Everybody in business thinks they have an idea that will be “the next big thing,” but few realize that really, the idea is just the starting point. Successful entrepreneurs know that any product they sell must be honed and perfected with good, reliable market research. That is how they get to know their customers and what those customers want and need. It is also how they determine how much those customers are willing to pay for it, whether anyone else is offering it, and where to sell it. There are many different methods of conducting market research, and there is no one-size-fits-all. Each can be used for different purposes and will achieve different results.
Basic research of the current market
You might have a great idea, but if someone else is already doing it, you need to know how to make it greater. It is important, therefore, to conduct basic research about the current state of the market before going any further in developing your product or service. Companies that are doing what you want to do and succeeding can teach you just as much as those who fail. Look at what works and find how you can make it work better, faster or harder. Look at what failed, figure out why, and avoid those pitfalls. Doing this research at the outset will save you a lot of time, money and stress down the road. Imagine investing $100,000 in an “innovative” product you thought of only to discover that there is already a more advanced and cheaper option for sale. Don’t end up wasting your time and money! Do some basic research.
Asking questions and analyzing the answers is one of the oldest tools in the market research toolbox. You can use them to get reactions to your ideas and to get inspiration for new ones. There are two kinds of survey questions: quantitative and qualitative. The first measures harder numbers and amounts, like hours or amounts of money. The second measures softer information, like opinions or reasons behind certain choices. Good market research should utilize both. For example, if I am thinking about advertising my new soap on television, I might ask my respondents how many hours of television they watch a day to determine if it’s worth the money (quantitative) and what their favorite television shows are and why (qualitative). It is important to make your questions clearly written, non-leading and on topic. Providing multiple choice answers will generally make them easier to measure (50% said they love to watch Friends reruns), but the answers will likely be less insightful. It might be best to run a pilot survey with your close family and friends to see how well it works before mass emailing everyone you know or a giant list serve.
Ethnographic Market Research
This technique of market research involves in-home in-depth interviews that are meant to provide the researcher with better information about the customer base. Researchers will try to understand the consumer’s lifestyle, including how she thinks, works, lives, relaxes, parties etc. and her priorities, behaviors, beliefs and motivators. The questioner will also examine the context and environment where a product or service is used and how that experience can be improved. A company employing this method wants to know why the consumer behaves as he does and how he makes his purchasing choices. Of course the problem with this kind of questioning is that it takes a tremendous amount of man power – often up to three hours per interview. Thus, it is important to choose the interviewees carefully, to make sure they are emblematic of your target customer. The upside, though, is that well-crafted questions will lead to valuable insights.