Market research is the process of gathering information about the market, competition, trend and expectations. Market research is a valuable tool in the hands of the marketer and gives him the insight that is imperative before launching a product, upgrading existing product lineup or taking other general decisions which are dependent on the response received from the market.
Market research is also a valuable tool to estimate current and future demand, pinpoint the target demographic for a product / product lineup and also create a general SWOT analysis to assess the conditions, whether it is suitable for whatever the business has planned.
There are different methodologies to undertake a market research, however, they all somehow can be categorized under the following five categories which are widely used.
Surveys are basically a questionnaire that are asked to a sample group representing a larger target demographic. This sample group is presented with a series of questions that are asked at different high traffic sites such as multiplexes, streets, shopping malls etc. Surveys are successful when there is a compensation attached at the end to reward the efforts of the surveyed. The questions that are asked can range from feedback about a product that was launched in the market recently, to features that they want in a new product and or any combination that the market researcher needs probed on. Such surveys are an excellent way to get feedback from the market. However the biggest drawback of surveys are that they are very expensive. This prohibits the use of surveys in large scale sampling.
There are various versions of surveys, apart from face-to-face ones. Telephone surveys e.g., is a cheaper yet quite effective format where the same questionnaire is asked over the telephone to a sample from the target audience. Telephone surveys is certainly a much faster format of market research and is often considered to be the best in terms of cost-effectiveness and results. There is however a growing dislike for telemarketing which has promulgated among target audience making this a risky method to use.
Another form of market research is mail surveys. This is the cheapest form of market research and involves sending mailers to a sample of the target audience and asking them to send back the completed surveys by post. This, however, has the poorest response rate among all the market survey methods in use. The internet age has ushered in a fast and effective marketing tool – email marketing. Marketers have now switched to email marketing for a faster and more cost effective direct response marketing method than anything else.
Market surveys are not the best method of research when as a marketer you are not aware of the right or the specific questions that you need to ask. In the initial stages of market research the better method is the one discussed below.
Focus groups are suitable when the marketer is trying to get a feel of the market and wants to find out what the demographic feels generally about the product and or what they want out of a product. Let’s say a new anti-virus company is about launch their product in the market. They are still in the testing and QC level but they want to figure out what the market is looking from a new product. So they bring forward a target group of say 10 people, all working executives who use their computers for business work. Their feedback is taken over an informal session where their opinions, expectations and suggestions are all collected. Since an anti-virus is a product that is used across a wide user base, separate focus groups can be created such as work-at-home-mothers, or college students, or gamers or even kids under the age of 15 and so on.
Focus Group discussions are usually coordinated by a moderator but it is not his job to leave too much of a footprint on the core discussion. He would simply let the ball in motion and let the group take it forward. This is a classic group discussion scenario where ideas are introduced and tossed about and other members support or negate it. There is yet another group of people who are watching this discussion and they are the observers whose job is to take notes of the ideas and objections that emerge out of the discussion.
In the first step surveys were discussed. Focused groups are the first step before surveys should be carried out as focus groups will help a marketer to know the list of right questions to ask to a sample. Having said that, if in a general survey it is suggested that something is wrong with the product, a focus group discussion and study of the same may reveal what exactly it is.
Interviews or in-depth Interviews are one of the most intensive market research methods and it usually reveals details on objections and ideas that a regular focus group cannot reveal. Interviews are always one on one and unlike a face-to-face survey these involve more subjective questions that can reveal issues such as psychological, behavioral and others. Often the questions are direct which means they would require more elaborate answers. At other times questions may be more objective requiring simple answers.
Interviews have been considered to be an effective method of marketing research because the interviewer has a single minded focus on the interviewee and thus can ascertain more insightful knowledge out of the answers or by further investigation. Interviews are considered to be more useful compared to Focus groups. Interviews can be arranged in a short notice as unlike in a Focus group only two person’s prior approval is required. Additionally interviews are more flexible because they can be taken anywhere and even over the phone.
Field Testing and Experimentation
This concept is like the old trial and error method. The marketer finally decides to put his knowledge about the market and the insights gathered through interviews, focus groups and other survey methods to test. He does so by making a soft launch of the product. You may have come across marketing jugglery like ‘now in 6 different flavors’. As a matter of fact the company is unable to decide which 3 flavors they should be focusing on. They are letting the customers decide for them. So they launch all the different flavors in limited quantity and check which ones sells out first. Needless to say, the top three will be retained and the other three will be discontinued or a similar launch will be made in a different demographic and again tested for their popularity.
Again, a business having an e-commerce portal undergoing a change in its design may be unsure whether the new design will be fancied by its customers. They may decide to keep both the new and the old version working during the transition phase. Some visitors would see the old version and the rest would see the new one. Depending on the volume of conversion the business may finally decide whether to keep the old version or switch to the new one. This method of testing is also known as A/B Testing.
Observation as a market research tool is plain and simple observing of the behavior of the customers when they are using a product / service. Never mind what customers report, what they actually do with the products/ services is more important for the business to make its decisions. Customers often say something but tend to do the exact opposite of it when they are alone with the product concerned.
In a product survey, a personal grooming products manufacturing business found out that there has been a 400% jump in the sale of their hair-cream. The market concerned has been a perennial slow one so the exorbitant jump surprised one and all in the business. Nevertheless, they thought to take advantage of the spike in demand. Supplies were redirected from other slow moving markets and fresh production was made to meet the increased and still growing demand. The company additionally decided to go for some marketing endeavors. TV ads, billboards and handouts were sanctioned and a marketing team was set up to educate people.
A month later sales were found to be back to original levels! Since the sudden spike followed by the sudden ebb were both baffling, the company decided to send out a team to make further research into the reasons. After all they felt that they just lost out on a promising market and wanted to know what went wrong and if the situation was salvageable. The researchers found out something startling.
The market, which was rather backward and poor had no means to buy butter as it was prohibitively expensive. The hair cream that was launched in the market was somehow mistook for a butter alternative and being cheaper than a pound of the white stuff they used it on bread! Thankfully the taste was not too unpalatable either. Later on however, when the marketing drive was made they realized that the product was not edible and thus realizing their mistake stopped buying it! Get more insights on successful market research methods and methodologies.