A Treatise on Market Research … in 60 Seconds
Have you heard the one about the guy who started a business without doing any market research and still found great success? No? Well, that’s probably because life doesn’t work that way.
Most things accomplished in life require a strategy. Those of you who watched the NBA Finals may recall Golden State and Cleveland coming up with new strategies from one game to the next. Business is no different. And if you think you can simply roll out a sign, open the front doors, and enjoy waves of customers without planning, without entertaining the idea of a business strategy, we’ve got some luscious swamp land in Florida you should see.
What is Market Research?
Market research is part of your business strategy. It’s about gathering information on a target market, or customer base, and interpreting that information to determine if a product or service can satisfy the needs of that customer base, and how saturated that market is with competition.
Let’s say you’re thinking of starting a business selling hammers. You’ll want to know the potential for the hammer business, how competitive it is, the market size, economic shifts, demographics, trends, and any number of other factors.
You’ll also want to know what the needs and preferences of your hammer-buying group of consumers are. And after gathering all the information you can, including statistical information, you’ll thoroughly analyze it and determine if your hammer-selling business has a chance to make it in the big, bad world of hammer-sellers.
Why is Market Research Useful?
I believe it was Sylvester Stallone who said, “By failing to prepare, you are preparing to fail.” Or maybe it was Benjamin Franklin, on second thought. The point being, success doesn’t just happen. You have to plan for it. And if you don’t, that’s akin to preparing to fail.
If that wasn’t clear, market research is important because it gives you an edge, a statistical advantage over all the fools out there entering the hammer-selling market with no business strategy or market research. Or depending on what you discover, you may pass altogether on starting your hammer business in the first place. But whatever you choose, market research provides the knowledge you need to make an informed decision.
Understanding Qualitative and Quantitative Market Research
Quantitative market research is exploratory in nature and used to gain an understanding of a particular market. It’s unstructured, as in not statistical, and includes observations, opinions, and comments.
You, the potential hammer-seller, would be dealing with focus groups and interviews to get your qualitative market research. You’d likely hear people talk about what they want in a good hammer, their concerns with current hammer technology, and other such comments and opinions.
Qualitative market research is numerical, which makes it structured. It’s taking raw data and statistical information and analyzing it using a spreadsheet. It relies on a variety of ways of collecting this data, such as customer surveys and questionnaires.
Let’s say you want to know how often the average hammer-buyer has to replace his or her hammer, which could be an important consideration. This is the kind of data that can easily be gathered via survey and put into a spreadsheet for future analysis. If you determine that your target market is flying through hammers at an unprecedented rate, this would be good news for any hammer-seller entering the market.
How to Collect Market Research Data
There are two types of data: primary and secondary. Primary data is new data, while secondary data already exists in some form. Secondary data is great because you can gather it up just as quickly as you can type into the Google search bar. But how old is it? And more importantly, is it accurate?
Primary data is data you collect in the present, and this can be done a number of ways, including surveys, interviews, questionnaires, focus groups, experiments or trials, and observation.
Let’s say you’ve determined that the hammer-buying market is a gold mine. Now you want to know what people really want in a hammer. So you toss a large and enthusiastic hammer-buying group into a room with a variety of hammers in every conceivable shape, color, and flavor. And you observe. Which hammers get the most love, which the least, and so forth.
No matter your business, it would be pretty foolhardy to forego knowing more about your target market and the customers that populate it. And as more businesses fail than succeed, why not give yourself the best possible chance of success? Whether you’re selling hammers, or hammering the Cleveland Cavaliers.
If you still don’t think market research is important, there’s still the matter of that swamp land we have for sale. It’d be a great place for a bed and breakfast. Don’t worry about the research; you can take our word for it.