Market research is the objective process for generating information to help you make strategic business and marketing decisions.
Marketing is an essential part of business. However to ensure your marketing plan is successful, it is essential for a business to take a customer view across the marketing mix. Whether it is products, or pricing, distribution or communications, consumers can provide important information to feed into the strategic decision making process.
The most common way to gather this information is through consumer surveys or focus groups. Through market research consumers can tell you which products they find appealing and why. They can provide an indication of what the optimum price would be for those products, and how they want to buy them (i.e. distribution channels) They can also give you an indication of which marketing communications are working, and why (or why not).
Specifically market research can help you:
• Understand consumers attitudes and preferences
• Understand consumers decision making process when purchasing products or services
• Uncover opportunities or gaps in the market, for both new and existing products
• Help forecast future sales, for both your current product range and future product ideas
• Measure the effectiveness of your marketing communications – How well your ads are performing and what message are they giving about your company.
• Understand whether customers are satisfied with the service they receive and suggest areas for improvement
Take the Time to Do Your Market Research First
So many times throughout my career I have heard people say – “I don’t have time for market research” or “I can’t afford to do market research”. My question is, “can you afford not to?” Even businesses that have been trading profitably for a while can benefit from market research to ensure they are continually meeting their customers’ needs in terms of the products and services they provide. Here’s a real life story of what happened when one of the most well-known companies in the world – McDonalds, launched a product without taking the time to understand their target market.
McDonalds decided they wanted to expand their product offering in order to attract an “older more sophisticated” crowd. They hired a top-notch chef to design a range of gourmet sandwiches called the “Deluxe Line”, and hired a marketing agency to promote it.
The marketing agency (who were clearly very good at writing taglines that appeal to children) went to work and came up with the tagline “Especially for Grown up Tastes”. They also designed a great web promo where you could click on Ronald McDonald and he will teach you step by step, the “Deluxe Line Dance” All up McDonald paid around $300 million to launch this new product.
How many “older sophisticates” raced into McDonalds with their friends to eat Deluxe Line sandwiches and do the Deluxe Line Dance? I don’t know exactly, but needless to say, McDonalds was out-of-pocket, $300 million dollars out-of-pocket. By doing a few qualitative groups among their target market “older sophisticates” (however McDonalds defines them), they could have found out such things as:
• Would anything at all ever entice “older sophisticates” into McDonalds?
• Would the promise of a deluxe sandwich make them want to try McDonalds?
• What sorts of perceptions do people have about a product described as “Especially for Grown up Tastes?”
• Would they have any desire to go online to learn the “Deluxe Line Dance?”
I could go on, there is a lot you can cover in a 2 hour focus group, but you get my drift. By taking the time up front to understand their target market, they could have saved a lot of time money and heartache.
You or your business may not be as big as McDonalds, and you may not have as much money, but the principle is the same. Ideas marketed from a customer perspective are much more likely to succeed.
By testing your product or business idea on a small part of your target market before you launch it, there is a far higher chance of it being a success, and making you money. Or it could save you a lot of time and money by telling you upfront if there is no appetite for your great idea
The good news is there are a lot of quick and easy ways to understand your target market which are relatively cost-effective. In the coming blogs I will give you quick and easy tips on how to set up your own market research surveys.