Market Research And The Practical Reasons To Do It
Market Research and the Practical Reasons to do it
A marketer can come up with a well-written Marketing Plan yet fail to answer the question, “What is the basis of the plan?” If Market Research did not take place and the strategies, no matter how good, are based merely on personal opinions and assumptions, then the brand is set up for failure.
Market Research is indispensable and should precede the formulation of your marketing strategy. It is the systematic gathering of data to discover new truths or insights from the very people who make your business thrive - your customers and stakeholders.
Who is my target market? What are their pain points? What are their likes and dislikes? What influences them to buy, when, where, and how? Will my product be acceptable and profitable? Where do I stand among my competitors? These are just some of the questions you need answers to in order to determine market segmentation, product positioning and overall, your marketing objectives.
And the answers will not come from a textbook, it will come from real people that matter to your brand. Market Research allows you to uncover these answers. It’s like peeling off an onion, layer by layer, you get to the very core - and that’s where the secret to your brand success lies.
Market Research gives you a deeper understanding of your customers and the industry you belong to. It allows you to customize your strategy versus settling for the gunshot approach because you know who you’re doing it for and why.
Data from your Market Research will guide you in making fact-based business decisions along the way. To give you an overview, here are 10 things you should include when looking at the market for your product or service:
MACRO MARKETING ENVIRONMENT
Consider external factors that may come in the way of your brand’s success. Identify the existing political, economic, social, legal, and environmental issues in the city or country that you want to infiltrate. Determine if any of these will affect your brand such as trade restrictions and laws involving labor, health matters, and consumer welfare among others.
MICRO MARKETING ENVIRONMENT
Conduct an internal evaluation and assess your company’s value chain. Which processes are excellent and which needs to be improved? What are your strengths and weaknesses in your processes?
When you analyze, include everyone who is part of the value chain including companies who buy and resell your product, your marketing agency if you have one, as well as communities you are affiliated with. Where do you stand and what needs to be done to step up the game?
If you are an established business, hiring an outside firm could be a smart decision to take an unbiased look at your processes. If you are smaller and can't afford to contract for this evaluation, set up with a mentor at your local SCORE office. An executive mentor can help narrow down what processes might be most important to look at.
Identify the industry where your product or service belongs to. Thoroughly look at new entrants (new products that are vying for market share), threat of substitutes (alternative products from another industry), existing competition (who are they, how fast are they growing, how are their products different from yours?).
For many small businesses, it can just be a matter of looking at your direct competition to start. Say you are a new pizza restaurant owner, catalog all of your competition within a 5 mile radius and begin to list pros and cons of each establishment. Do they offer delivery? Is there dining room spacious and clean? Are their online reviews strong or weak?
It would also be wise to study the extent of bargaining power your customers and suppliers have.
Conduct a SWOT (Strengths, Weakness, Opportunities, Threats) analysis on your product. Identify your Key Factors of Success or variables that must be managed well to achieve your objectives. Benchmark and set your metrics.
QUALITATIVE & QUANTITATIVE RESEARCH
Mine for data by conducting qualitative & qualitative research. Some of the methods are:
Gathering of Socio-demographics data
Focus Group Discussion (composed of 7-9 people who build their experiences in a group)
In-depth interview (one-on-one interaction, more room for follow-up questions)
Depending on your line of questioning, these methods may help you gauge the brand awareness of your target market, their sources of awareness, usage behavior (why or why they don’t use the product, when is the product used and how often, what other brands have they tried). You also get a clearer view of your target market’s purchase behavior (when and where do they buy your product, how many do they buy, how much are they willing to pay for and what other brands will they patronize apart from yours).
You can also delve into product experience and discover what they like or dislike about your product. This wealth of information will let you validate your market segmentation.
When conducting market research, your objective is to discover new truths and validate your hypothesis. Start by defining your research problem, choose the appropriate market research approach, craft your research design, collect data and interpret it, then lastly, make an actionable plan.
If your product or service has been there for a while, then past sales data is a great source of insight. What do the numbers tell you? Is there a trend? What is the pattern? When were your sales the highest and why? When was it the lowest and why?
The questions can be endless. Understand your data so these numeric reports can have more value to you. Furthermore, compile customer commendations or complaints you’ve received over the months and listen to what they say about your product.
Analyze the activities on your website and other online channels (e-mail, social media, online ads). Track the behavior, analyze and ask why until you discover a new truth.
Take time to read the comments and reviews online, what do they say about your product? How can their feedback help you improve your products and services? What do they say about your competitors?
Understand the cultural characteristics of your market, discover brands associated per social class, analyze the social characteristics of your customers (family life, roles and statuses in daily life), explore personal characteristics (economic status, personality, occupation, age and life cycle - where are they at this point in their lives? Are they a young professional, a mother, a hardworking husband, a senior citizen?)
It would also be interesting to look at their psychological characteristics. Discover what motivates them, how do they want to be perceived by others, what are their beliefs and attitudes in life?
An emerging method of conducting market research is to look at it through the lens of an anthropologist. Immerse with your target market to discover truths that you would not have gained via traditional research methods.
Live with them, be one with them. What is their society like, what are their norms and values? What do they need? How can we best communicate with them? Anthropology links the past and the present. Patterns in history can reveal so much truth.
Check if your product pricing is fair and reasonable. How does it go against your competitors? Calculate your price versus your cost and analyze if this makes your product a smart choice among consumers.
Understanding your customers is a continuous process. What can be true today may change tomorrow. Market Research may be expensive but it can benefit you greatly in the long run. It is always worth knowing who your products and services are for - these are WHYs you should not take for granted. If you cannot afford traditional market research, think outside the box to perform some of these tasks in a more simple manner.
We hope these tips help on your journey to self-employment. Make sure to check out all of our great articles and success stories on the Portals Blog. If you have any questions or want to talk with us, use our Contact Form to get started.