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 further 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 its users better news and an opinions feed where they could share their “status”.
Odeo never came to fruition. Instead, Twitter was borne out of the ideas and information yielded by the market research that Williams and Stone conducted.
What is market research?
Market research is the well-thought-out process of gathering data to gain insights and make informed business decisions. It is used by businesses when planning their overarching strategy and direction. Information collated from market research includes such things as the needs of the market, the characteristics, the market perception towards the concept, the market size, and competition. Conducting market research on a continual basis is ideal for staying abreast of the latest trends relating to the business, as well as to have a competitive advantage.
Why it is important
The information gathered from research can confirm or dispel the notions a business owner or marketing team has about their product or service. The findings from the research can then help the business to make calculated decisions about the product, service, brand and promotional plans moving forward. The reasons for conducting market research can vary from one enterprise to another, under different circumstances – such as stage of the business and social and economic conditions. 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- Based on the information, the business owner will be able to determine practical goals for business development, marketing, sales, and growth.
Develop effective strategies- The information will set the tone for the activities of the business moving forward, taking into account information such as the customer characteristics, preferences and blind spots of the business.
Market research methods
There are two methods used for market research: primary and secondary. The two are not mutually exclusive and can be done concurrently. Business owners who want to get specific and timely information go for both methods.
Primary research- This type of research is done by the business owner and/or his staff or by an outside agency that specialises in market research. The research material is designed specifically to the needs of the business and what information the business owner requires. There are different ways of conducting primary research:
- Survey (online or print) – This involves getting a number individuals to answer pre-made questions online or on print.
- Focus group – A group of people that share a common set of characteristics are gathered together and asked questions to get their opinions, perceptions, and beliefs towards a product or service.
- Interview- These are like focus groups but instead of interviewing a group of people, only one person is asked questions.
- Observation – This method involves watching customers or potential customers from afar to determine their behaviour and how they interact with the product or service.
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.
Types of market research data
When conducting research, there are two types 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.
- 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 in knowing the viability of your product or service. It is also a great way to understand your customer and discover potential opportunities for the business moving forward. The crucial element is to aligning the research findings with your marketing strategy and desired outcomes.
Reload Consulting offers a range of market research services that are tailored to the research objectives and budgets of our clients. Get in touch via the Contact page or call through on 1300 714 146 to learn more.