Market research is about finding out answers to questions that specifically deal with whether or not there is a local/national market for your product/service: be that about price, quality, quantity etc. The idea is not to find out if ‘someone’ will buy your product, but that in your target area there is a sustainable need for what you have to offer.
Further, market research can give you new, up to date and powerful information that could, say, highlight clear signs as to how to break into a market or take a market to higher levels. Competitors may not be able to match the knowledge you have gathered - say improved product features - so in the short-term it could give you enough of an early and powerful advantage to grab, or consolidate, a share of the market.
There are two main sources of marketing research information:
To many of us, the term ‘market research’ was something you did if you had a multi-million pound business and you required highly statistical commercial/demographic/product profiling to turn probability into fact. The cost of hiring experts - if you could convince yourself that they would consider taking on your project - was another determining factor against the whole mystique of market research.
There was some justification in the past for thinking that market research was beyond the small business owner. There were a number of problems to overcome: the lack of affordable marketing services/agencies, no in-house analysis skills, poor/costly demographic information, and not least our own lack of knowledge in the subject. But, none as big as the business owner not making time for market research before launching a business, service or product.
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Doing Research on Marketing
Research on marketing is essential to understand the pattern of marketing. This is possible by searching existing knowledge related to business marketing. It is a form of business research, business-to-business marketing research and business marketing research. Marketing research is done in many forms and all these forms are known as problem-identification research.
Research in advertising is done to determine the copy testing of advertisements. It is also used to know the efficiency of ads placed in any medium, the customer attention it gets, the message it delivers and how it motivates the customers to buy the product. Commercial eye tracking is done to understand the visual behavior of the customer. Ads, websites, etc., are analyzed for this. Before an advertisement is released in the market, its performance can be forecasted with the help of copy testing which takes consumer’s level of attention, motivation, brand liking, and entertainment into consideration.
When a customer buys something online he analyses it in order to make the decision, this one of the criteria on which consumer decision research is done. Interviews and surveys can be done to understand consumer’s level of satisfaction, which is known as customer satisfaction studies. The demographic and psychology of the people of a particular geographical region can be studied with the help of segmentation research.
When analyzing is to be done about brand recognition, brand performance, brand preference and awareness, ad tracking is done. A favorite brand can be recognized with the help of brand equity research. Tests are conducted so as to determine what customer thinks about a brand or a product and it is specifically known as brand name testing. The demand of a product can be understood by demand estimation. After the demand of the product is taken care of, the quality should be checked from time to time. Appointing mystery shoppers who is usually an employee of the market research firm does this. He buys goods through a salesperson and notes down the whole experience. This procedure can be used to do research about rival companies’ products.
Before practical application of a concept, concept testing should be done which tells whether the targeted audience will like the idea or not. Test marketing is done by introducing a product in small numbers in the market and observing the sales, after which the product is launched on a large-scale. After the initial phase, when the company thinks of increasing the price of the product, price elasticity testing should be carried out which shows customer reaction to price fluctuations. Distribution channel audits are conducted to understand the attitudes of retailers and distributors towards specific products and brands.
The more tech savvy form of marketing research is Internet strategic intelligence. The likes and dislikes of the customers can be directly known with the help of chats, blogs and forums. Online panels are a group of experts who accept the marketing research done online.
All the researches that are carried out can be classified as primary research, which gathers original research, and secondary research, which is based on a primary research and information published by other resources. Secondary research costs less as research is done on already researched data, but the result isn’t efficient.
The research designs used by marketing research are either based on questioning or are based on observations. Quantitative marketing research and qualitative marketing research are based on questioning. Quantitative marketing research is done to derive conclusions like questionnaires forms and survey. The number of respondents involved is high. Qualitative marketing research is done to understand something like in-depth interviews and projective techniques.
Marketing research based on observations is called experimental technique and ethnographic studies. Test markets and purchase laboratories are examples of experimental techniques. The quantity measured is determined by understanding the factors that are responsible for the success of a product and then one or some of the factors are changed and the result is observed. In ethnographic studies observations are done longitudinally or done at several instances of time or cross-sectional, or done at only a particular time.
Research on marketing is similar to exit polling in politics. The market is studied from different angles, at different time, and under different circumstances.
Know Your Market
You can have the best product in the world but, without extensive information on your customers and their behaviour, your chances of succeeding will be slim. Which is why a knowledge of the market in which your products or services are sold is so crucial. And one of the best ways to gather that information is through rigorous market research.
Not only do you need to know about your customers' behaviour; you must consider external influences such as political, economic, social and technological (PEST) factors as well. Serious thought should be given to how, when and what type of market information you should be pulling in and how you intend to use it for the profitability of your business.
Unless you are on top of what is happening in your market, you are going to lose out. For example, supermarkets now account for a 60 per cent market share of all wine sales, compared with 30-40 per cent 10 years ago. What this means for smaller wine merchants is that they have to stand out from the crowd to maintain a foothold. Arthur Rackham Fine Wine Merchants discovered this and responded by offering a combination of quality wine and food for its discerning target audience.
The reality for many businesses is that although they understand the importance of market research, particularly before the launch of a new product, very few have sufficient resources to carry it out.
Back in 1993, few people would have predicted that Dyson Appliances Ltd, a small start-up business, would have been able to suck up a substantial share of the vacuum cleaner market - let alone become market leader. But James Dyson, founder and chairman of the company, proved that if you design a product that satisfies customers' needs and provides superior performance, then even at a distinctly higher price than competitors' models, success is possible.
Dyson spotted a gap in the market that existing vacuum cleaners were not exploiting. His idea was to create a bagless vacuum cleaner that worked on the principle of centrifugal force within dual â€˜cyclones' of rapidly spinning air. In other words, in order to increase suction and performance he did away with the bag. Dyson's first model, the revolutionary DC01, also had a clear plastic removal bin that allows you to admire the grimy results of your cleaning endeavours. Consumers also liked the upright vacuum that sits nicely on the stairs (many others tilt disobediently).
Finally, after a 14-year struggle to raise enough capital for his company to produce the cleaner, the DC01 was launched in 1993. As with most small businesses, Dyson invested virtually nothing in advertising and instead relied on word of mouth and his own efforts to entice retailers.
A further example of Dyson's boldness was the pricing policy. He believed that in order to generate sufficient profit and reflect the product's true value, he had to price high. This was at a time when the market for vacuum cleaners over £160 was extremely small.
It was a strategy that defied conventional marketing wisdom, particularly for a small company. Not only was Dyson's product unknown and far too expensive, it was being launched in a marketplace saturated with established global giants such as Hoover and Electrolux. In fact, one of those companies was so entrenched in Britain that its name had passed into the language.
When Hoover and the other major players first caught a glimpse of Dyson's DCO1, they scoffed derisively at this small company with its multi-coloured, quirky products. Crucially, they did not see the product as a threat.
Yet by 1998, in just five years, Dyson had captured half of the United Kingdom's vacuum cleaner market, leaving its illustrious rivals high and dry. Today, sales of Dyson products are outstripping those of competitors by a ratio of five to one. Significantly Dyson's nearest competitor is another Dyson model.
On a global scale, nearly all of Dyson's competitors now manufacture their own versions of bagless cleaners that bear a striking resemblance to Dyson products. Expansion into international markets is continuing apace and the company already has a firm foothold in countries such as Australia and Israel.
Continuously monitor the marketplace in which you operate. You need to know who your competitors are, who your customers and potential customers are, how your customers behave and any important external factors, such as technological advances.
Great Businesses are planned that way.
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