Get The Scoop

This story appears in the February 2000 issue of Entrepreneur. Subscribe »

When it comes to promoting your business, knowledge is power. The more you know about your market, customers, competition and prospects, the more likely you are to make smart decisions. So why do so many small businesses ignore the power of even the most basic market research?

According to Paul Richards, president of Castle Hill Consulting, a Morris Plains, New Jersey-based market research and consulting firm, many entrepreneurs think research is either too expensive or can't tell them anything new. Richards maintains that varying degrees of market research are available to even the smallest businesses--and those that avail themselves of such information maximize success.

Fundamentally, two types of research exist: quantitative and qualitative. Quantitative research answers basic questions--who, what, when, where, how many, how much and how often--using statistical analysis to draw conclusions. Quantitative studies can benchmark awareness levels for your company, brand, product or competition, and give you a glimpse of what your customers, prospects and other audiences think of each. Qualitative research, on the other hand, is designed to answer questions such as "why" and "how." These studies are used to guide product and service development as well as the development of marketing programs.

A number of research mechanisms can give small businesses valuable information. Some of the most effective are:

Interviews: They should be done by phone or in person by a trained person. The results, hypothetically, should not be biased by preconceptions, emotional attachments or business pressures.

Surveys: These are generally conducted by mail. It's important to pay attention to how the survey is worded to ensure that biased language doesn't influence the results.

Focus groups: Focus groups range in size but are most effective with between eight and 12 participants. Led by a moderator, they're used to encourage free and open discussion. Although focus groups can reveal helpful information, they are vulnerable to the dynamics of the group. A participant with a dominant personality or the perception of a moderator's bias can seriously influence results. Therefore, be sure you hire a trained moderator who has experience in, or a thorough understanding of your field. (For more information on focus groups, see "Marketing Smarts" in our June 1999 issue.)

Online focus groups: Some of the larger chat-based Web sites offer low-priced online focus group opportunities. Online chat sessions are less likely to be skewed by a dominant participant due to the relative anonymity of the situation. However, this can also lead to exaggerated responses or enhanced claims by participants. Again, hire a trained moderator who understands the dynamics of the tool and your industry.

Observation: This method involves the study of the habits of your buyers by observing them in action. In addition to placing video cameras in stores, Sapient Corp.'s Experience Modeling Discipline, an experience-based design research consulting firm in Chicago has even given subjects disposable cameras for photographing their usage habits.

Richards has two warnings for entrepreneurs taking the market research plunge. "First, business owners should be extremely cautious about doing research themselves," he says. "Interview subjects are not likely to be totally frank with a `researcher' who is part of the business, much less the owner. Second, keep an open mind. Don't be defensive if your company or even you personally are criticized. Look for the opportunities the information creates."

Next Step

• The Market Research Toolbox: A Concise Guide for Beginners (Sage Publications), by Edward F. McQuarrie.

• Check your local municipal or college library for the American Marketing Association's Green Book, an international directory of marketing research companies and services, that includes an addendum of focus-group facilities.

Contact Sources

Castle Hill Consulting, (973)984-0556, prichard@cybernex.net.

Sapient Corp., (312) 640-4450, http://www.sapient.com.