Market Research: Knowledge Is Power
Market research, when properly conducted, is like a terrain map of the market, your market. It consists of both qualitative and quantitative information that helps you, a business owner or executive, make smart decisions while avoiding the pain of multiple trials and errors. Market research is the first building block in creating a high-performance marketing plan.
Where to begin?
Primary and Secondary Market Research
Primary Market Research - The Voice of the Customer
Primary market research consists of specific information collected to answer specific questions. This is data that’s collected straight from the customer. Primary market research includes user surveys, focus groups, telephone interviews, or customer questionnaires.
When conducting primary research, we get answers to the following questions:
- What factors are considered when purchasing a product or service?
- What do you like or dislike about our current products or services?
- Where can improvements be made?
- What would you consider to be the appropriate price for our product or service?
When conducting primary market research, it's important to ask the right people the right questions, in the right way. Poorly acquired research can steer your business in the wrong direction.
Four Tools of Primary Market Research
There are four basic tools used to conduct primary market research:
1. Direct Observation - Watching how people interact with a product or service is one of the oldest methods of market research. An example of direct market research most of us are familiar with is the cookies on your computer web browsers. Cookies track the website you visit and help advertisers deliver messages that are appropriate to you.
2. Focus Groups - Focus groups are usually used in the early stages of a product or service development program to determine marketability of a product or viability of a service. A focus group is a qualitative form of market research conducted in a controlled environment facilitated by a professional focus group facilitator. A focus group is a small, carefully selected group of prospective or actual customers. A focus group can help determine underlying belief, perception, attitude and opinion regarding a product, service, advertising campaign or packaging. During World War II focus groups were used to determine the effectiveness of propaganda.
3. Surveys - Surveys are widely used today to determine pricing, customer satisfaction, product features, and overall value. Developing an effective and statistically valid survey is more complicated than simply asking people what they think. When designing a survey it is important not to include assumptive clauses and leading questions.
4. Interviews - Interviews are like focus groups except only one individual participates. These interviews are especially useful for exploratory surveys, i.e. an unstructured interview.
Secondary Market Research - Don't Reinvent the Wheel
Secondary market research is information that has been gathered and repackaged from already established sources. Most of the information sources familiar to librarians and their patrons are considered secondary sources of market research, as are government agencies, books, journals, and newspapers, trade publications, and the internet.
With secondary data, we can identify competitors, establish benchmarks and identify target segments. Secondary market research is typically more cost-effective than primary research and is usually the best place to begin the information-gathering process. Not only can data be extracted from industry studies, books, journals and other published resources, but it’s often accessible for free via the Internet.
When conducting secondary market research, you’ll want to include the following:
- Basic demographic information. The age, sex, geographical region, marital status, etc., of your existing and potential customer base.
- Buying cycles or patterns. Do your customers buy weekly, monthly, yearly? Are the purchases spontaneous or planned?
- Trends for new or improved products and services. What needs do your customers want to have filled? What's missing in the marketplace?
- Competition and strategic alliance opportunities. Who else is doing what you do? What companies could complement your products or services if you worked together?
Data Collection - Quantitative vs. Qualitative
In addition to the two separate types of market research, there are also two major types of data collection when conducting market research: Quantitative and qualitative
Quantitative data is all about numbers. It uses mathematical and informational analysis to shed light on important statistics about your business and market. This type of data can be gathered from sources such as multiple-choice questionnaires or surveys, and typically involves a large sample size for statistical validity and predictability. It can help you to gauge the level of interest in your company and your products and services. For example, if we want to know how many of your customers support a change in a product or service, we would use quantitative research.
The advantage of quantitative data is that it’s statistically based, so a properly constructed test is assumed to be statistically valid. This means we can use the findings to make legitimate predictions about where your business is headed.
Qualitative data, on the other hand, is not so much about numbers as it is about people—specifically, their opinions and perceptions of your business. Qualitative data collection is usually conducted by asking questions of individuals or groups of people, for instance, through focus groups or interviews. It can help you define problems and learn more about your customers' opinions, values and beliefs.
Qualitative research generally involves smaller sample sizes than quantitative research. As a result, it’s not intended to be used to predict future performance. But it does provide a subjective look into your business that you otherwise would not have. If we want to know why your customers behave as they do, we use qualitative research to explore those issues.