Market Research: Common Business Problems and Their Respective Research Methods
Sizing a Market: This type of market research is designed to create an estimate of the market size (measured by units or dollar volume) that a new product is expected to get on the market. In general, this is usually done for an entirely new product category or in anticipation of a new product introduction that substantially changes the competitive landscape that customers are already familiar with (for example, I suspect that the new category of premium chewing gum that has emerged in the last 18 months could have upset the conventional wisdom of industry analysts). Conducting this type of market research can be expensive, so the best place to start is often by evaluating the ready-made syndicated market research reports that are available for any reasonably sized market. Sizing a market is almost always a quantitative market research study, although depending on the specifics of the market, there may be qualitative introductory activity or even qualitative follow-up to gain more detail on a specific slice of the market.
Product Concept Development: Product concept market research is typically designed to provide customer insights to help product marketing managers develop products that more directly meet the needs of the target customer. There are usually trade-offs related to ease of use, price, industrial design decisions, and bundling options. For the product marketing manager, conducting market research gives them the opportunity to get feedback from the group that will actually decide whether or not they will pay the bills, the customer. Product concept market research can be done qualitatively or quantitatively. In general, direction depends on customers’ familiarity with the product or changes being considered, and terminology that potential respondents understand well enough to ensure that clear communication takes place without significant uncertainty. that their definitions match what we think they mean. If the product category is understood and the terminology is sufficiently well defined, quantitative research is probably the best option. Otherwise, qualitative methods are likely to be used to ensure a full understanding of the concepts and feedback.
Customer Profiles – The intent of customer profile market research is to create a profile of a typical customer who purchases a certain product or service. Having a complete profile of a customer can be very helpful when defining a design center to develop the next generation of a product category and to ensure that engineers and salespeople have the right person in mind when making those decisions. Creating a customer profile often includes collecting the following:
- Demographic data (age, title, physical city of location),
- Firmography (company sector, number of employees, decision-making structure around the product category being studied) and
- A series of questions were asked about the particular product, how it was being used, what product it replaced, the number of people using it…
In many cases, customer profiling becomes the “bible” when a product development team makes decisions about which features or capabilities would be desired and which others would be overlooked. For smaller businesses, conducting market profiling is often the first type of research a business does because it’s simple and it’s hard to argue with “who are our customers?”
Positioning Research: Positioning research is often closely related to brand market research as its role is to understand the positioning of one product relative to another. Much larger companies actually do positioning research simply to understand whether their “line logic” is clear or understandable to their customers, and doesn’t even go into the complexity of how customers relate their product line to the products of the brand. other companies. This is often very interesting research because often the positioning developed by marketing managers is sometimes different from how customers see the strengths and weaknesses of different products relative to each other. Sometimes, to the pain of marketing managers, the phrase “perception is reality” comes up again and again in this type of research, as marketing managers realize that it takes more than words in a brochure to change the perception of customers about the positioning of a product. . Consider whether a Jaguar has higher status than a Mercedes. Which car would you expect to be more comfortable? Which car would you expect to be faster? Having a portfolio buying strategy that highlights the benefits of the next product, without saying disparagingly about the product ahead, is a challenging task, but that’s where positioning research really shines.
Message Research: Message research is closely related to advertising research, although it tests the most basic concepts of an advertising campaign: the most basic idea that is believed to be the main motivator of a product. For example, what do you see when you look at a Rolex ad? Do they have the highest precision of a Rolex watch over the others? They talk about how much more shock resistant a Rolex is than any other watch? Are you talking about how much deeper in the ocean a SCUBA diver can dive with a Rolex than with another watch? No, they don’t message any of these points, instead when you go to their website they show beautiful people steering their million dollar yachts through rough seas, they show close-ups of meticulously detailed watches, they show brave men, obviously. risking their lives, climbing to the top of a distant snowy peak. Its message is about living the good life and being ready for any adventure, whether you’re made of it or not, as if owning a watch that costs tens of thousands of dollars brings you one step closer to fearless. The crux of messaging market research is, what are the few things we need to emphasize if we’re lucky enough to get a few seconds of consideration from a potential customer? Messaging market research is about finding our product’s combination of unique capabilities or attributes and framing that in a way that makes sense to people who are somewhat inclined to buy our product. Message research tends to be qualitative because nonverbal communication is a huge part of communication and many people want to be able to “read” respondents when they first try to digest our schpeel.
Industrial Design – Industrial design (or ID, as it is often called) generally refers to the shape, feel, and texture of a product. The RAZR Phone ID could be said to be a smash hit, big enough for other companies to quickly copy it. ID research focuses on understanding what effect industrial design can have on the purchase of a certain product category and how to optimize the industrial design of a product for the target audience. If we all own the same products, it seems that identification is becoming one of the fundamental ways that companies try to differentiate products that are otherwise quite similar. In general, ID market research is considered to be best handled by face-to-face qualitative research (often in-depth interviews with one person at a time). However, online capabilities have increased significantly in recent years and there is a reasonable case for conducting ID research on a website. If you’re looking for an example of how robust online capabilities have come, take a look at Audi’s website where you can view their cars, back up, zoom in, view the car from any angle just by hovering your mouse. Capabilities are available from some of the higher end online research houses. The only caveat is that people often want to feel the weight of a product to know if it is plastic, metal or wood, to understand the quality of the finish, to feel the quality of the moving parts. In many cases, online research is able to complement face-to-face methodologies and, for some product categories, can replace them entirely.
Customer segmentation: Segmentation market research studies attempt to understand what groups of customers exist in a product category in order to more accurately target their needs or to address the needs of a more attractive group (perhaps the high-quality group, rather than value-driven customers). ). While all of these customers may be buying the same products, because they have different perspectives, their responses to product changes may be completely different, so it’s a good idea to understand how large your groups or segments are. and how they will do it. it probably responds to the changes your company is considering. This is a type of market research that usually ends with a big quantitative bang. Segmentation research can be quite simple – understanding how customers in the eastern part of the country dress compared to those in the south – or it can involve very high-level statistical analysis that can be very expensive. However, good customer segmentation can greatly improve a company’s product development and target customer efforts.
Channel Research – This research can take various forms depending on the critical business problem. Channel research can be done to understand how a company’s channel partners ACTUALLY behave, as opposed to how they are believed to behave. Channel research can be done to understand what motivates channel partners or to understand if a new channel partner being considered would be a suitable fit for a given product category. This is a very broad category of potential investigative methods that can range from efforts such as “mystery shoppers,” who walk through a typical customer journey and report on the experience, to price checks or product offering reporting.
Price elasticity – remember to go back to Economics 101. As the price of a product increases, the marginal value decreases (fair disclosure: I’m not sure I passed EC101), and at some price point, customers choose an alternative product . This research is designed to understand where that sweet spot is for different types of customers. Price elasticity market research really needs to be quantitative, although there are times when an initial phase of qualitative research to understand critical characteristics and attributes may make sense. Price research is also very difficult to do because there is the “monopoly money” syndrome: people tend to make different decisions with a theoretical exercise than when the money comes out of their pocket. Price elasticity research really needs to be well planned because there are a number of seemingly insignificant but very important details to make a decision.
