Posts Tagged ‘insight’

The Essence of Marketing Research

Wednesday, May 4th, 2011

The essence of marketing research is ‘reducing business uncertainties by learning more about the markets you participate in’.  It’s about improving your odds when you’re trying to predict the future:  “How will customers respond to my new ad message?  What message would be more effective?”  “Which features of a potential new product are valuable and attractive to customers.  How much are they worth, in the price of the new product?” “Who has most / least influence on buying decisions at Company ABC?”  “If we do X, how will competitors respond?”

There are 4 essential steps to any successful marketing research project:

1. Collaborate with business leaders to define a significant business problem or opportunity, and describe the information, insights and understanding which will be needed to solve it.

2. Identify the most likely sources of the necessary information, and design a methodology to gather, analyze and interpret the information.

3. Execute the methodology.

4. Use the resulting information, insights and understanding to help decision makers solve the original problem.

 The sources and techniques selected in step 2 depend strongly upon the nature of the problem you define in step 1, so there’s no single answer to your question about “…what types of questions they ask and what type of an expert do they seek when performing primary research.”  Most projects tap into the experience and opinions of multiple important groups, including:

– Direct customers and non-buying potential customers, always including a spectrum of job functions – R&D, brand management, operations, logistics, purchasing – and management levels.

– The customers of our direct customer, and other companies that operate in the chain of turning raw materials into end products – other guys who play a big part in determining our customer’s success or failure.

– Suppliers of other materials or equipment to our customer

– Competitors (This can be tricky.  Hiring a consultant to get information or use techniques that would be illegal for you directly is no protection for you (or the consultant) under US anti-trust, trade and espionage laws.)

– Government employees and academia.  For example, people in the Department of Commerce and regulatory agencies are nearly always knowledgeable and helpful, and US government libraries, publications and databases are generally excellent.

The optimum techniques to use and the most productive questions to ask are dictated by the business problem you’re trying to solve and the nature of the groups whose opinions and experience you focus on.  Large groups (owners of single family homes, consumers of laundry products, independent auto repair shop owners, for example) might be sampled with statistical survey techniques, while individual in-depth interviews might be more appropriate for smaller groups (for example, makers of kidney dialysis machines, designers of office furniture, or paint chemists).  Group techniques (like focus groups) may be great for gathering initial impressions, but are less useful sources for detail and reliability.  

In almost all cases, the real value-adding capacity of marketing research comes from its ability to answer questions that impact the future – questions like “What if …?” and “Why?” – NOT  from its ability to execute a methodology and answer the more simplistic “How many?” and “Who?”.

What’s Happening in Your Marketplace?

Tuesday, February 1st, 2011

Entrepreneurs just starting out, owners of growing small businesses, corporate marketing managers – business people in general – need a clear understanding of what’s happening in their marketplace:

– of what customers want, what’s frustrating them, and what makes them happy

– of what customers like and don’t like about you and about your competitors

– of the forces creating changes in the marketplace, and what will be their impact

Gaining objective, fact-based answers to questions like these – and using the resulting insights to drive better decisions – is Marketing Research, the key to making any business stronger and more successful.   

Whether your Marketing Research budget is large, small or hardly there at all, here’s what you need to know to get smarter about the market environment you’re operating in, and how to use that knowledge to guide your business to greater success.

Plan Your Project:  A little forethought will assure that your efforts are focused on the issues that really matter – that you get ‘the most bang for your marketing research buck’.

1. What big problem or opportunity are you facing?  What sort of information would help you face it better?

Not getting enough customers through your doors?  Want to attract more?

– What do potential customers know about me – and just how many potential customers are really out there?

– How do they learn about products and services like mine? 

– What do they really care about, and what really upsets them?  How do I measure up?

Wondering about introducing a new product or service?

– Why will customers care?  What’s bad and good about what they’re using today?

– How dissatisfied are they today?  Upset enough to spend real $$$ to change to your new offering?  How many would likely buy your new product, and for how much?

– How will your competitors react?

Worried about competitors eating your lunch?  

– What do customers like about you, about your competitors?  What have you done to make them mad?

– What do customers really think about your competitor’s latest ad campaign / new product / expansion?

2. Methodologies – What types of information will be most helpful in solving your problem?  What sorts of people are most likely to have the information, and what’s the most efficient way to get the answers you need?

Who has the info you need – not just your direct customers, but anyone else who influence their decisions and anyone who has a bearing on your success for failure.  Ex-customers or people who decided not to buy from you are often your very best source of ideas for improvement.

Different questions require different data, and different data implies different methodologies …

“Should I stock red, blue or green?”  A simple survey and simple statistics will tell you how many customers prefer which color – and what else they might like or dislike.

“How do all the players in a complex value chain interact to make or break a new product?”  Better have deep, searching conversations with a number of people who make decisions up and down the value chain.

“What’s the right price for my new product?”  Ask directly and you’re likely to hear numbers you don’t like, but some special techniques and analyses can get your very close to the truth.

3. How much is solid, comprehensive understanding worth?  How painful are the potential consequences of not knowing?  How much should you invest in getting it right?

What would it be worth – Dollars and Cents – to have 25% more customers?  What’s it worth to know the best way to attract them … and what ways would be ineffective?

How expensive and damaging – Dollars and Cents – would it be if your new product fizzles out after you introduce it? 

Execute Your Project:   The big question “Pay someone else or do it myself?” doesn’t have an easy answer.  A ‘hired gun’ consultant can bring special methodologies, they can usually get things done more quickly and efficiently, and they they’re less likely than you to look at the marketplace through those ‘rose colored glasses’.  But then, there’s that out-of-pocket price tag.

Engage a consultant when you don’t know the specialized techniques or just don’t have the time; when anonymity will help get unbiased answers and results; when your issues are complex and the stakes are high

– Carefully agree upon the scope of work before you begin.  Most problems with consultant projects result from a mismatched expectations that could have been avoided.

– To make sure the project stays on course, be actively engaged during the project – but think long and hard before you substantially change direction.

– Challenge your consultant to give you not just the facts, but interpretation and recommendations.

DIY works just fine when the questions and analyses are simple and straightforward; when the consequences of uncertainty are not so high; or when the value of enriching your relations with customers outweighs the potential value of the answers you gain.

– In person or on surveys, phrase your questions in neutral language – don’t subconsciously lead them to the answer you want to hear

– In your conversations, ask open-ended questions that invite discussion.  Practice ‘active listening’ and follow up questions.

– Keep surveys short and simple.  Test ahead of time to make sure customers won’t be confused.

Most consultants will be happy to talk through your options with you, without any fee or obligation.

Apply the results:  Any research is too expensive if you don’t put the results – even results you don’t like or didn’t expect – to good use.

Forty percent of your customers like ‘blue’ but only 20% like ‘green’?  Make sure that store shelves and your production run aren’t overloaded with ’green’.

Customers like to rely on sales reps for product info and recommendations?  Consider less consumer focused advertising and more support to retailers and distributors.

Customers mad because your deliveries are too slow, even though you met your 3-day promise?  If 3 days isn’t good enough, then you’d better figure out how to do it in 2 or 1, of kiss those customers good bye.