Market Research – The Key To Business Success – Part 2 of 2

Product development

Having established customers’ needs, and how this affects their buying behaviour, this vital intelligence can be used to influence both product design and the marketing message.

Statistical analysis can then be used to group consumers according to these needs, allowing the supplier to offer a customised range of products or services that will meet their differing requirements.

A significant amount of market research (over a quarter) is spent on developing new products. Primary research may test attitudes to existing products to establish in what way they are lacking, and then test improved and modified products to see if they better meet consumers’ needs.

This research can be carried out in a variety of ways including focus groups (repeated sampling of a group representing your potential customers), random high street tests and home tests.

Pricing

One of the best methods of establishing what people will pay for a product is a test market in which the product is offered in a real competitive environment, with controls to see the different effects of prices.

Test markets are expensive to set up and control, so primary research is used to obtain views on the optimum prices for products and services.
This type of research can range from very simple questions that ask people’s likelihood to buy at a certain price, through to more sophisticated approaches using trade-off (conjoint) analysis.

Conjoint analysis asks respondents to rank a number of contrasting combinations of attributes that represent the concepts for the new product. The ranking enables researchers to calculate values for each attribute, indicating a measure of the desirability of the different combinations.

Promotions and branding

A significant amount of primary research is devoted to finding out promotions that can be made to work harder. Qualitative research is used to explore the motivations that drive buying decisions, and these become the messages in the promotions.

Qualitative research is also used to test advertising concepts and draft campaigns to establish which will be most effective or how they can be tuned to greater effect.
You can also measure brand awareness and find out how that awareness has been built up (a difficult task). Media research checks on the newspapers and journals that people read and the programmes they watch and listen to.

People are often reluctant to admit to the influence of promotions or the power of brands in influencing their purchasing decisions. Primary research is used to find out how brands are perceived and what are considered to be their values.

Setting objectives

In conclusion, practical market research requires a good brief – an analysis of the problem and setting out the objectives that need to be achieved.

This brief is arguably the most important part of the research process, because if it is well thought out, the research approach will be easily and correctly proposed. The following questions should be front of mind when preparing the brief:

• Why carry out this particular research and what action will be taken when the research is completed?
This is the most important part of the brief, as it will allow the researcher to work out how the information will be used.

• What has caused this problem or led to this opportunity? Here it is helpful to describe the history that has led up to the research.
A description of the product or service is important, and it would also be useful to talk about the way the market is changing.

• What is known about the subject already?
There is no point reinventing the wheel. What desk research exists on the subject? What is known about the market within the organisation but has not been shared around or that has been dismissed?

• Who are the target groups for the research?
The targets for interviews need to be lined up carefully. If they are householders, should they be people who have bought a product or who are thinking of buying a product? In a business-to-business market, should the targets be buyers or people who specify the product or service?

• What specific information is needed from the research?
The person wanting the market research almost certainly has some key information gaps that need filling – e.g. market size, trends, buying behaviour, customer needs and segmentation.

• What is the proposed budget?
This is essential, or the researchers could design a comprehensive plan, only to be sent back to the drawing board because there are limited funds.

• Are there any initial ideas for the research method?
A client who is sponsoring a research project may well have a method in mind. Are any research methods favoured?

• Are there any reporting requirements?
Increasingly, the default method of reporting in the market research industry is a set of presentation slides which doubles as the presentation and the report. Researchers have no problem writing a narrative report, but they would typically have to charge an extra three or four days of their time for its preparation – incurring a cost of a few thousand pounds.

• When are the findings required?
Most research has a demanding timetable. The dates by which research is required should be specified so that even if they are really difficult, the researcher can try to be accommodating, perhaps with an interim debrief or regular reporting sessions.

In summary, then, don’t plan anything in business without doing your homework first – and structure that homework carefully and professionally.

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