Businesses have an obligation to help grow the economy of their community. One way that they can do this is by hiring someone to oversee market research in entrepreneurship. This means that they need to find out about how consumers feel about their product or service so that they can improve it before releasing it into the market. This is done by hiring a market research expert who will employ different techniques to enable entrepreneurs to get information about what consumers are thinking before rolling out an idea or service into the market. The idea is for them to then refine their idea based on the results of the market research in entrepreneurship. If this is not done,
Market surveys are the most popular method of gathering customer insights for companies involved in either selling their services or selling products. Before companies including start ups conduct market research they must first use the research process. Research is here to provide guidance on how you can make decisions about your company or business through the collection of data. We’ll take a look at market research examples and define market research techniques.
What Is Market Research?
Market research is the process of determining the viability of a new service or product through research conducted directly with potential customers. Market research allows a company to discover the target market and get opinions and other feedback from consumers about their interest in the product or service.
This type of research can be conducted in-house, by the company itself, or by a third-party company that specializes in market research. It can be done through surveys, product testing, and focus groups. Test subjects are usually compensated with product samples or paid a small stipend for their time. Market research is a critical component in the research and development (R&D) of a new product or service.
Market research involves two types of data:
- Primary information. This is research you compile yourself or hire someone to gather for you.
- Secondary information. This type of research is already compiled and organized for you. Examples of secondary information include reports and studies by government agencies, trade associations or other businesses within your industry. Most of the research you gather will most likely be secondary.
When conducting primary research, you can gather two basic types of information: exploratory or specific. Exploratory research is open-ended, helps you define a specific problem, and usually involves detailed, unstructured interviews in which lengthy answers are solicited from a small group of respondents. Specific research, on the other hand, is precise in scope and is used to solve a problem that exploratory research has identified. Interviews are structured and formal in approach. Of the two, specific research is the more expensive.
When conducting primary research using your own resources, first decide how you’ll question your targeted group: by direct mail, telephone, or personal interviews.
If you choose a direct-mail questionnaire, the following guidelines will increase your response rate:
- Questions that are short and to the point
- A questionnaire that is addressed to specific individuals and is of interest to the respondent
- A questionnaire of no more than two pages
- A professionally-prepared cover letter that adequately explains why you’re doing this questionnaire
- A postage-paid, self-addressed envelope to return the questionnaire in. Postage-paid envelopes are available from the post office
- An incentive, such as “10 percent off your next purchase,” to complete the questionnaire
Even following these guidelines, mail response is typically low. A return rate of 3 percent is typical; 5 percent is considered very good. Phone surveys are generally the most cost-effective. Here are some telephone survey guidelines:
- Have a script and memorize it–don’t read it.
- Confirm the name of the respondent at the beginning of the conversation.
- Avoid pauses because respondent interest can quickly drop.
- Ask if a follow-up call is possible in case you require additional information.
In addition to being cost-effective, speed is another advantage of telephone interviews. A rate of five or six interviews per hour is typical, but experienced interviewers may be able to conduct more. Phone interviews also can cover a wide geographic range relatively inexpensively. Phone costs can be reduced by taking advantage of less expensive rates during certain hours.
One of the most effective forms of marketing research is the personal interview. They can be either of these types:
- A group survey. Used mostly by big business, group interviews or focus groups are useful brainstorming tools for getting information on product ideas, buying preferences, and purchasing decisions among certain populations.
- The in-depth interview. These one-on-one interviews are either focused or nondirective. Focused interviews are based on questions selected ahead of time, while nondirective interviews encourage respondents to address certain topics with minimal questioning.
Secondary research uses outside information assembled by government agencies, industry and trade associations, labor unions, media sources, chambers of commerce, and so on. It’s usually published in pamphlets, newsletters, trade publications, magazines, and newspapers. Secondary sources include the following:
- Public sources. These are usually free, often offer a lot of good information, and include government departments, business departments of public libraries, and so on.
- Commercial sources. These are valuable, but usually involve cost factors such as subscription and association fees. Commercial sources include research and trade associations, such as Dun & Bradstreet and Robert Morris & Associates, banks and other financial institutions, and publicly traded corporations.
- Educational institutions. These are frequently overlooked as valuable information sources even though more research is conducted in colleges, universities, and technical institutes than virtually any sector of the business community.
Understanding the types of customer you’ll encounter
Most new businesses will encounter three different types of customer; market research gives you the ability to understand how your target customers think and adapt to their needs in order to turn them into regular customers and brand advocates.
The ‘savvy’ purchaser
This type of customer is someone that’s not necessarily concerned with the quality or effectiveness of a product or service, but is intent on getting the best possible value. A ‘savvy’ customer is someone that’s likely to be aware of all the prices offered by your major competitors, so you’ll need to carry out secondary market research to understand whether your products or services will be priced competitively.
If it transpires that your products or services will not be the cheapest it’s best to know now in order to provide compelling evidence to potential purchasers why they should continue to buy through you; perhaps based on quality and reliability.
The industry influencer
An industry expert or influencer is someone that is not only highly knowledgeable about your target market, they can influence other prospective customers that trust their opinion.
An industry expert will not be fixated on the price of a product or service, they are often more concerned with the value and quality. Industry influencers make for ideal candidates to use for primary market research, allowing them to use your products or services, garnering their opinion on them and the market as a whole.
The end-user
An end-user is a customer that will actually use your products or services on a day-to-day basis. End users also make for excellent candidates for primary market research, allowing you to understand their frustrations and limitations – ideal if you’re still in the process of developing and designing new products, giving you the edge over the competition.
Conclusion:
Market research is a systematic and reliable survey of the characteristics and behavior of customers, competitors and the overall market. It provides the necessary information and tools for business strategy and decision-making. Market research is an important factor in any kind of marketing strategy because it helps you keep up to speed with your target customers and competitors alike.