How to do Market Research
Why do Market Research?
- To use the marketing concept effectively in a growing business, you should . . .
- Analyze your firm's competitive advantage. What do you do best?
- Identify specific markets you now serve.
- Determine the wants and needs of your present customers.
- Determine what you are now doing to satisfy those wants and needs.
- Prepare a marketing plan that allows you to reach out to new customers or to sell more to your present customers.
- Test the results to see if your new strategies are yielding the desired results.
- Learning who your customers are and what they want.
- Learning how to reach your customers and how frequently you
should try to communicate with them.
- Learning which advertising appeals are most effective and which ones get no response.
- Learning the relative success of different marketing strategies, thus improving return on investment.
- Learning how not to repeat your mistakes.
Some obvious pitfalls are:
- Using a sample that does not represent the total market.
- Asking the wrong questions.
- Not listening to the responses.
- Building in biases or predispositions that distort the reliability of information.
- Letting arrogance or hostility cut off communication at some point in the marketing process.
worthy of consideration are:
- Advisory board - Occasionally convene a group of local people, whose opinions you respect, to act as a sounding board for new ideas. Choose your group with extreme care; one or two negative thinkers can distort the thought process of the entire group.
- User group - Gather customers together to discuss new ideas. Their opinions can help you keep your business on track. Pick a neutral setting where the people will talk. Be sure to reward the participants and share the credit for good ideas.
- Informal survey - If you seek feedback from customers by simply asking, How was everything? you can be seriously misled. Most people, even those with legitimate complaints, are reluctant to speak out because they are afraid of appearing foolish. This tendency is probably more widespread in smaller communities, where friendships often stand in the way of critical review.
- Suggestion box - A suggestion box is a simple idea that works, but only if you do the following:
- Read the suggestions on a regular basis.
- Do something about the suggestions you receive.
- Reward those who give you good ideas by posting their names, writing letters to them or rewarding them with money or other things of value.
- Sample survey - Canvass the neighborhood to gather data. If you wish to remain anonymous, line up some marketing students to perform the survey or engage a local marketing agency.
Be sure you establish a technique for getting a random sample as most people naturally attempt to attract respondents with whom they feel comfortable. Be sure to test your questionnaire to see that the questions are easily understood and are meaningful (see Appendix A for a sample survey).
- Focus group interview - Get 10 to 15 people together in a relaxed
setting and encourage them to talk about products or services they like or dislike.
- Use a moderator who can lead the group discussion without inhibiting the thought processes or limiting the expression of ideas and opinions. Tape record the session for later analysis.
- Brainstorming - This is a variation of the focus group, in which participants are encouraged to freewheel in their thinking to produce as many suggestions as possible with out analyzing them. Again, a trained moderator will obtain the best results.
- Complaint analysis - Encourage your customers to contact you directly if they have complaints. Respond to every complaint with a courteous letter assuring that you will correct the situation. A few disgruntled customers can be harmful. If your customers feel that they can work with you to solve their problems, you are sure to be successful.
- Comparison shopping - Arrange with someone in a similar business located out of town to come to your town to shop your business and several of your competitors. Then return the favor and compare notes. This will avoid the danger of your becoming complacent about your premises and overlooking things that may be annoying or confusing to your customers.
- Customer analysis - Tabulate information about customers regularly to determine such data as:
- Size of buying group (family, household, etc.)
- Sex of the decision maker in the group.
- Geographic location - Sort checks and sales slips by ZIP code, or ask customers to mark their home on a map with a colored pencil.
- Tabulate visitors versus local residents.
- Average amount of purchase.
- Coupon usage.
- Response to recent advertising.
- Radio station listened to.
- Newspapers read.
- Response to mailings.
- Full price buyers versus those who respond to sales or specials.
- Special populations in your area, such as college students, military personnel, senior citizens, hospital visitors, convention attendees, sports spectators, fair attendees, farmers, seasonal workers, car pools, pet owners, home owners, boat or recreational vehicle owners and athletic participants.
Your customers may be telling you they are dissatisfied with your competition and would prefer buying from you. You will be able to tell if other businesses in the area are in trouble, even before they know it themselves. You may also discover ways to make additional income by adding new departments or product lines or by developing a special-order business if your customers are willing to pay the added shipping costs and wait for delivery.
- Industry analysis - On business trips or vacations, visit businesses similar to yours. Take pictures of signs, storefronts and displays, and talk to the owners to compare notes on new products, services and marketing techniques.
- Subscribe to trade journals and attend trade shows to keep current on marketing developments in your industry. Sales representatives - Representatives who call on other similar businesses in your area can provide valuable information on business trends, new items and changes in the industry. Be sure the information is reliable.
- Advertising notebook - Each ad that you run represents an investment. To make sure you maximize your investment, cut out each ad and tape it to a page in a three-ring notebook. (For a radio or TV ad, write a short description.) Enter the date, medium and cost of the ad. Record the results of the ad in sales, inquiries or coupons redeemed. Divide the cost by the results to get a cost-per-inquiry factor that you can use to compare your ads and the media in which they appeared.
- Exit interviews - When someone leaves your employ, be sure to spend sufficient time to find out exactly why he or she is leaving. Probe deep to learn what may be occurring in your business that causes hard feelings, employee conflict or customer dissatisfaction. It is important that your employees leave with a good feeling about you and your business, so they will not spread unfounded rumors.
- Also, you may wish to keep them as customers. Employee turnover and training can be expensive to a business, so try to find out what you must do to keep employees and then decide if they are worth the price.