What sells best in your company?
Regardless of what you produce and sell, the short answer is … whatever the customers really want to buy. That’s the million dollar question, isn’t it?
What do my customers really want to buy from me? That’s where market research comes into play.
Market research is about getting into the minds of your customers and potential customers, hearing what they have to say, and tracking actual behaviors.
Market research can take many forms and can be fairly simple to very complex. Let’s review a few types of market research and the pros and cons of each.
Customer Surveys. These are perhaps the most common research tool. You have someone develop a questionnaire to ask customers what they think or plan to do about a variety of topics. You deliver the questionnaire by mail, email, web link, telephone or one-on-one interviews, and then compile the answers and make conclusions based on those answers.
Obviously, some of these methods are more cost effective than others, but the choice of survey method for the information you’re looking for is key to getting the results you want. If you’re serious about getting solid, in-depth information that will be useful to your organization, a good market research firm can give you guidance.
A few challenges associated with surveys are:
- Loading the questions. If the question isn’t asked clearly, you may be leading the customer to a particular response. It helps to have a trained researcher develop or tweak your questions.
- Asking too many questions. Customers don’t mind giving feedback, but people are busy and the longer the survey, the lower your response rate is likely to be.
- Deciding who to survey. If you select certain customers to survey, you can skew your results. Of course, if you only want to appeal to a certain segment (biggest customers, for example), then surveying a subset of customers might make sense. Just remember to apply the data obtained in light of the customers surveyed.
- Getting responses. Response rates vary, but it will likely take some work to get enough responses to be meaningful.
- Interpreting the responses. If the questions were asked well, responses will be easier to interpret. If not, you may have a lot of data, but not much information.
Focus Groups. Focus groups are more involved, but they give you a wider range of responses.
Let’s say you’re working on a new product or thinking about modifying a current one. A market research company can help you bring together a group of buyers to evaluate and give feedback on your idea. An effective facilitator will know how to draw the information you need from the participants in an objective, unbiased manner.
Generally, the focus group members don’t know what company they are being asked about, so they can be more free with their comments. You also get the advantage of hearing from current customers and non-customers who may have different opinions and insights. Typically, you observe the session behind a two-way mirror.
A good market research firm can tell you more about focus groups and how they work, and help you determine if a focus group is the right option for your project.
Industry Statistics. A third type of research is more general and can be less costly, if it fits your needs. Many industry organizations survey their members regularly on a variety of topics including buying patterns, projected growth segments, and so on. This data, if available in a digital format, can be analyzed to look at specific issues and patterns.
For instance, you might want to see responses from only a certain size company or in a certain geographical area. The more refined your analysis, the more accurately you’ll be able to use it for your own purposes.
Let’s look at an example of market research that helped a company make a better decision.
A cabinet company had developed beautiful luxury bath vanities. The owners were prepared to spend a great deal on advertising, marketing and sales. The company decided to do a little research first to see how the new designs would be received. They used a market research firm to gather information and learned that the new designs weren’t well received at all.
The designs were beautiful, but research found they were not seen as functional because they didn’t have enough storage space built in. The company changed course and successfully marketed the vanities in a much different way to a totally different market.
The field of market research is broad and has many complexities. But, the reason for research is simple – you need to know what your customers and potential customers want so that you can effectively deliver it at a reasonable profit.
What do you need to find out about your market?