Researching Your Market

Whether you're just starting out or if you've been in business for years, you should always stay up-to-date with your market information. Here are the best methods for finding your data.

The purpose of market research is to provide relevant data that will help solve marketing problems a business will encounter. This is absolutely necessary in the start-up phase. Conducting thorough market surveys is the foundation of any successful business. In fact, strategies such as market segmentation (identifying specific segments within a market) and product differentiation (creating an identity for your product or service that separates it from your competitors') would be impossible to develop without market research.

Whether you're conducting market research using the historical, experimental, observational or survey method, you'll be gathering two types of data. The first will be "primary" information that you will compile yourself or hire someone to gather. Most information, however, will be "secondary," or already compiled and organized for you. Reports and studies done by government agencies, trade associations, or other businesses within your industry are examples of the latter. Search for them, and take advantage of them.

Primary Research
When conducting primary research using your own resources, there are basically two types of information that can be gathered: exploratory and specific. Exploratory research is open-ended in nature; 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 is broader 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 more expensive.

When conducting primary research using your own resources, you must first decide how you will question your target group of individuals. There are basically three avenues you can take: direct mail, telemarketing or personal interviews.

Direct Mail
If you choose a direct-mail questionnaire, be sure to do the following in order to increase your response rate:

  • Make sure your questions are short and to the point.
  • Make sure questionnaires are addressed to specific individuals and they're of interest to the respondent.
  • Limit the questionnaire's length to two pages.
  • Enclose a professionally prepared cover letter that adequately explains what you need.
  • Send a reminder about two weeks after the initial mailing. Include a postage-paid self-addressed envelope.

Unfortunately, even if you employ the above tactics, response to direct mail is always low, and is sometimes less than five percent.

Phone Surveys
Phone surveys are generally the most cost-effective, considering overall response rates; they cost about one-third as much as personal interviews, which have, on average, a response rate which is only 10 percent. Following are some phone survey guidelines:

  • At the beginning of the conversation, your interviewer should confirm the name of the respondent if calling a home, or give the appropriate name to the switchboard operator if calling a business.
  • Pauses should be avoided, as respondent interest can quickly drop.
  • Make sure that a follow-up call is possible if additional information is required.
  • Make sure that interviewers don't divulge details about the poll until the respondent is reached.

As mentioned phone interviews are cost-effective but speed is another big advantage. Some of the more experienced interviewers can get through up to 10 interviewers an hour (however, speed for speed's sake is not the goal of any of these surveys), but five to six per hour is more typical. Phone interviews also allow you to cover a wide geographical range relatively inexpensively. Phone costs can be reduced by taking advantage of cheaper rates during certain hours.

Personal Interviews
There are two main types of personal interviews:

  1. The group survey. Used mostly by big business, group interviews can be useful as brainstorming tools resulting in product modifications and new product ideas. They also give you insight into buying preferences and purchasing decisions among certain populations.
  2. The depth interview. One-on-one interviews where the interviewer is guided by a small checklist and basic common sense. Depth interviews are either focused or non-directive. Non-directive interviews encourage respondents to address certain topics with minimal questioning. The respondent, in essence, leads the interview. The focused interview, on the other hand, is based on a pre-set checklist. The choice and timing of questions, however, is left to the interviewer, depending on how the interview goes.

When considering which type of survey to use, keep the following cost factors in mind:

  • Mail. Most of the costs here concern the printing of questionnaires, envelopes, postage, the cover letter, time taken in the analysis and presentation, the cost of researcher time, and any incentives used.
  • Telephone. The main costs here are the interviewer's fee, phone charges, preparation of the questionnaire, cost of researcher time, and the analysis and presentation of the results of the questioning.
  • Personal interviews. Costs include the printing of questionnaires and prompt cards if needed, the incentives used, the interviewer's fee and expenses, cost of researcher time, and analysis and presentation.
  • Group discussions. Your main costs here are the interviewer's fees and expenses in recruiting and assembling the groups, renting the conference room or other facility, researcher time, any incentives used, analysis and presentation, and the cost of recording media such as tapes, if any are used.
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