Market research, like other components of marketing such as advertising, can be quite simple or very complex. You might conduct simple market research such as including a questionnaire in your customer bills to gather demographic information about your customers. On the more complex side, you might engage a professional market research firm to conduct primary research to aid you in developing a marketing strategy to launch a new product.
Regardless of the simplicity or complexity of your marketing research project, you'll benefit by reviewing the following seven steps in the market research process.
Step One: Define Marketing Problems and Opportunities
The market research process begins with identifying and defining the problems and opportunities that exist for your business, such as:
Step Two: Set Objectives, Budget and Timetables
Objective: With a marketing problem or opportunity defined, the next step is to set objectives for your market research operations. Your objective might be to explore the nature of a problem so you may further define it. Or perhaps it is to determine how many people will buy your product packaged in a certain way and offered at a certain price. Your objective might even be to test possible cause and effect relationships. For example, if you lower your price by 10 percent, what increased sales volume should you expect? What impact will this strategy have on your profit?
Budget: How much money are you willing to invest in your market research? How much can you afford? Your market research budget is a portion of your overall marketing budget. A method popular with small business owners to establish a marketing budget is to allocate a small percentage of gross sales for the most recent year. This usually amounts to about two percent for an existing business. However, if you are planning on launching a new product or business, you may want to increase your budget figure, to as much as 10 percent of your expected gross sales. Other methods used by small businesses include analyzing and estimating the competition's budget, and calculating your cost of marketing per sale.
Timetables: Prepare a detailed, realistic time frame to complete all steps of the market research process. If your business operates in cycles, establish target dates that will allow the best accessibility to your market. For example, a holiday greeting card business may want to conduct research before or around the holiday season buying period, when their customers are most likely to be thinking about their purchases.
Step Three: Select Research Types, Methods and Techniques
There are two types of research: primary research or original information gathered for a specific purpose and secondary research or information that already exists somewhere. Both types of research have a number of activities and methods of conducting associated with them. Secondary research is usually faster and less expensive to obtain that primary research. Gathering secondary research may be as simple as making a trip to your local library or business information center or browsing the Internet.
Secondary sources include the government and it's massive databases. Much of the data is free to use and much of it comes with government grants, business grants, loans and free help for public employees.
Step Four: Design Research Instruments
The most common research instrument is the questionnaire. Keep these tips in mind when designing your market research questionnaire.
Close-end questions - Respondents choose from possible answers included on the questionnaire. Types of close-end questions include:
Open-end questions - Respondents answer questions in their own words. Completely unstructured questions allow respondents to answer any way they choose. Types of open-end questions include:
To help you obtain clear, unbiased and reliable results, collect the data under the direction of experienced researchers. Before beginning the collection of data, it is important to train, educate and supervise your research staff. An untrained staff person conducting primary research will lead to interviewer bias.
Stick to the objectives and rules associated with the methods and techniques you have set in Step Two and Step Three. Try to be as scientific as possible in gathering your information.
Step Six: Organize and Analyze Data
Once your data has been collected, it needs to be "cleaned." Cleaning research data involves editing, coding and the tabulating results. To make this step easier, start with a simply designed research instrument or questionnaire.
Some helpful tips for organizing and analyzing your data are listed below.
Once marketing information about your target market, competition and environment is collected and analyzed, present it in an organized manner to the decision makers of the business. For example, you may want to report your findings in the market analysis section of your business plan. Also, you may want to familiarize your sales and marketing departments with the data or conduct a company-wide informational training seminar using the information. In summary, the resulting data was created to help guide your business decisions, so it needs to be readily accessible to the decision makers.