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Do Your Homework! Market Research Matters
Published on Feb 18, 2010
Read 'Do Your Homework! Market Research Matters' at 'Time to Start Up,' the small business blog by BizFilings.
There's a reason this is called the Information Age—because information is now the bread and butter of business. What you know about your industry, your market, and your customers can be the difference between abject failure and stunning success.
Ask Philip Kotler, author of the classic Marketing Management, whether information matters and he'll point to the billions spent on market research every year. Coke knows how many ice cubes we put in a glass on average (3.2) and how many Coke commercials we see on average each year (69). Proctor & Gamble once bothered to find out how many of us fold our toilet paper and how many crumple (42 percent fold; 33 percent crumple; 8 percent fold and crumple; 6 percent wrap it around their hands. Oh, you didn't ask? Sorry).
These companies are not searching for these answers so the CEO can do better at Trivial Pursuit. They are looking for information so they can continue to grow their businesses. Knowing your market and the habits of your customers, often in exquisite detail, matters. Ice cubes and toilet paper may not matter to your company, but some things will, and it's your job to figure out what those are and how to measure them.
All successful business owners must know their markets, competitors, customer wants and needs, and what it takes to be competitive. You must set aside a decent amount of time and money for market research, especially if you are starting a new business or branching out into a new direction.
Before you begin researching your market and collecting data, you must first determine your needs and objectives and then implement the right data collection procedures:
Determine your market research needs and objectives. The first step in doing market research is to decide what you really need to find out. The kind of information you are seeking should determine the type of research you will do—although of course budgetary constraints will also play a part in your decision.
Do you need to learn how potential customers think about your product category in general? If so, interviewing groups of target buyers in focus groups may be the way to go, even though this type of research indicates only directional trends and may not be statistically reliable.
Or maybe you only need to confirm general trends in your industry based on existing research. In that case, reading information from outside services, industry trade associations, and industry experts may be all that you need to do.
Maybe you'll want to conduct blind tests of different formulas before finalizing recipes for a new product. Or perhaps you have completed extensive product development and testing and are now ready for a field test of your prototypes.
Market research procedures. Generally, market research procedures break down into the following categories: Primary research (the actual data-gathering about the specific usage patterns, product feature likes and dislikes, etc. of target buyers or current users of your products) and secondary research (in which someone else has done the actual data-gathering in the field). Secondary research is generally much less time-consuming and cheaper than primary research.
Depending on your budget and timeframe, it may be worth popping in to your friendly neighborhood marketing consultant for a professional overview of your situation. If nothing else, a quick consultation can give you a better grasp of what the possibilities are and which would be best suited to your own business.
What methods have you used to do any kind of market research?