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Thorough research into your target market has long been considered a luxury – a perk available only to corporate giants with deep pockets. But the wave of small businesses over the past decade has made understanding and targeting your customers accurately a key survival factor.
Market research comes in all shapes and sizes, and some forms certainly come with high prices. Of course, not all companies have thousands of dollars to fork out for analyst reports and services from large market research companies.
Fortunately, there are plenty of effective options available that won’t take a heavy toll on your budget.
What is market research?
Researching your market helps you understand your customers, your competitors, and the industry in which you operate. It is an ongoing process that involves using data to make decisions related to running your business.
Carrying out market research consists of collecting data to analyze. Data can be collected through a variety of processes, and the method you choose depends on what you hope to discover or better understand in your market.
Once your data is collected, careful analysis is required to come to any conclusions or understanding. But if it’s done right, the results will make all of your business decisions smart.
Why use it?
Market research has definite value. It gives you the information you need to make smart business decisions so your income grows.
In fact, your ROI on market research often exceeds the cost of performing the research.
Good market research helps you:
- determine how to correctly target your marketing campaigns
- identify opportunities in the market
- determine what you are doing wrong as well as what you are doing right
- identify the specific needs of your customers
- uncover issues with your business that might not have surfaced otherwise
- evaluate your success with measurable data
Although the name may imply the opposite, secondary research is the usual starting point for market research.
Secondary research is conducted by consulting published reports from reliable sources in order to discover:
- who is your target market
- what are the needs of your market
- the size of the potential market
Secondary research is less expensive than primary research. It’s often free, in fact. It’s also more easily accessible than you might think.
Secondary research can be internal, such as internal sales reports or market analysis. But most will be external, including:
- directories and web resources
- non-profit agencies
- government agencies (try www.fedstats.govto access 70 government websites with valid statistics and information)
- back issues of magazines and newspapers in the library
However, analyzing secondary data can sometimes be overwhelming, and your results may turn out to be inaccurate or inconclusive. It may be a good idea to use the knowledge gained through secondary research to guide your decisions about primary research or even to hire an outside consultant to perform the analysis for you.
You can think of primary research as getting to the bottom of it.
Primary research is conducted to be truly intimate with your market, to answer specific questions you may have, or to address specific areas of interest. It costs more and often takes longer to complete than secondary research, but gives conclusive results.
Primary research can be divided into two sub-categories:
- Qualitative research includes studies done on smaller groups of people, such as individual interviews with consumers or focus groups. It is meant to give you direction, to get an answer to a particular concern or question – not to make predictions.
- Quantitative research includes studies carried out which give rise to a large number of data-type surveys. This type of research is statistically valid and can be used to make predictions.
Surveys are a type of quantitative primary research that aims to collect specific data from a sample of audiences.
Surveys can be administered by email, post, or telephone and typically target customers or potential customers.
There are four steps to attacking a survey: identify your audience, write the survey, conduct the survey, and analyze the data collected.
When writing the survey, keep the questions simple, but be very specific. Also, including a ârewardâ for completing the survey (a promotional product or coupon of some sort) is a good way to increase participation.
While it is possible to conduct a survey entirely in-house, your best bet would be to outsource the conduct of the survey and data analysis to a research company that conducts surveys as part of their business.
About Focus Groups
Are you developing a new product? Get started in an advertising campaign? Interested in assessing the needs of your customers beyond simple questions and answers? Here’s where focus groups – a type of qualitative primary research – can help.
Focus groups are typically made up of around 10 shortlisted people who meet the criteria you specify. They come together in one room – on your site or off site – to discuss and respond to a specific topic relevant to your business.
Meeting off-site has its advantages; facilities designed for focus groups generally have access to cameras to record the session. Some also have one-way mirrors for participants to be observed.
The discussion is guided by a moderator. You can either hire an external moderator or assign the role to someone in your organization, but keep in mind that he or she cannot participate beyond moderation.
Focus groups are useful because participants can be polled for the reasoning behind their opinions, and conversations can be generated around a particular topic, giving you what is called ârich dataâ as opposed, for example. example, to the finished responses you get from survey questions.
It is best to hold at least two sessions in order to come to solid conclusions.
Survey prices will vary depending on a number of factors including whether you purchase a mailing list, who designs the questions for the survey, what communication channel you use to send the survey and how you want the results to be. analyzes.
The costs also depend on the incidence rate or the number of inquiries to be sent (or calls to be made) to obtain a response. For example, if you send out 100 surveys and 10 people respond to them, your incidence rate is 10%.
- Telephone. Telephone surveys can cost between $ 5,000 and $ 15,000. They typically cost an average of $ 40 per interview (or per interviewee).
However, this price per interview may increase or decrease depending on the success of the responses. The fewer answers, the higher the price. For example, if only 50% of the list responds, you will pay a little over $ 40 per interview.
- Mail. Postal surveys will cost close to the cost of telephone interviews, typically between $ 5,000 and $ 7,000 for 200 responses.
- E-mail. Email surveys are increasingly popular because they cost less – around $ 3,000 to $ 5,000.
The costs are lower for two reasons. First of all, the postage is not a problem. Additionally, email has a higher incidence rate, as the ability to answer questions in participants’ free time makes them much more likely to respond.
However, a word of warning: Using email for polls limits your population to those with email access (currently around 40%).
Options to reduce survey costs
To save money, design your survey questions in-house. Also, if you have a ready-made recipient list (say a list of registered users on your website), you can avoid the cost of buying a mailing list (usually five to fifteen cents per name, which can be expensive).
And certainly think of email as opposed to postal mail. You don’t have to pay for printing or postage, and the response rate seems to be better.
Costs of focus groups
Prices for focus groups can range from $ 4,000 to $ 6,000 per session if you are outsourcing to a company that operates focus groups. Since it is recommended to hold at least two sessions, this price can be a little high.
But there are ways to save. You don’t need to outsource all aspects of a newsgroup (setup, moderator, recruiting, and script). If you script the discussion questions yourself, don’t hire a professional moderator, and use a conference room in your office rather than an outdoor facility, you can cut costs by almost half.
However, recruiting is the one area where you don’t want to skimp. The time spent recruiting eligible participants may be more than you would like a member of your office to spend, especially if your guidelines are strict. For example, finding cell phone owners may not take a long time, but if you want to find cell phone owners who have dogs, it will take a little longer.
Participants must also be remunerated for their time, either in cash or by a reward of equivalent value (stock options, gift certificate). For a two-hour session, you can expect to pay $ 35 to $ 50 each for consumers, $ 50 to $ 100 each for professionals, and $ 100 to $ 150 each for executives.
Secondary source costs
Many published reports and resources are available free in your library and online. Just make sure the information you are using is not out of date.
Some analyst reports cost as little as $ 250, but most well-known research companies charge at least $ 1,000 for their reports.
Mie-Yun Lee is the founder of BuyerZone.com, the first online marketplace for professional purchases. The site offers extensive buying advice and a free quote request service for over 100 common business purchases, ranging from telephone systems to forklifts.