already there, waiting for you to read them.
*information is useful data. So you collect data, and use information!
Exercise
Take 15 minutes to think about the information that you need right now in order to help you make the decision that will benefit you.
Target Market
Market research will assist in identifying your market, where it is, how big it is. Is it worthwhile investing in it? Who is likely to buy your product, and so on. Undertaking market research will give you a closer and more accurate perspective on who precisely your customer is, and what is required. It helps to really understand what drives demand in the market, what makes the customer want to buy your product.
Competitive Analysis
You will want to know who you are competing against. You may well be beaten to the market by competition, but you will ALWAYS be beaten if you assume that no competition exists and/or assume that your product is the best. You must not, or cannot assume anything…get the facts, get the data…then decide the best pathway to travel. Only by engaging in focused, systematic research will you be able to have the greatest chance to succeed.
Environmental Analysis
If you are walking across a busy road, you will stop at the roadside, looking left and right, checking for traffic and then, will only proceed when you have judged that you are safe to move forward. It is exactly the same when it comes to analyzing your business surroundings or environment. Using models such as PESTEL, you rigorously assess all activity in the environment that is likely to impact upon your business activities. Not to do so is tantamount to walking blindly across a busy motorway – it is only a matter of time before the inevitable occurs!
Here are the questions that well-conducted systematic Market Research can/should/will address:
Who are your customers? Describe them in terms of age, occupation, income, lifestyle, educational attainment, etc. Really understand them, the more you know, the more you will be able to attract them to your product offering.
What do they buy now? Describe their buying habits relating to your product or service, including how much they buy, their favoured suppliers, the most popular features and the predominant price points.
Why do they buy? This is the “get inside the mind of the customer” question that needs to be addressed. Often it is insufficient to simply ask customers why they do what they do…they do not always know, or they simply cannot explain it. Do you always know why you do the things that you do? Can you always explain why it is that you bought that particular suit, that specific car, that wonderfully expensive holiday? The fact that it is a difficult question to get answers to, must be set aside. The more you understand the reasons people do what they do, the more likely you are to provide what it is they really want. Thus, you get the sale, and your competitor does not – and of course, you also get the customer!
Exercise
Take 30 minutes to identify all the questions relating to you that you currently need answers to.
In Summary
Follow these steps in order to spend your hard-earned cash wisely when it comes to doing your market research:
- Determine what you need to know about your market. The more focused the research, the more valuable it will be.
- Prioritise 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.
- Review less-expensive research alternatives. Small Business Development Centres and the Small Business Administration can help you develop customer surveys. Your trade association will have good secondary research. Be creative.
- 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.
Benefits of Market Research
- Understand your customers and their preferences.
- Identify opportunities to grow and increase profits.
- Recognise and plan for industry and economic shifts.
- Monitor and evaluate competitive activity in your market.
- Lower the risk of making ineffective decisions.
