How to Use Marketing Research to Really Understand Your Customers and Position

A guide to gaining a deeper insight into both your market and your marketing

How to Use Marketing Research to Really Understand Your Customers and Position

Businesses can always understand more about the market they are selling to.

Marketing research, as opposed to market research (which refers to research conducted solely into the location, size, and growth potential of a chosen market) can help you gain a much deeper insight into your customers, your current position, and the potential opportunities and risks you face.

Though it yields indications rather than concrete answers, marketing research can be an invaluable part of your decision making process.

This guide will help you understand the different kinds of marketing research, decide what kind of research to carry out, and the best approach for doing so, and decide who should carry out the research, and how to budget for the resources involved.

What kinds of marketing research are there?

Broadly, there are five different categories of marketing research.

  1. Customer research.

The aim of this is to discover the numbers and different kinds of potential customers you have. You should aim to gain an insight into the needs, behaviours, and buying patterns of potential customers, as well as compartmentalising these customers into different categories that can be targeted by different sales messages. You should also try for an understanding of any existing customers you have – of what their levels of satisfaction and loyalty are, and what opinion they have of your customer service.

  1. Product research.

The aim of this is to discover how your offering compares to those of your competitors, and to identify any opportunities for development or refinement. Such research can help you understand the life-cycles of your products, as well as how any new products you introduce are likely to fare, and what new technologies exist that have the potential to help or hinder your business.

  1. Promotion research.

The aim of this is to assess the impact of your marketing spend. Through it, you can build an understanding of the effectiveness of your campaigns, and the performance of your sales force. Use it to compare the effectiveness of the different elements of your marketing (traditional advertising verses e-media, for example), and establish whether your brand is working for or against you.

  1. Pricing research.

The aim of this is to find out whether you are pricing your offerings correctly. You should explore the perceptions customers and non-customers hold about the price of your products compared their actual value, as well as what prices your competitors offer for similar kinds of product. Ideally, you should trial the effects of discounts or loyalty schemes before offering them as standard.

  1. Distribution research.

The aim of this is to investigate how your product reaches the market. Establish what intermediaries stand between you and the customer, and what media/third parties serve the same market segments as yourself. Determine the cost-effectiveness and suitability of various transport methods used to ship and deliver your offerings.

What marketing research approaches should I use?

The approach you take depends largely on the nature of the business decisions you are trying to make.

When making real-time decisions, use exploratory research. For example, consider using a leaflet drop around local houses to determine whether there are potential customers in your area who have not yet been reached by your current marketing.

When you are making longer term, high-stakes decisions, use detailed research.

Any major planning decisions should be backed up by thorough research and concrete facts.

Finally, when making speculative decisions, use casual research.

For answering ‘what-if’ questions (e.g. seeing how a higher price for your product would affect sales volume), forms or casual research such as customer questionnaires can be a good resource to use.

What marketing research can I conduct from my (or my employees’) desk?

Don’t assume that marketing research demands that you stand out on the street with a pen and a clipboard – you can carry out a lot of effective research without moving from your desk.

There are both forms of internal and external sources of research that you can use to your advantage.

Internal sources.

This research is based on your account records, customer records, sales reports, and any logs of complaints or queries (it pays to set up easily accessible systems for storing such data). This can tell you all sorts about buying patterns, sales volumes, customer activity and the sources of grievances and dissatisfaction.

External sources.

This research based on trade press/association surveys, government statistics and data collected by universities and research organisations. You may have to pay for access to some of this data, but the cost can be worth it – it can be invaluable when deciding whether to enter new markets and launch new products.

What marketing research can I conduct in the field (i.e. away from my desk)?

Of course, if you have the time and resources to venture out into the field, there’s a lot you can learn.

Observe people, as what they do is often different from what they say they do.

Watch your customers’ habits and behaviours from afar – watching how they act in-store or on the high street, for example.

Use questionnaires to your advantage.

Post and email questionnaires are cheap, but generally have low response rates. Since respondents are self-selecting, they’ll tend not to be representative of your customer base as a whole.

Conduct interviews. These tend to work best when conducted face-to-face, though may be cheaper when done over the phone (however, this usually requires the involvement of a skilled interviewer to be useful).

Finally, a controlled, well-conducted experiment can tell you how people act and react in a certain situation (e.g. a blindfolded tasting test.)

Should I use quantitative or qualitative research?

Again, this depends on the kind of results you want to get out of the research. Do you want information that is ‘quantifiable’, or that which is nuanced and detailed?

Quantitative research requires large sample sizes.

You will generally need to survey a minimum of 150 people – smaller sample sizes will not yield statistically valid data. Make sure you ask the exact same questions of everyone you survey.

Qualitative research require detailed responses.

Such research is usually carried out in small-sized ‘focus’ groups, and respondents should be encouraged to discuss their opinions, and not give single-word answers. It generally takes longer to carry out that quantitative research, and yields results that are harder to analyse.

Can I carry out marketing research myself?

If you feel able to carry out research by yourself, you can save a lot of money and achieve the exact results that you want.

Define what data you are looking for.

Be as specific as possible – your research should yield a tangible message to take away.

Involve employees with the necessary technical skills.

The ability to run a focus group well, or to design a questionnaire, is a specialist attribute. Involve only those you deem to possess such qualities.

Give those involved time.

Research can take a long while – make sure you give those carrying it out sufficient time, and do not rush them, since doing so will encourage them to be sloppy.

Budget for costs.

Whatever research you do will include costs, whether that be the cost of printing and mailing a questionnaire, or the cost of hiring a research lab. Input and analysis of the data may require outsourcing, so don’t forget to budget for this if it seems necessary.

How should I choose an outside agency to carry out research for me?

A good outside agency should bring with it the experience and expertise that you need to gain a detailed insight into your market and marketing.

Establish their reputation and determine whether they have any experience in your area of business, or your market. Contact previous clients of the agency to determine whether they were satisfied with the results.

Secondly, establish their qualifications. The Research Buyers Guide and the Chartered Institute of Marketing are both good resources for finding out the qualifications of researchers.

Make sure to agree a fee. (This will be determined by the scale of the job and the reputation of the agency so buyer beware!)

Finally, consider going freelance as in most cases they will be cheaper.

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