In-Focus: Market Research
Market research can serve as an enabling tool for companies or entrepreneurs, whether by gaining a better understanding of competitors, consumers or the wider macro-environment. Such information can be gathered through a variety of qualitative and/or quantitative means. Qualitative research tools can include in-depth interviews and focus groups whilst quantitative research tools can refer to techniques such as surveys. Whilst market research can play an invaluable role in helping a firm succeed, there are certain points worth considering in relation to research.
- Selection of methodology
Depending on the key objectives of the research, certain techniques are more appropriate. For instance, where the research is of a more exploratory nature such as understanding consumer perceptions of a brand, qualitative research is more appropriate. However, in scenarios where one is looking to forecast demand for their product or service, quantitative research is more suitable. It is worth noting that one need not solely rely on just quantitative or qualitative research. Rather, both can be used in a complementary manner, providing information that is in-depth as well as statistically reliable.
- Phrasing of questions
The reliability of data is highly linked to the design of the research technique utilized. It is important to ensure the questions posed are concise and leave no room for confusion. Asking respondents if they are satisfied with the quality and variety of food served at a restaurant is an example of a poorly formulated question, as the respondents may be satisfied with one point and not the other. Questions should also not be leading, as this may skew the results and reduce the reliability of the information gathered.
- Implementation of findings
Market research can provide a valuable tool in challenging one’s assumptions, rather than simply verifying them. Although mandating market research is sometimes out of necessity (for instance, when seeking finance from investors or perhaps when presenting a new idea to the board), it is important not to diminish the results because they are not in line with expectations. One example of this relates to supermarket giant Tesco and its failed entry to the US market. The company spent two years conducting intensive on-the-ground research in the US, even sending senior executives to live with Californian families in order to better understand their shopping habits. Despite these efforts, Tesco proceeded to ignore the results of the research, incurring significant losses.
The selection of an experienced research partner is vital in ensuring the development of a research design that is best suited to the research objectives, and thus the production of reliable and quality data. When used correctly, market research can play a strategic role in reducing exposure to risk by making informed decisions that are grounded in data, rather than based on assumptions.