Seven steps to Successful Market Research

Researching the market need not be a complex process, nor need it to be a very expensive way. The risks of effort associated with the expenditure of the proposition need to be market-related research and should be conducted systematically following these seven stages:

Formulate the problem: Before embarking on your market research you should first set clear and precise objectives, rather than just setting out to find interesting general information about the market.

So, for example, if you are planning on selling to young fashion-conscious women, among others, your research objective could be: to find out how many women aged 18 to 28, with an income of over {35,000 ($54,800/€39,700) a year, live or work within your catchment area. That would give you some idea of whether the market could support a venture such as this.

Determine the information needs: Knowing the size of the market, in the example given above, may require several different pieces of information.

For example, you would need to know the size of the resident population, which might be fairly easy to find out, but you might also want to know something about people who come into the catchment area to work or stay on holiday or for any other major purpose. There might, for example, be a hospital, library, railway station, or school nearby that also pulled potential customers to that particular area.

Where can you get the information? This will involve either desk research in libraries or on the internet, or field research, which you can do yourself or get help in doing. Some of the most important of these areas are covered later in this chapter.

Field research, that is, getting out and asking questions yourself, is the most fruitful way of gathering original information that can provide a competitive advantage.

Decide the budget: Market research will not be free even if you do it yourself. At the very least there will be your time. There may well be the cost of journals, phone calls, letters, and field visits to plan for. At the top of the scale could be the costs of employing a professional market research firm.

Starting at this end of the scale, a business-to-business survey comprising 200 interviews with executives responsible for office equipment purchasing decisions cost one company 112,000 ($18,800/€13,500). Twenty in-depth interviews with consumers who are regular users of certain banking services cost 18,000 ($12,500/€9,000).

Using the internet for web surveys is another possibility, but that can impose too much of your agenda onto the recipients and turn them away from you.

Doing the research yourself may save costs but may limit the objectivity of the research. If time is your scarcest commodity, it may make more sense to get an outside agency to do the work. Using a reference librarian or university student to do some of the spadework need not be prohibitively expensive.

Another argument for getting professional research is that it may carry more clout with investors. Whatever the cost of research, you need to assess its value to you when you are setting your budget. If getting it wrong would cost {100,000, then {5,000 spent on market research might be a good investment.

Select the research technique: If you cannot find the data you require from desk research, you will need to go out and find the data yourself. The options for such research are described later in this section, under ‘Field research’.

Construct the research sample population: It is rarely possible or even desirable to include every possible customer or competitor in your research. So, you have to decide how big a sample you need to give you a reliable indication of how the whole population will behave.

Process and analyze the data: The raw market research data needs to be analyzed and turned into information to guide your decisions on price, promotion and location, and the shape, design, and scope of the product or service itself. 

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