MARKETING RESEARCH TO BUY OR NOT TO BUY?

In some cases, such as reviewing the Yellow Pages to determine the level of
competition for a specific geographic area, marketing research can easily
be accomplished by small business owners themselves. However, as the
research becomes more complicated, the small business person may wish to
turn to an expert in the field.

     Numerous research firms exist throughout California and the U.S. Some
conduct millions of dollars of research each month, such as A.C. Nielsen
and its monitoring of television audiences. Others are smaller, independent
firms that serve specific geographic areas such as Los Angeles or the San
Francisco Bay Area.

     Although marketing research can be considered a bargain, especially if
the results of a study greatly increase revenues or cut costs, good
marketing research is not cheap. Marketing researchers are trained,
experienced professionals, not unlike attorneys or architects. Accordingly,
the first-time research buyer may be startled by the prices for research
services. For example, focus groups run about $3,000 each, and a telephone
survey could range anywhere from $5,000 to $25,000 or more, depending on
the number of interviews and length of the questionnaire.

     Because costs of this size represent a substantial investment for most
small businesses, owners should ask themselves the following questions
before ever contacting a research firm:

- Is the research really necessary?   In some cases, maybe a "best guess"
would prove just as effective as a well-designed research project. In other
cases, however, research may be absolutely necessary. For example, many
lending institutions require a feasibility study of a proposed business
idea, using marketing research, before they make any loans.

- Is the research worth doing?   Will the outcome of the research result
in a benefit exceeding the cost of the research itself? Spending $20,000 on
a research project to realize an increase in company revenues of $1,000 a
year simply doesn't make sense.

- Can I do the research myself?  This is probably the hardest question to
answer. You must be able to determine the complexity of the research
problem and the risk involved if the research was not done. To strike an
analogy, several companies offer do-it-yourself legal guides that allow the
small business owner to create contracts, incorporate and so forth. If you
feel comfortable with this type of approach, fine; if not, see an attorney.
The same holds true for marketing research.