Market Research is a Valuable Tool
Market research is critical in a competitive and complex business environment to help in decision making and identifying new market opportunities, along with changing consumer tastes and preferences. But the real challenge is how to conduct market research effectively in order to achieve meaningful results for the organization. If there are flaws in the market research process, there is a risk of serious deviations which can lead to bad decisions that may prove costly for the company.
Identify the Specific Need for Market Research
Before it can be decided how to conduct market research using specific research tools and techniques, it is important to identify and define the marketing challenge for which research is necessary. The research methodology will be determined only on the basis of the nature of the marketing challenge or opportunity. Whether it is a decision regarding a new product launch, adoption of a new technology, diversification into a new business segment, entering a new market, devising a new marketing campaign, or assessing the impact of price or quality changes in an existing product or service, the approach to market research will have to be customized according to the specific need for research. Business.gov offers free tips on how to perform a market analysis.
Prepare a Timetable and Budget for the Market Research
Once the objective of research is clear, a detailed budget must be prepared within which the entire research process must be accomplished. Setting a budgetary limit will ensure that costs remain under control and cost efficient research tools are adopted to conduct the research. The research must also be conducted in a time-bound manner because in a dynamic environment, the results may get redundant very soon. The time limit must also take into consideration the urgency of decision making in a particular situation.
Preparing a Budget: One of the popular ways to allocate market research budget for small businesses is to set aside a small percentage of the previous year’s gross sales revenue. This figure is generally two percent of the total annual sales, but in case of a new product launch or venturing into a new business or market, the budget may be kept as high as 10 percent of the last year’s sales.
Preparing a Timetable: If the business is seasonal or cyclical it is very important to choose the right time for research. For instance, a Christmas gifts business should conduct market research at a time when the potential customers are already thinking about buying gifts and the gift trends and patterns for the year are becoming clearer in the market. Secondly, the timeframe for research must provide sufficient scope for a detailed research.
Market Research Design
It is important to understand how to conduct market research using proven and most effective design instruments. Surveys and questionnaires must be designed in such a way that they elicit the desired information most accurately and comprehensively. The Internet is a cheap and powerful instrument of market research nowadays which can be used in an innovative way to collect valuable data from primary as well as secondary sources.
The key to successful data collection through primary means lies in designing the questionnaire appropriately. It may have both close-ended and open-ended questions, depending on the nature of research. However, it is important to keep the questionnaire simple and as brief as possible so that the respondents are encouraged to provide proper responses. Contests, prizes or some kind of freebies may be offered to the respondents in order to gain the best attention of the respondents in exchange.
Market Research Process
Collect the Data from Primary and Secondary Sources
Collection of data is the key in how to conduct market research because that is the raw material for the research exercise. Data collection must be conducted under the supervision of experienced researchers. The appropriate target respondents must be chosen for primary data collection, and their responses must be recorded accurately with minimum margin for error. In case of secondary data, professional data collection agencies should be identified that maintain a database in the specific field as required. There are also professional database sellers that have large data lists for sale. So the relevant data can be purchased from a reputed seller.
Analyze the Data and Present the Research Findings
Once the best possible data has been collected using appropriate research designs, it must be organized and analyzed efficiently in order to derive relevant and accurate conclusions from it. It is equally important to present the results and findings of the marketing research in a systematic manner to management. There must be no room for ambiguity, gaps and inconsistencies in the research findings. Management’s decision making will be influenced by the findings of the research; therefore, it is crucial for the research team to not only know how to conduct market research effectively but also how to present the results clearly and efficiently to management.
Market Research Advice for Small Businesses
Secondary research is usually more suited for small and medium businesses that may not be able to afford the expenses of a large scale primary research project. Such research material is available in libraries, universities, and trade and business journals and newspapers. Business and trade associations and government agencies are also good sources of secondary data.
Sources for Secondary Research
- The Center for Associated Leadership (ASAE Directory of Associations Online) - https://www.asaecenter.org/
- US Library of Congress - Ask a Librarian - https://www.loc.gov/rr/askalib/
- US Bureau of Labor Statistics - https://stats.bls.gov/
- The Business Research Lab - https://www.busreslab.com/
U.S. Small Business Administration - https://www.sba.gov/