MARKET RESEARCH FOR NEW VENTURE

  • Market research is any organized effort to gather information about target markets or customers. It is a very important component of business strategy. The term is commonly interchanged with marketing research; however, expert practitioners may wish to draw a distinction, in that marketing research is concerned specifically about marketing processes, while market research is concerned specifically with markets.
  • Market research is one of the key factors used in maintaining competitiveness over competitors. Market research provides important information to identify and analyze the market need, market size and competition. Market-research techniques encompass both qualitative techniques such as focus groups, in-depth interviews, and ethnography, as well as quantitative techniques such as customer surveys, and analysis of secondary data.
  • Market research, which includes social and opinion research, is the systematic gathering and interpretation of information about individuals or organizations using statistical and analytical methods and techniques of the applied social sciences to gain insight or support decision making

NEED FOR MARKETING RESEARCH

  • To undertake marketing effectively
  • Changes in technology
  • Changes in consumer taste
  • Market Demand
  • Changes in the product ranges of competitors
  • Changes in economic conditions
  • Distribution Channels

PURPOSE OF MARKETING RESEARCH

  • Gain a more detailed understanding of Consumers’ need.
  • Reduce the risk of business failure.
  • Forecast future trends.

MARKET RESEARCH PROCESS

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STAGE 1 – FORMULATING THE RESEARCH PROBLEM

Formulating a problem is the first step in the research process. In many ways, research starts with a problem that management is facing. This problem needs to be understood, the cause diagnosed, and solutions developed.

However, most management problems are not always easy to research. A management problem must first be translated into a research problem. Once you approach the problem from a research angle, you can find a solution. For example, “sales are not growing” is a management problem.

Translated into a research problem, we may examine the expectations and experiences of several groups: potential customers, first-time buyers, and repeat purchasers. We will determine if the lack of sales is due to:

  • Poor expectations that lead to a general lack of desire to buy, or
  • Poor performance experience and a lack of desire to repurchase.

What then is the difference between a management problem and a research problem? Management problems focus on an action. Do we advertise more? Do we change our advertising message? Do we change an under-performing product configuration?

If so, how? Research problems, on the other hand, focus on providing the information you need in order to solve the management problem.

STAGE 2 – DETERMINE YOUR RESEARCH DESIGN

  • Now that you know your research object, it is time to plan out the type of research that will best obtain the necessary data.  Think of the “research design” as your detailed plan of attack.  In this step you will first determine your market research method (will it be a survey, focus group, etc.?).  You will also think through specifics about how you will identify and choose your sample (who are we going after?  where will we find them?  how will we incentivize them?, etc.).  This is also the time to plan where you will conduct your research (telephone, in-person, mail, internet, etc.).  Once again, remember to keep the end goal in mind–what will your final report look like?  Based on that, you’ll be able to identify the types of data analysis you’ll be conducting (simple summaries, advanced regression analysis, etc.), which dictates the structure of questions you’ll be asking.

Your choice of research instrument will be based on the nature of the data you are trying to collect.  There are three classifications to consider:

  • Exploratory Research – This form of research is used when the topic is not well defined or understood, your hypothesis is not well defined, and your knowledge of a topic is vague.  Exploratory research will help you gain broad insights, narrow your focus, and learn the basics necessary to go deeper.  Common exploratory market research techniques include secondary research, focus groups and interviews.  Exploratory research is a qualitative form of research.
  • Descriptive Research – If your research objective calls for more detailed data on a specific topic, you’ll be conducting quantitative descriptive research.  The goal of this form of market research is to measure specific topics of interest, usually in a quantitative way.  Surveys are the most common research instrument for descriptive research.
  • Causal Research – The most specific type of research is causal research, which usually comes in the form of a field test or experiment.  In this case, you are trying to determine a causal relationship between variables.  For example, does the music I play in my restaurant increase dessert sales (i.e. is there a causal relationship between music and sales?).

STEP 3 – DESIGN AND PREPARE YOUR RESEARCH INSTRUMENT

  • In this step of the market research process, it’s time to design your research tool.  If a survey is the most appropriate tool (as determined in step 2), you’ll begin by writing your questions and designing your questionnaire.  If a focus group is your instrument of choice, you’ll start preparing questions and materials for the moderator.  You get the idea.  This is the part of the process where you start executing your plan.
  • By the way, step 3.5 should be to test your survey instrument with a small group prior to broad deployment.  Take your sample data and get it into a spreadsheet; are there any issues with the data structure?  This will allow you to catch potential problems early, and there are always problems

STEP 4 – COLLECT YOUR DATA

  • This is the meat and potatoes of your project; the time when you are administering your survey, running your focus groups, conducting your interviews, implementing your field test, etc.  The answers, choices, and observations are all being collected and recorded, usually in spreadsheet form.  Each nugget of information is precious and will be part of the masterful conclusions you will soon draw.

STEP 5 – ANALYSE YOUR DATA

  • Step 4 (data collection) has drawn to a close and you have heaps of raw data sitting in your lap.  If it’s on scraps of paper, you’ll probably need to get it in spreadsheet form for further analysis.  If it’s already in spreadsheet form, it’s time to make sure you’ve got it structured properly.  Once that’s all done, the fun begins.  Run summaries with the tools provided in your software package (typically Excel, SPSS, Minitab, etc.), build tables and graphs, segment your results by groups that make sense (i.e. age, gender, etc.), and look for the major trends in your data.  Start to formulate the story you will tell.

STEP 6 – VISUALIZE YOUR DATA AND COMMUNICATE RESULTS

  •  After you have spent hours pouring through your raw data, building useful summary tables, charts and graphs.  Now is the time to compile the most meaningful take-aways into a digestible report or presentation.  A great way to present the data is to start with the research objectives and business problem that were identified in step 1.  Restate those business questions, and then present your recommendations based on the data, to address those issues.
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