Whether your goal is to expand into new markets, introduce a new product or service, or gauge customer reactions, even the smallest businesses can benefit from a simple but well-planned market-research study.
A market research study helps you understand your market, your customers, your competitors, and larger industry trends. High-quality research will reveal details about your current customers and will help you target new customers. For example, before you open an organic produce market, it is important to find out if there’s a demand for food grown without pesticides and whether customers will pay more for it.
In addition to the insight that you’ll gain into customer needs, market-research study can help you avoid costly mistakes, such as introducing an unpopular line of goods or developing a service that no one really wants.
Coca-Cola’s introduction of New Coke in the 1980s demonstrates what happens when decisions aren’t supported by solid research. Coke revised the formula of its traditional brand of soft drink and lost millions in sales. By performing a study and determining what people thought of the new formula, the company could have avoided public-relations headaches.
When you establish a market-research studies for your business, follow these basic guidelines:
The research sample — your study’s group of participants — has to be just the right size. Too large a sample is not cost effective, and too small a sample offers inaccurate results. You also need to have the right samples from your overall population. Even a sample as small as one percent of a market or group will work, as long as the sample truly reflects the overall geographic area or population that you want to query.
Your surveys must reflect all characteristics of the market from which it is drawn, such as geographical area or population segment.
Nielsen TV ratings are based on very small samplings of the overall audience, but they’re accurate to a few percentage points. For example, if half of your target market is aged 65 and older and half is 30 and younger, make sure that the sample size accurately reflects this demographic. If one-third of your market lives in one town and two-thirds lives in another, your survey must reflect the geographic split in order to give you accurate and useful information.
Successful studies follow proven approaches based on statistics and sampling. But don’t worry — you don’t need a PhD in mathematics. Most results can be tabulated with simple arithmetic and broken down into percentages that anyone can understand.
If you follow these guidelines, you’ll collect information that can contribute to the success of your enterprise. In short, market-research studies can save you money, save you time, and — above all — save you from disaster.