Why is market research so important?
Why is market research so important to the success of most commercial organisations, regardless of their size, maturity, industry sector and so on? In this age of fast-paced technological advancement, with new innovative products popping up all the time, it is easy to forget about investing in market research and just get stuck in to the ‘doing’. At its heart, market research is all about minimising commercial risk and financial uncertainty – so if these concepts are attractive to you, read on…!
When developing a new product or service, it is understandable that you want to start trading straight away. The focus is probably on creating a website or building a presentation or developing a video – whilst investing time, money and energy in market research could be the furthest thing from your mind.
However, effective market research can make all the difference to the success or failure of your business. And, what’s more important, for a relatively small investment, you can save yourself a huge amount of money by avoiding expensive dead ends along the way – it will also make any investors you have sleep easier in their beds at night.
So, what is market research? Market research is very simply the process of testing your product or service in front of your primary target audiences. Many people underestimate the importance of ‘Product/Market Fit’, the definition of which has two component parts:
- Am I in a ‘good’ market?
- Does my product satisfy that market?
When your customers are banging down your door for your product, this is when you have achieved the perfect product/market fit. The first step on the journey to achieving this business heaven is market research. Does your target audience have the need/desire/passion for your product or service, and do they have the means (level of disposable/usable income) to purchase it?
As always, it is worth noting before you read further that our monthly blogs are primarily aimed at introducing subject matter relating to the world of marketing to those who want to find out a bit more about a particular topic, so that they can make a better-informed decision on what is best for their business. Although there is a great deal of sophistication, experience and expertise underpinning all the content we create for our Marketing Matters articles, their number one objective is to enlighten those who do not have a deep understanding or a specific marketing media, rather than educating those who have a comprehensive knowledge about a particular medium we are discussing.
The pitfalls of market research
Ineffective market research can be just as lethal to a new business plan than not conducting any market research at all; therefore, we are going to showcase some of the common pitfalls when carrying out market research.
- Friends and family
We all love our friends and family, and we often need their support most when entering into a new venture or business idea. However, they are NOT your target audience, and their views need to be taken with a healthy dollop of scepticism. This is perhaps the most common mistake made by new business owners. It is vital that an impartial group of your target demographic is used for testing opinions on any new business.
- Not getting the whole picture
It is important that you distinguish exactly what answers you want from your audience before you start carrying out your research. Going in blindly with the hope of learning something (or anything…) from your target audience, is not a strong enough plan. The main things to get out of your research is; what kind of need does your audience have for your product/idea (think of ‘nice to have’ vs ‘can’t live without’) and what are they willing to pay for it? For example, your audience may have a very strong need for your idea, but they aren’t willing to pay enough for it for your business to make a profit. Insights like this are invaluable, and can be properly addressed before spending a fortune on the wrong idea.
- Leave the emotions at the door
We all know that a good business owner has to have the right passion and drive for their product/idea to really get it off the ground. However, when it comes to market research, try and leave your emotions at the door. Remember, the main reason you are conducting the research is to gather invaluable insights and information about the needs and behaviours of your audience. It is easy to get disheartened when your research findings don’t support your initial conclusions. So, try and remember two things if this happens:
- Take it with a pinch of salt – not everyone is going to like your business idea and it is impossible to please everyone. You are conducting research to answer the main questions, so stay focussed on that.
- Be flexible – any new idea is a process, and so what if your first idea isn’t going to be as big as the new iPhone. However, if you listen to your audience and remain flexible in tweaking and improving your idea, your second or third idea could just be the thing!
Types of market research
There are many types of market research for you to choose from, so it is important to think about what you want to achieve from your research before deciding what is right for you. Be very specific with your goals and this will help you to determine what type of market research is right for your needs. It might be a good idea to combine quantitative market research (research which obtains large volumes of general information/data from your target market) with qualitative research (more detailed information about the personal desires, motivations and thoughts of your audience). This balance will help you to achieve a well-rounded picture of where your idea/product might sit in the market.
- Online surveys
Pros: Online research surveys are possibly the easiest way to conduct market research and gather the opinions from your target demographic. Online surveys can reach a large demographic in a short period of time and collect a large amount of data in a cost-effective way.
Cons: With online surveys, you can get a very one dimensional view of your audience. You are gathering a large amount of data (which is always useful) but you don’t get to meet, see or speak to your target audience; therefore, it lacks the opportunity to get personal and understand the needs and motivations of your audience.
The questions you are asking in your survey are also very important, so make sure you do a couple of drafts to ensure your questions are delivering the correct information you want to get from your audience.
- Focus groups
Pros: Focus groups are an excellent way to test out ideas on a real time audience. You can meet your target demographic and get multi-dimensional information on how they interact with your ideas/products. Focus groups can deliver a wealth of information that can’t be obtained from a simple survey. The recruitment process is also extremely important as you are finding out where your target audience hang out, how to engage them, what works and what doesn’t work – which is invaluable information when launching a new idea and driving initial sales.
Cons: It is easy to get caught up in the minor details when conducting focus groups, and it is important to take comments and ideas generated by the groups with a pinch of salt. There is often a discrepancy between what people say they will do and how they will actually behave in practice. A lot of campaigns that received negative comments in focus groups went on to be extremely successful ideas! Therefore, it’s important to take all information and process it to answer the main questions to ensure your products and services appeal to your mass demographic, rather than trying to re-create your product/idea to suit everyone’s individual needs.
- Direct B2C market research
Pros: Direct B2C research can mean many things, but the main goal of this type of market research is to simulate the business/new idea as if it was already launched and seeing how your target audience behaves. This is very different from the first two methods as, instead of asking your audience how they think they would behave, you are seeing in real time how they are behaving!
One example of this includes taking samples (this can be product samples for a new product or branding samples for a new service) to a busy exhibition/market/trade show where your target audience will be and testing sales or sign ups. Is your target audience attracted and engaged by your branding or product? Are they happy to pay the price you have set? Or are they disengaged or irritated by the messaging? It’s important to identify your audience’s potential negatives early on to be able to address them effectively and efficiently.
Cons: This is probably the most time-consuming of the market research methods and it is important to identify the correct crowd for your experiment. If you show up at the wrong place, this could be a costly mistake. However, if you do your research and set-up correctly, this method could provide you with some invaluable, real-time data from your perfect audience.
- Other market research options
There are lots of other options when it comes to market research. Other options include:
- Market reports – this is a great quantitative research technique of gathering large amounts of data on your target audience. You can easily access market reports online that report key details such as overall spend on certain types of products and much more. This may require a bit of digging around, but you may gain some great ‘bigger picture’ insights.
- Mystery shopping – this is a great way to investigate competitors and your own company too. Experiencing the sales pipeline process first-hand can reveal all sorts of insights that you can use to improve your own prospect interactions. Also, you can find out whether your business is doing a good job or not too. This type of observational research can deliver powerful insights in an indirect way to classical forms of research. It can be expensive, but remember, value is a relative concept.
- One-to-one interviews – similarly to focus groups, you can gain some really personal and in-depth details on individuals from your target audience. You can dig deep on personal motivations and how they interact with your idea. However, this can be a time-consuming practice and will only target a small portion of your audience.
- Competitor analysis – this is a great, cost effective technique for gathering audience insights. With competitor analysis you are focusing on what successful companies are already doing in your marketplace, and how they engage with their audiences. What products are successful and what isn’t? Insights from your competitors can be invaluable and can also provide some great ideas and inspirations for your own business. As well as desk-based research, there are lots of software tools you can use to analyse the digital marketing strategies of your competitors too.
Strategic marketing planning process
At Abacus, we use an intensive strategic process that brings research to the heart of everything we do. Our strategic marketing planning process is a research-driven one that uncovers helpful insights that support the viability of new products and business ideas, as well as revealing evidence that will support the effectiveness of an integrated sales and marketing campaign to launch the idea.
Market research company in London
If you are looking for a market research company in London and would like to find out more about how Abacus Marketing can help you to deliver an effective market research plan for your business, please do get in touch. To book a free consultation, please email Stephen Taylor-Brown, Client Services Director, at [email protected], or call us at 020 3858 7836. You can find out more by visiting our website at www.abacusmarketing.co.uk.