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The Chartered Institute of Marketing defines marketing as "the management process responsible for identifying, anticipating and satisfying customer requirements profitably". Put very simply marketing finds profitable customers. The overall marketing process starts with marketing research and goes through market segmentation, business planning and execution, ending with pre- and post-sales promotional activities.
Market research is an essential component of an organisation's overall marketing and business development procedures. The famous management guru, Peter Drucker, saw market research as the quintessence of marketing. It gathers data about marketplaces, target customers and competitors. For any successful business, market research is a continuous process and key to increasing sales and bottom line profits.
Market research is vital for any start-up. Don't waste money on a new business before you know if there's a market for your product or service and how much demand is out there and who your potential customers are and what are they prepared to pay and how often are they prepared to pay it.
Businesses can be very insular. Many, especially start-ups, assume that because they like their product, service or ad campaign, so will prospective customers. Millions have been lost because organisations have been too subjective. Many SMEs fail because they spend too much time and money on new products or markets without undertaking basic market research before, during and after launch. It can be difficult to scrap projects when research suggests failure. Personalities and principles can be killers of objectivity.
There are five key steps in the market research process:
Then you should be in a position to choose the market research technique(s) required. These could be qualitative techniques such as in-depth interviews or group discussions - to collect data on what people think about product attributes or its advertising. Or, they could also be quantitative techniques such as tick box surveys, street interviews or on-line questionnaires - to collect data on how many people choose an attribute. With both types time needs to be spent on selecting the sample size and and make-up to reflect the target customer profiles. In particular, with quantitative studies the research needs to have representative numbers to ensure the data is significant. These numbers could be quite large if you need significance in various sociodemographic groups, areas of the country, age, etc. Many large market research projects use both qualitative and quantitative techniques
Of course, it is not just start-ups who need to embrace market research. For most successful organisations continuous market research is a necessary function of assessing market share, developing new products, testing advertising, measuring customer satisfaction and finding new markets.
It's not just businesses that use market research. The UK's National Census takes place every 10 years. It is a huge data gathering exercise - the last one in 2011 cost £482 million. Each of the 25 million homes must complete an extensive questionnaire. Super computers analyse the data which is used for planning the needs of local communities. It is also available to healthcare, local communities, researchers and businesses. This 'big data' is used by consumer list owners to tightly target households based on the Postal Address File (PAF) and data analysis at individual postcode levels. In the UK, on average one postcode contains 15 addresses - this compares with around 3500 for France.
Market research includes a wide range of formal and informal activities from simply checking competitors on-line and gaining customer feedback to large scale consumer surveys and focus groups. As such, market research is crucial in making decisions and minimising risks.
So what are the major types of market research and how do you do it? Usually it is divided into primary research and secondary research. Primary research is going out and finding out for yourself about your potential market. This could be through focus groups, on-line or off-line surveys or, if you're researching for an already established business, speaking to existing clients about their expectations. secondary research, or third-party research, is information already at your disposal. Mooney explained: "It's not like the old days where you had to dig around for information about your competitors on the internet, it's usually there within seconds. You can do a lot of very quick, effective research just by spending an hour on the internet, looking at who your potential competitors are."
Some market research is not costly and easy to undertake. For example, desk research is just that sitting at a desk in your home or a library, interrogating files, reading publications or contacting likely information sources. The local library, Chambers of Commerce, national and local media and trade bodies are useful data sources. In particular, the British Library has an excellent Business Section which can be accessed on line mostly free of charge. The BBC, Financial Times, Huffington Post and business sections of national newspapers are all good places to look into.
In short, you cannot have a good business without market research. A thorough market research strategy will help you find new profitable customers. It will advise the risks involved in choosing products, people and market places where sales and profits are likely to be poor. Hopefully, we have supplied some hints and tips to start your own market research activities. If you have a market research project for us to look at contact us at info[at]deve.co.uk or call 01582 792875