How to Perform a Market
Research
:To use the marketing concept
effectively, you should
- Analyze your firm's competitive advantage. What do you do best?
- Identify specific markets you now serve.
- Determine the wants and needs of your present customers.
- Determine what you are now doing to satisfy those wants and needs.
- Prepare a marketing plan that allows you to reach out to new
customers or to sell more to your present customers.
- Test the results to see if your new strategies are yielding the
desired results.
Market research must be used in each of these six steps to help define
your business for your customer's interests, not your own. It is the
process of learning what customers want or need and determining how to
satisfy those wants or needs. It is also used to confirm whether the
customer reacted to a marketing program as expected. The benefits of
market research include:
- Learning who your customers are and what they want.
- Learning how to reach your customers and how frequently you should
try to communicate with them.
- Learning which advertising appeals are most effective and which ones
get no response.
- Learning the relative success of different marketing strategies,
thus improving return on investment.
- Learning how not to repeat your mistakes.
The dilemma for the small business owner is that, properly done, market
research is quite expensive, takes time and requires professional
expertise. Acquiring all the necessary data to reduce the risk to your
venture may cost so much and take so long that you may go out of business.
The answer is to find a quick and inexpensive way of getting enough data
to help you make the right decision most of the time. Some obvious
pitfalls are:
- Using a sample that does not represent the total market.
- Asking the wrong questions.
- Not listening to the responses.
- Building in biases or predispositions that distort the reliability
of information.
- Letting arrogance or hostility cut off communication at some point
in the marketing process.
If you have a limited budget, develop the skills to hear what your
customers and potential customers are telling you. Some techniques worthy
of consideration are:
Advisory board - Occasionally convene a group of local people,
whose opinions you respect, to act as a sounding board for new ideas.
Choose your group with extreme care; one or two negative thinkers can
distort the thought process of the entire group.
User group - Gather customers together to discuss new ideas. Their
opinions can help you keep your business on track. Pick a neutral setting
where the people will talk. Be sure to reward the participants and share
the credit for good ideas.
Informal survey - If you seek feedback from customers by simply
asking, How was everything? you can be seriously misled. Most people, even
those with legitimate complaints, are reluctant to speak out because they
are afraid of appearing foolish. This tendency is probably more widespread
in smaller communities, where friendships often stand in the way of
critical review. Also, if your attitude is such that customers feel
complaining will not do any good, you may be antagonizing customers
without even knowing it. One solution is to take a few customers aside and
ask them some sincere questions about how your business met their
expectations and where it fell short. If the customer appears uneasy, do
not press the issue - you will only force him or her to give you pat
answers to escape the situation. If you get a good response, take notes.
Follow-up letters thanking the customers and telling them what you plan to
do with their suggestions will bring you friends for life.
Suggestion box - A suggestion box is a simple idea that works, but
only if you do the following:
- Read the suggestions on a regular basis.
- Do something about the suggestions you receive.
- Reward those who give you good ideas by posting their names, writing
letters to them or rewarding them with money or other things of value.
The principle at work is: If you reward good results, you will get more
good results. If you do not reward them, you will end up with an empty
suggestion box and the mistaken idea that everything is fine.
Sample survey - Canvass the neighborhood to gather data. If you
wish to remain anonymous, line up some marketing students to perform the
survey or engage a local marketing agency. Be sure you establish a
technique for getting a random sample as most people naturally attempt to
attract respondents with whom they feel comfortable. Be sure to test your
questionnaire to see that the questions are easily understood and are
meaningful.
Focus group interview - Get 10 to 15 people together in a relaxed
setting and encourage them to talk about products or services they like or
dislike. Use a moderator who can lead the group discussion without
inhibiting the thought processes or limiting the expression of ideas and
opinions. Tape record the session for later analysis.
Brainstorming - This is a variation of the focus group, in which
participants are encouraged to freewill in their thinking to produce as
many suggestions as possible without analyzing them. Again, a trained
moderator will obtain the best results.
Complaint analysis - Encourage your customers to contact you
directly if they have complaints. Respond to every complaint with a
courteous letter assuring that you will correct the situation. A few
disgruntled customers can be harmful. If your customers feel that they can
work with you to solve their problems, you are sure to be successful.
Comparison shopping - Arrange with someone in a similar business
located out of town to come to your town to shop your business and several
of your competitors. Then return the favor and compare notes. This will
avoid the danger of your becoming complacent about your premises and
overlooking things that may be annoying or confusing to your customers.
Customer analysis - Tabulate information about customers regularly
to determine such data as:
- Age.
- Size of buying group (family, household, etc.).
- Sex of the decision maker in the group.
- Geographic location - Sort checks and sales slips by ZIP code, or
ask customers to mark their home on a map with a colored pencil.
Tabulate visitors versus local residents.
- Average amount of purchase.
- Coupon usage.
- Response to recent advertising.
- Radio station listened to.
- Newspapers read.
- Response to mailings.
- Full price buyers versus those who respond to sales or specials.
- Special populations in your area, such as college students, military
personnel, senior citizens, hospital visitors, convention attendees,
sports spectators, fair attendees, farmers, seasonal workers, car pools,
pet owners, home owners, boat or recreational vehicle owners and
athletic participants. The more you know about your customers the better
you will be able to satisfy and even anticipate their needs.
Customer want list - Keep a notebook at your cash register and
write down every request you receive for items you do not carry or have in
stock. Periodic review of the list will give valuable clues about sales
you are losing or new products and services you should consider carrying.
You may learn of fad items, products being heavily advertised or items and
services your competitors have dropped. Your customers may be telling you
they are dissatisfied with your competition and would prefer buying from
you. You will be able to tell if other businesses in the area are in
trouble, even before they know it themselves. You may also discover ways
to make additional income by adding new departments or product lines or by
developing a special-order business if your customers are willing to pay
the added shipping costs and wait for delivery.
Industry analysis - On business trips or vacations, visit
businesses similar to yours. Take pictures of signs, storefronts and
displays, and talk to the owners to compare notes on new products,
services and marketing techniques. Subscribe to trade journals and attend
trade shows to keep current on marketing developments in your industry.
Sales representatives - Representatives who call on other similar
businesses in your area can provide valuable information on business
trends, new items and changes in the industry. Be sure the information is
reliable.
Advertising notebook - Each ad that you run represents an
investment. To make sure you maximize your investment, cut out each ad and
tape it to a page in a three-ring notebook. (For a radio or TV ad, write a
short description.) Enter the date, medium and cost of the ad. Record the
results of the ad in sales, inquiries or coupons redeemed.
Divide the cost by the results to get a cost-per-inquiry factor that
you can use to compare your ads and the media in which they appeared.
Exit interviews - When someone leaves your employ, be sure to spend
sufficient time to find out exactly why he or she is leaving. Probe deep
to learn what may be occurring in your business that causes hard feelings,
employee conflict or customer dissatisfaction. It is important that your
employees leave with a good feeling about you and your business, so they
will not spread unfounded rumors. Also, you may wish to keep them as
customers. Employee turnover and training can be expensive to a business,
so try to find out what you must do to keep employees and then decide if
they are worth the price.
Food For Thought
Think about the incredible
series of coincidences that have led you to where you are today.
Chances are, there have been many moments, seemingly insignificant at
the time, that ended up altering the course of your life in a major
way. Perhaps it was someone you met, who introduced you to someone
else, through whom you met your spouse. Or perhaps it was a party you
attended, and someone you talked to, who knew someone else, who was
responsible for your current job.
You never know what will come your way, or how it will come. Things
happen in the most unexpected ways. People come into your life, and
lead you to other people, who lead you to others, and so on. That
person standing in line behind you at the bank might just hold your
future in his hands.
That's why it's so important to be open to new ideas, new people, and
new experiences. If you sit in front of the TV all the time,
life-changing opportunities will rarely come your way. Get yourself
out, circulating among people, doing things, exchanging ideas and
participating in life. Opportunities come in abundance each day when
you are open to them.
Recently, I heard a young boy on television make the comment that "If
I were President, I'd give everybody enough money to buy whatever they
want."
As wonderful as this might sound at first blush, such a policy would
be a complete disaster. If everyone could receive all the money they
needed, without working, then there would be nothing to buy with that
money. No one would work to produce the goods and services. Money
would be meaningless.
The value of money, or of anything else, depends on the effort that
must be expended to get it. A diamond and a pebble are both rocks, but
diamonds are much more valuable because they are so hard to find. If
diamonds were as plentiful as common pebbles, they would be virtually
worthless.
There simply are no shortcuts. It is the effort needed to acquire a
diamond that makes it so valuable. It is the work necessary to acquire
it that gives money its value.
Life itself is that way, too. It is only worth what you put into it. A
life of value and fulfillment is possible only you are willing to put
forth an effort and give of yourself.
Don't cheat yourself out of life by trying to get "something for
nothing." Your life is worth exactly what you put into it.
If you want something out of life, it is challenging. Once you accept
the fact that life is difficult, you begin to transcend it.
It takes courage to stand up and make a difference. Believe in
yourself. What you have, what you are, is a result of what you believe
you deserve.
Get in the habit of giving more than you're paid for. Go the extra
mile. Don't go where the path may lead, but go where there is no path,
and leave a trail. When you have your own vision, you don't have any
competitors. Be your best, do your best and don't worry about the
rest.
Make the commitment to work on yourself. Many people never realize
their greatness because they get sidetracked. You deserve to get some
prime time from yourself.
Focus on the things you love and on your talents. Develop your gifts.
We all need an area of life in which we have a special competence. It
will give you confidence, and a larger vision of yourself. It takes
work, focus and a determined effort to make the best of what you have.
The reward is that you'll accomplish great things, and you'll always
be in control of your destiny.
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