This post on How to do Market Research for Your Business is a follow up to our previous post in which we discussed the “life and death” significance of market research. Without market research you might enter a business and then find you cannot sell in profitable volumes. Without profits, a business dies.
Types of Market Research
Market research can take the form of primary market research or secondary market research.
In primary market research the researcher interacts directly with people who are likely to become customers. On the other hand, secondary market research involves gathering information from sources other than prospective customers, such as published reports.
The goal of both types of research is to gather information about the market to support different kinds of business decisions.
Even when you are focusing on primary research it is best to start with a little secondary research. Secondary research is easier to conduct, and also gives you a preliminary view of the market you are researching. This overview will help you plan your primary research.
Decide on the Research Objective
To be useful, all market research must be done with a clear understanding of what you are trying to find out, and why. Some major objectives are:
- Confirming a market need: You might want to introduce a new product into the market. To do this successfully, the product must be tailored to the needs and preferences of the customer who will buy it. So you go into the market to find out things like:
- Who buys the product?
- What need does the product meet?
- How do customers use it?
- Where and how do they buy it?
- What features and price do they expect?
- Getting a clear idea of the competition: These days, competition is a fact of life in most markets. You can learn a lot of things, and develop a competitive strategy by finding out:
- Who is already meeting the customer needs that my product meets?
- What do these competitors offer?
- How do they market their offer?
- Are customers satisfied with these offers?
- If not fully satisfied with these offers, what do customers complain about?
- Improving marketability of existing products: Existing companies can benefit by improving their offerings. This is most effective when they have a clear idea of how their product is being seen in the market. They will benefit from finding out:
- Do customers have any complaints about our products?
- How do they use the product?
- What problems do they face in using it to best benefit?
- How best can we improve the product to compete better in the market?
Before you start your research effort, you have to clarify the specific goal you are trying to achieve.
A SWOT (Strengths Weaknesses Opportunities Threats) analysis can help you narrow down to the goal. For example, if the SWOT analysis reveals a market opportunity you can tap, you can tailor your research questions to provide data for tapping the opportunity most effectively.
On the other hand, if the analysis reveals that you are losing market, the goal would be to find out the reasons for it, and find ways to reverse the trend.
Develop a Research Plan
Primary market research can involve two types of research, Qualitative Research and Quantitative Research.
Qualitative research can be seen as an exploratory exercise to help decide how to go about the research. For example, if the goal is to improve marketability of an existing product, we need to get an idea of what customers think about the product – their opinions, complaints, etc. These tend to be descriptive rather than quantities.
We conduct a preliminary qualitative research by assembling a representative group of customers and getting their views about the product. This will give us an idea of where to focus and what to research further.
Quantitative research involves asking questions that help us arrive at quantifiable answers. For example, what percentage of people are aware of our product? You use a formal questionnaire to do the research and tabulate, classify and analyze the answers.
Both these types of research can be done in different ways. The major primary research methods are:
- One to one interviews where the researcher interviews one person at a time and get their views and answers to specific questions
- Focus groups where a representative group is assembled and an open or guided discussion takes place to elicit views and suggestions from participants
- Surveys where questions are sent via direct mail or email asking recipients to respond with their answers. There are also web tools like survey monkey that makes surveys easier
- Phone interviews where the questions are asked over the phone
- Observation where the researcher observes say, the customer using the product and takes notes
The research plan is developed considering what is appropriate in the context. For example:
- Qualitative research is best through one to one or focus group interviews
- A web survey tool is good for doing quantitative surveys among global audience
There is no hard and fast rule. Select an approach that is likely to produce adequate responses and generate authentic data, provided the researcher has the budget to carry it out. Budget could be one determinant of the method finally selected.
While developing the plan try to eliminate the possibility of the research findings being affected by different types of biases.
Common biases include:
- Seeing only information that confirms your preconceived views. Authentic research should come up with some surprises that are not in line with your own views
- Making the sample unrepresentative of the target audience because of careless selection of participants
- Selecting participants and doing the interviews in a way that they tend to give answers expected by you rather than their true views
Create guidelines for the researchers that lead to authentic research exercise. Select the sample of the target audience to include members from all segments in the audience.
Create a Good Questionnaire
Attending to the following would help you create a proper questionnaire that researchers can use to get authentic data:
- Ask only those questions that are relevant to the goal of the research.
- Start the questionnaire with a brief intro making the purpose of the survey clear. If the survey is about complex concepts or technologies, also include a definition so that participants will know exactly what is being discussed.
- Ask a qualifying question at the start to check whether the respondent belongs to the audience you want to research. For example, if you are trying to learn about customer experiences with your product, start by asking whether they have used the product. If not, they don’t qualify for the survey.
- Frame the questions in a way that you get the data you need. For example, if you are surveying the expenditure on different items of food people buy, you want to know:
- What items do they buy
- What prices do they pay for each item and
- How frequently they buy each iem.
- Questions about satisfaction with a product should have an option to indicate NEUTRAL (e.g. Very satisfied/ Satisfied/ No opinion / Dissatisfied/ Very dissatisfied) because many people might have neither positive or negative feelings about a product; don’t force these people to take a positive or negative position.
- End with questions that identify relevant characteristics of the respondent, such as age, gender, education, range of income, etc. Asking these at the beginning might put off the respondent as some of the questions could be sensitive
Actually, creating an effective questionnaire is a specialized task. It is best to seek help from a professional researcher. This is particularly true when you are trying to measure qualitative factors such as attitudes, trust and such.
Identify and Contact Research Respondents
Respondents are the people you will interview. While completing the work above, you would have gained a good idea about the characteristics of people you want to study. For example, you might want to study only people residing in a specific area. Write down these criteria.
Next, think about the issue of finding the people with those characteristics. When you do that consciously, you are likely to find ways to contact them. For example, if you want to interview women home makers in a particular city, you can start by approaching the women’s association of that city.
Present your request for interviews in a way that is likely to interest the respondents (or other decision makers who can influence the respondents to give you time). For example, you can explain how your research will make life a bit easier for the respondents.
In the case of online surveys, you approach things in a different way. You will focus on identifying the online venues where your target audience gathers together, such as forums, social media groups and other online places.
Next, find ways to interact with the people at these venues. You can use the online survey tools to make the process easier and more productive.
Carry out the Research
Take utmost care to carry out the survey just as planned and listen very carefully (with an open mind) to the responses.
It has been suggested that the best interviews involve two interviewers. One person focuses on engaging the respondent while the second person takes notes.
Sort and Classify the Data, Analyze it and Arrive at Conclusions
Now that you have the raw data, it is time to:
- Sort the documents in a way to make recording and analysis easier
- Record the data in an appropriate manner, such as entering it into an Excel worksheet
- Analyze the recorded data into meaningful classifications and carry out statistical analyses
- Review the analysis and draw conclusions
Write the Report
Market research reports have to meet two key requirements to be effective:
- They must focus on the objectives of the research exercise. Anything that does not help in achieving the objective is irrelevant and best avoided or de-emphasized
- They must be read and acted upon
Attending to a few things can help meet these requirements:
- State the research objectives at the start and present the research findings to answer the questions relevant to each objective.
- Start with an Executive Summary or other summary format that presents the essentials in a quick way.
- Use the most appropriate format to present the findings – Text, Excel Worksheet, PowerPoint, Video or the best combination of these.
- Present things in an interesting way, as concisely as possible without omitting key findings; more like an interesting story than boring and long-winded lectures.
- Make the graphics easy to understand and pleasing to look at.
- Move methodological and other incidental information to the end of the report.
Primary market research provides data that comes directly from your audience and is much more likely to be more relevant for your research objective.
To make it effective, follow certain best practices such as clarifying your objectives, creating a research plan that generates data to meet these specific objectives without being affected by any kind of bias, and executing the actual research exactly as planned.
Here are the Handpicked articles that you must read.