Understanding the many different market research methods available is critical to extracting the maximum benefit from your market research projects. There is no one way that works for every company or every market; all the different methods should be explored and evaluated before ruling out those which are inappropriate. Many companies, especially small businesses, make the mistake of relying on the cheapest or easiest available techniques for conducting market research when the emphasis should really be on gathering useful information.
Reasons for Conducting Market Research
All market research methods are designed with the same ultimate goal in mind: gathering data which can be used to inform business decision making.
A company considering developing a product will want to do market research to see if demand already exists or can be manufactured. They could discover the product they've been pinning their hopes on isn't something that people are willing to pay for. This can save a company thousands or even millions of dollars depending on its size. Alternatively it could reinforce all their ideas and speed up the development and launch of the product to exploit the extra revenue stream as quickly as possible. It could also help determine a launch price for the product.
Some other objectives of market research include conducting competitor analysis, identifying market trends, determining customer satisfaction levels or even finding interesting statistics for use in press releases and publicity material.
Methods of Conducting Market Research
When it comes to gathering data, a company conducting market research has a variety of options available depending on the type and quantity of data required.
- Telephone Surveys
This involves conducting questionnaires over the phone with existing customers or a random sample of people or businesses who match the required criteria.
Pros: Useful for gathering large amounts of quantitative data to which you can apply statistical analysis or for conducting qualitative interviews. Telephone research has the benefit of increased customer engagement and returning results fast.
Cons: The major drawback is that response rates are low – people don’t like unsolicited calls.
- Online Surveys
Soliciting users of particular websites to fill in questionnaires or emailing the surveys to a database of customers or a random sample.
Pros: Can simultaneously target large numbers of potential respondents for gathering large quantities of data.
Cons: Low response rates which can be improved by offering an incentive (e.g. entry to a prize draw) though how much attention respondents will pay to their answers is questionable.
- Postal Surveys
Sending out surveys to customers or a random sample of appropriate people which they return by post.
Pros: People take more time over manually completed questionnaires, thus improving answer quality.
Cons: Response rates are low and slow to return.
- Focus Groups
Aka Access panels. Focus groups comprise a selection of appropriate people who give feedback on a brand, product or service which is recorded by the market research company. This method is used to obtain qualitative data like how consumers ‘feel’ about a particular brand or product.
Pros: Clients can sit in or watch a live or recorded video feed to gain first hand insights.
Cons: The quality of information attained from paid attendees is questionable and it can be difficult to recruit unpaid participants.
- Face to Face
Sending out researchers to interview members of the public in person on the street, door-to-door or in stores.
Pros: Can be used to gather quantitative or qualitative data. Using passers-by ensures randomness of sample. People give more considered answers face-to-face.
Cons: Expensive when compared to postal, online or telephone surveys. Biases results towards geographic location or high-street shoppers.
- Published Report
Some market research agencies gather, publish and sell industry specific reports which include data like market size, key players, industry press, government involvement etc.
Pros: Industry snapshot which is useful for moving into new markets or territories.
Cons: You’re restricted to very general research. Finding what you’re after might be difficult or even impossible.
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