More Information About Starting Your Small Business
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Marketing Research |
What is Marketing Research? |
According to the American Marketing
Association, marketing research is the systematic gathering, recording,
and analyzing of data about problems relating to the marketing of
goods and services.
Every small business owner-manager must ask the following questions
to devise effective marketing strategies:
- Who are my customers and potential customers?
- What kind of people are they?
- Where do they live?
- Can and will they buy?
- Am I offering the kinds of goods or services they want - at
the best place, at the best time and in the right amounts?
- Are my prices consistent with what buyers view as the product's
value?
- Are my promotional programs working?
- What do customers think of my business?
- How does my business compare with my competitors?
Marketing research is not a perfect science. It deals with people
and their constantly changing feelings and behaviors, which are
influenced by countless subjective factors. To conduct marketing
research you must gather facts and opinions in an orderly, objective
way to find out what people want to buy, not just what you want
to sell them.
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Why do it? |
It is impossible to sell products
or services that customers do not want. Learning what customers want,
and how to present it attractively, drives the need for marketing
research. Small business has an edge over larger concerns in this
regard. Large businesses must hire experts to study the mass market,
while small-scale entrepreneurs are close to their customers and can
learn much more quickly about their buying habits. Small business
owners have a sense their customers' needs from years of experience,
but this informal information may not be timely or relevant to the
current market.
Marketing research focuses and organizes marketing information.
It ensures that such information is timely and permits entrepreneurs
to:
- Reduce business risks
- Spot current and upcoming problems in the current market
- Identify sales opportunities
- Develop plans of action
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How to do it |
Without being aware of it, most business
owners do market research every day. Analyzing returned items, asking
former customers why they've switched, and looking at competitor's
prices are all examples of such research. Formal marketing research
simply makes this familiar process orderly. It provides a framework
to organize market information. |
Market Research - The Process |
Step One: Define
Marketing Problems and Opportunities Step Two: Set
Objectives, Budget, and Timetables
Step Three: Select
Research Types, Methods, and Techniques
Step Four: Design
Research Instruments
Step Five: Collect
Data
Step Six: Organize
and Analyze the Data
Step Seven: Present
and Use Market Research Findings
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Define the Problem or Opportunity |
The first step of the research process,
defining the problem or opportunity, is often overlooked - but it
is crucial. The root cause of the problem is harder to identify than
its obvious manifestations; for example, a decline in sales is a problem,
but its underlying cause is what must be corrected. To define the
problem, list every factor that may have influenced it, then eliminate
any that cannot be measured. Examine this list while conducting research
to see if any factors ought to be added, but don't let it unduly influence
data collection. |
Assess Available Information |
Assess the information that is immediately
available. It may be that current knowledge supports one or more hypotheses,
and solutions to the problem may become obvious through the process
of defining it. Weigh the cost of gathering more information against
its potential usefulness. |
Gather Additional Information |
Before considering surveys or field
experiments, look at currently held information: sales records, complaints,
receipts, and any other records that can show where customers live
and work, and how and what they buy. One small business owner found
that addresses on cash receipts allowed him to pinpoint customers
in his market area. With this kind of information he could cross-reference
his customers' addresses and the products they purchased to check
the effectiveness of his advertising.
Customers' addresses tell much about them. Lifestyles - and buying
habits - are often correlated with neighborhoods.
Credit records are an excellent source of information, giving information
about customers' jobs, income levels, and marital status. Offering
credit is a multifaceted marketing tool with well-known costs and
risks.
Employees may be the best source of information about customer
likes and dislikes. They hear customers' minor gripes about the
store or service - the ones customers don't think important enough
to take to the owner. Employees are aware of the items customers
request that you do not stock. They can often supply good customer
profiles from their day-to-day contacts.
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Outside Data |
Secondary Research
Secondary research exploits published sources like surveys, books,
and magazines, applying or rearranging the information in them to
bear on the problem or opportunity at hand. A tire sales business
owner might guess that present retail sales of tires is strongly
correlated with sales of new cars three years ago. To test this
idea, it's easy to compare new car sales records with replacement
tire sales three years later. Done over a range of recent years,
this should prove or disprove the hypothesis and help marketing
efforts tremendously.
Localized figures tend to provide better information as local conditions
might buck national trends. Newspapers and other local media are
often quite helpful.
There are many sources of secondary research material. It can be
found in libraries, colleges, trade and general business publications,
and newspapers. Trade associations and government agencies are rich
sources of information - GALES' Directory is available at any public
library.
Sources of Secondary Research
ASAE
Directory of Associations Online
Ask
a Librarian - U.S. Library of Congress
Bureau
of Labor Statistics
Business
Research Lab
Center
for Business Women's Research
Economic Statistics & Research
Fedstats.gov
Internet
Public Library
Population
& Demography Resources
Primary Research
Primary research can be as simple as asking customers or suppliers
how they feel about a business or as complex as surveys conducted
by professional marketing research firms. Direct mail questionnaires,
telephone surveys, experiments, panel studies, test marketing, and
behavior observation are all examples of primary research.
Primary research is often divided into reactive and non-reactive
research. Non-reactive primary research observes how real people
behave in real market situations without influencing that behavior
even accidentally. Reactive research, including surveys, interviews,
and questionnaires, is best left to marketing professionals, as
they can usually get more objective and sophisticated results.
Those who can't afford high-priced marketing research services
should consider asking nearby college or university business schools
for help.
For More Information on This Topic:
Missouri
SBDC's "Market Research Workbook"
Inc.
Magazine Market Research Articles
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