April 27, 2016
In the know: Simple Market Research
In 2005, Evan Williams and Biz Stone decided to invest in Odeo – a platform to create, browse and share podcasts. It was their belief that podcasting could become a conventional way of sharing news, opinions and all sorts of information. Today podcasting has become widely used; but at the time, Williams and Stone were apprehensive to invest as Apple had announced iTunes would include a podcasting platform built into iPods. To confirm their direction the pair conducted research on the potential market. Findings from their research revealed that the success rate of their idea was not idyllic. However, they discovered the potential of their idea and its scalability. Instead, they focused their attention on creating a simplified version- a portal where users can simply share their thoughts and what they were up to.
The two conducted market research, delving into what users didn’t like and what competitors, such as Facebook, didn’t deliver. They found that people liked to use Facebook to share photos and to stay in the loop with their friends but didn’t particularly appreciate how news or information was delivered. This information convinced Williams and Stone to transform Odeo into Twitter – a platform that offered users a better news and an opinions feed where they could share a “status”.
Why Market Research is Important
Conducting research on a continual basis is ideal for maintaining a competitive advantage. The information gathered can confirm or dispel the notions a business owner or marketing team has. The findings can then help to make calculated decisions moving forward. The reasons for conducting research can vary, yet the kind of data that can be attained include:
- Customer characteristics – In getting to know customers, data about their gender, marital status, job descriptions, family composition, level of education, salary range, and address are gathered. Moreover, their preferences in relation to the product or service offered, the conditions in which they would switch to your product or service, their shopping behaviour, their sources of information and so forth are also looked into.
- Blind spots in the business model – Through market research, the business owner will get to see the product through the eyes of customers. Information such as what they like about the product or service, what they don’t like, what other features they wish the product had and so forth.
- Business Opportunities – Market research is also a good way to check if trends are shifting (if so, why and how) and the level of saturation of the market. It may also lead to the discovery of a market that is not serviced, or is under-serviced, in which the business owner can penetrate.
These can then help a business owner set realistic targets and develop effective strategies.
There are two methods used for market research: primary and secondary. The two can be done concurrently.
Primary research – This type of research is done by the business owner and/or his staff or by an outside agency. The material is designed to the needs of the business. There are different ways of conducting primary research: surveys, focus groups, interviews or observation.
Secondary research – Instead of a more hands-on approach to sourcing data, secondary research entails using accessible data or information that has been collected by another person or agency. Sources of such information include; journals, white papers, and marketing reports. These can usually be found online or in libraries.
Categories of Data
When conducting research, there are two core categories of data that can be attained: qualitative data and quantitative data. The type of data chosen will depend on the research goals of the business. They can also be unstructured or structured.
- Qualitative research – Through this method, the fundamental reasons, opinions, and motivations towards a product or service are investigated. Focus groups, interviews, and observations are some of the ways by which this type of data can be gathered. Usually, a small group of respondents is chosen based on specific criteria to share their thoughts with others.
- Quantitative research – This involves measuring the situation through numerical data. The numbers are used to represent the opinions, attitudes, perceptions, and behaviours of the respondents, who are generally made up of a larger sample size. Patterns are uncovered in this type of research. Quantitative data is usually collected through surveys, interviews, and observations.
Market Research is an important tool as a great way to understand elements of the business and discover potential opportunities for the business moving forward. The crucial element is aligning the findings with your strategy.