Market Research Facts

Do you know your customers intimately?

There are two main marketing strategies businesses can use to reach their customers effectively. There is mass marketing which refers to treatment of the entire market as a homogeneous group and offering the same marketing mix to all the customers. It allows economies of scale to be realized through mass production, mass distribution and mass communication. The disadvantage of this marketing approach is that customer needs and preferences differ and the uniform offering is unlikely to be viewed as optimal by all customers.

Given the above scenario, if a business needs to fully understand and know their customers, they must adopt the market segmentation approach. It is important to know who your customers are, why they purchase from you and what keeps them buying from you rather than your competitors. Please note that this doesn’t mean you have to know each customer personally, rather you need to know what types of people buy from your business. By types of people, I mean you need to know your customers’ demographic profiles.

Knowing your customers’ profile is known as “market segmentation “by marketers. This mean dividing your customers or entire market into segments or smaller groups that have similar demographic, psychographic and or product usage characteristics. A market segment is a sub-set of a market made up of people or organizations sharing with one or more characteristics that cause them to demand similar products and/or services based on qualities of those products such as price or function. This is very important as it will help you in understanding each segment of your customers better.

Please note that a proper market segment meets all of the following areas: it is distinct from other segments (different segments have different needs), it is homogeneous within the segment (exhibits common needs); it responds similarly to a market stimulus, and it can be reached by a market intervention. Businesses worldwide have adopted market segmentation as a corporate strategy, creating and maintaining detailed customer profiles for each product or service. This information serves as input in strategic decisions and tactical marketing activities, sales, product development, and customer support.

In order to get the best out of market segmentation, it is prudent to engage a professional marketing research company. There are many market segmentation products on the market. You have to select the one you think will best give you the information you are looking for. Please bear in mind that market segmentation is a purely a scientific market research process.

To your success!!!

Will you ever be Rich?

In a recent survey conducted by Princeton Survey Research Associates International, Americans believe its harder to get rich than it used to be. But when asked about the likelihood of getting rich personally, about one-third say it’s very or somewhat likely that they will attain wealth because of their work, investments, inheritance or good luck.

On the other hand, 63% say it’s not too likely or not at all likely they’ll get rich. Just 2% volunteered that they’re already rich. Bankrate.com commissioned Princeton Survey Research Associates International to explore how people feel about their chances for prosperity, as well as how they define wealth and their motivations for pursuing it.

Hope springs eternal –for the young. More than half (54%) of those 18 to 29 believe they will become rich. Meanwhile, reality sets in with the passage of time. Only 34% of respondents in the 30-to-49 age range believe they will be rich, while 21% in the 50-plus age group think so.

culled from Msn.

Methods of getting information from customers

Many business managers think they know what their customers think and want. This feeling is derived from their gut feel which often times is contrary to what is obtainable in the market place. Businesses can not survive and excel  if they don’t meet the needs of their customers. Thats a fact of life.  In order to be relevant and competitive in the modern day market place businesses need to continually look for information which gives them direction with regards to the ever changing consumer needs.

The advent of modern technology brought about a different type of consumer who is sophisticated with many choices at his disposal. This scenario poses a great challenge to any business, as concerted effort is required  to keep in touch with such a hyperactive consumer’s general behavior.

Many companies frown at the mention of information gathering as they think market research budget is a sheer waste of resources. There are several ways companies can use to gather information without spending so much money. Important information about your customers can be gathered from the following sources:

Employees

Your employees interface with your customer on a daily basis. Ask them about products and services that customers are asking for. Also ask them about what the customers complain about. Is it service related or product related. This information will provide a vital platform on which you can start re-engineering your service/product offering.

Customers – Comment Cards

Provide brief, half-page comment cards on which your customers can answer basic questions such as: Were you satisfied with our services? How can we improve on our service offering? Are there any services you would like to see which we are not offering at the moment? Make the comment card very SIMPLE in order to get more responses from customers. You can have maximum 10 questions on the score card, the response should be close-end with the comment are left open in order to solicit qualitative feedback

Analyze internal Records

You can mine data in your sales records to see what customers are buying most across your business. This will provide you with monthly, weekly or bi-monthly trend analysis. With this information you will be able to see where your customers are spending most of their money.

Telephone Surveys

Hire summer students or part-time people for a few days every six months to do telephone surveys with your customers. This provides you with an opportunity to get information about your business from your customers. This information will help you in mitigating service short falls before they become catastrophic.

So there you are. Before you think about spending top dollar in conducting market research, you can start by collecting information internally before engaging an external research agency. It is however, important to note that the above information gathering methods DO NOT SUBSTITUTE an independent survey which can be commission with an external market research agency. It is advisable to do a robust market survey every six months in order to keep abreast with market trends and consumer behaviour.

To your success!!!!

Market research as a black box

Market research is any organized effort to gather information about markets or customers. It is a very important component of business strategy. Market Research is not an isolated discipline – like science or biology. It is a scientific process that marketers use to understand the market place. Market research helps marketers and business leaders to understand their customers, competitors, market dynamics, and other factors that positively or negative affect the business.

Market research information is like any other information; however, market research findings on their own do not really do anything to make a difference. It is the people who use the information who make the information useable. Given this scenario, this clearly shows that market research is a shot in the arm for people who need insights that can help them make decisions that will improve their business. Research provides the roadmap for any business strategy development. It is the voice of the consumer in the board room.

The above description gives a general picture about market research practice. In order to get a full appreciation of this you need to look at market research as a Black Box. Research is about asking questions and getting answers. Questions are your input into the black box. Once you ask a question, you will definitely get an answer. The answer you get is a direct function of the question you ask and your approach in finding the answer. This scenario gives the interviewer a challenge to ensure he/she gets useful answers that will be able to address the marketing problem.

The Question

The questioning should be guided by an understanding of how the information will be used. For instance a company may be planning to expand a product line in order to consolidate their portfolio or maybe they may be planning to launch a completely new product in the market. With adequate background information, a researcher will be guided accordingly during interpretation of the data. There are various questions usually asked in any market research survey. These include questions on general awareness, usage, frequency of purchase, usage and pricing. Depending on the complexity of the survey, other questions may be added to the survey to ensure all important information areas are covered. This is the most important part of any survey as it provides the researcher the opportunity to dig and delve deeper into the target respondent’s psyche and get answers to his marketing problems.

What’s Inside the Black Box?

Experienced marketers don’t rely on the black box to give them the desired answers. They get involved with the mechanics of the Black Box, so that they can get the best out of the whole system – i.e. from question to answer. This involvement helps them to formulate better questions which will help them get valuable output. When the questioning is precise and directed, the data derived from the black box will be decoded in order to come up with useful insights which will help in the transformation of the business.

It is important to note that there are four distinct steps within the Black Box of Market Research:

• Planning and set up

• Implementation

• Field Work

• Analysis

The above steps represent the process of market research from inception to delivery of the research output. Each step has distinct processes which need to be followed religiously in order to get the desired output. Each step is interdependent on the other.

Watch out for my next post ‘ Basics of getting information from customers’.

To your Success!!!!

Is traditional market research under threat?

With the advent of online interview panels gathering information has never been easier. Forums such as Facebook and Twitter are cheap and fast information gathering platforms. A new study from Carnegie Mellon University shows that analyzing data from Twitter yields the same results as conducting a public opinion poll.

A CMU team from the computer science department looked at sentiments expressed in a billion Twitter messages between 2008 and 2009. The researchers then use simple text analysis methods to filter out updates about the economy and politics and determine if the overall sentiment of the update was positive or negative. The CMU team found that people’s attitudes on consumer confidence and presidential job approval were similar to the results generated by well-reputed, telephone-conducted public opinion polls, such as those conducted by Reuters, Gallup and pollster.com.

For at least some topics, CMU Assistant Professor Noah Smith thinks this kind of passive information gathering could work. “With seven million or more messages being tweeted each day, this data stream potentially allows us to take the temperature of the population very quickly,” Smith said. “The results are noisy, as are the results of polls. Opinion pollsters have learned to compensate for these distortions, while we’re still trying to identify and understand the noise in our data. Given that, I’m excited that we get any signal at all from social media that correlates with the polls.”

The CMU researchers did notice that Twitter sentiments had much more day-to-day variation compared to data gathered from traditional polling data. To compensate, the team averaged the Twitter results over a number of days; at that point, the results were generally quite similar to polling data.

For example, on Twitter as in life, consumer confidence slumped in 2008 and started to revive last spring. And Twitter updates showed the same general decrease in presidential job performance approval through 2009 as was seen in traditional polls. There were a few discrepancies — enough that the CMU folks don’t recommend using Twitter to poll for election results just yet. Still, researchers hope that better natural language processing (NLP) techniques will make Twitter and other social media a valuable source of public opinion information in the future.

The question is, is traditional information gathering under threat by the advent of social media? How reliable is the output of this information? What are the pit falls of this kind of information gathering? Food for thought .

Source. mashable.com

Low Levels Of Trust In Facebook Over Privacy

Customer Satisfaction Vs Mystery Shopping

In continuation of my article, it is important to note that every company needs to measure customer satisfaction.  It is the heart of any modern business strategy. Research has shown that most companies spend about 3% of revenues on measuring customer satisfaction. Understanding customer demographics, expectations, motivations, and desires creates an opportunity to serve customers better than competitors do.

Serving customers better creates satisfied customers, builds repeat business, and drives profitability.  Customer-driven companies eagerly spend that 3% of revenues to learn more about how they are doing with customers.

Customer-driven companies use customer satisfaction information for input in their long term strategy. Companies also require information to help them serve customers better. Can one set of data serve both short term and long term needs?  Is a customer satisfaction study a substitute for a mystery shopping study?  Can mystery shopping studies be used to gauge customer satisfaction? To answer these questions, you need to understand the overlaps and differences between customer satisfaction studies and customer service measurement studies, such as mystery shopping.

A customer who visited a grocery shop a week ago cannot tell you with accuracy about the specific attributes of his recent visit.  He probably does not remember whether he was greeted within a reasonable time, served within a reasonable time and served with a friendly attitude. All of those attributes of the visit, along with many others, combine to create a level of satisfaction in his/her mind.  That overall satisfaction is important to the strategy of the company and will ultimately affect long term decisions. But does it help the shop to serve customers better right now?  The answer is usually “no”.

Customer satisfaction surveys reveal how customers feel about customer service. They do not reveal why. Customer service measurement reveals the “why” that stimulates continuous improvement. Essentially, satisfaction surveys report perceptions and service surveys report performance.

If a satisfaction survey revealed that customers thought food service was slow in a chain of restaurants, valuable information has been gleaned.  Acting on this information alone would be impractical.   Would the chain simply ask employees to work faster? Would it risk serving undercooked food for the sake of quick service? Would it redesign its units to receive food orders more quickly?  Of course not.  The chain would drill down deeper into the data to determine the root cause, the “why”.

The chain would measure the speed of customer service it provides, likely using mystery shoppers to take those measurements.  If a subsequent mystery shopper study revealed that table-service customers were waiting an average of 10 minutes to receive their order, a specific reason for customers to perceive slow service has been isolated.  Causes for the delay can now be investigated.

Causes might include slow credit card authorizations, understaffing, a backlog waiting for a manager approval, or lack of staff training to use computers.  That one statistic—the more than 10-minute wait–gives managers a specific issue to work toward correcting. It gives the customer-driven company a way to serve customers better in the short term.

Keep a tag on your customers

The first quarter for 2010 has come and gone. Many businesses are still suffering or recovering from the effects of the Global financial recession experienced in 2009. Financial institutions are still skeptical about lending money. Borrowing is still very expensive and other sources of cash flow injection are still beyond reach.

For some companies 2010 promises to be a good year, but for some the misery continues. Consumer spending is still low. Global consumer confidence is picking up, but this has not yet directly impacted on consumer spending habits.

Consumers are still skeptical and spending is still limited to important family needs. This scenario has created a tough environment for businesses in general.

This means businesses have to fight for a share of  the consumer purse. As the market space becomes a battlefield, marketers come up with different marketing strategies in order to get a share of the purse.  Customer oriented companies will survive this temporary setback. Global conglomerates such as Starbucks, Wal-Mart and GE continue to experience phenomenal growth despite the harsh economic environment. Their secret is centered on understanding their customers.

These companies continually gather insights and take action on any feedback they get from the market which directly affects their customers. In order to keep a tag on the ever-changing consumer needs, companies need to invest in regular market insight gathering exercises. This ensures they keep a tag on issues that affect their customers and take timely action.

Keeping a tag on customers involves conducting regular or periodic customer satisfaction and mystery shopper surveys.

I will talk about the difference between Customer Satisfaction Surveys and Mystery Shopping in my next post.

To your success!!!

Nigeria Africa’s largest Telecom Market

Nigeria is the largest mobile market on the African continent with about 61 million users as at December 2009, however, this penetration is below 50% suggesting that there is ample room for market expansion, this was revealed by a recent study conducted by Canadian research firm Technology Strategies International, in partnership with BroadGroup TMT Ventures.

The report, titled “Investment Opportunities in the ICT Sector in Nigeria: 2010”, also suggests that there is massive opportunity to improve fixed line and internet penetration in the country. “One of the things fuelling the growth in the Nigerian ICT sector is the imminent illumination of two undersea cables, which will increase international bandwidth dramatically. The improvement in international connectivity will have a major impact on business in Nigeria”, said Christie Christelis, President of Technology Strategies International.

The study revealed that demand for mobile services is still on the increase, with Nigerian operators experiencing declining ARPUs levels, as the subscriber base broadens to include poorer segments. Companies such as MTN Nigeria have shown that, even at ARPU levels of $12 and declining, the business is still capable of making superior margins, added Christelis.

Income Disparity between white and black Single Women

According to a report released by the Insight Center for Community Economic Development this week, there is a vast discrepancy in wealth between single women of color and single white women.

The study, “Lifting As We Climb: Women of Color, Wealth, and America’s Future,” found that while the median net worth of single white women ages 36-49 is $42,600 — 61 percent of the median wealth for same-aged, single white men — single women of color in the same age group have a median wealth of just $5.

Black and Hispanic women are also drastically worse off in a broader age bracket, with almost half of single black and single Hispanic women ages 18-64 reporting zero or negative wealth (46 percent and 45 percent, respectively), compared with 23 percent of single white women, according to the report.

The financial situations of single women of color are so precarious, the study found, that just one unpaid sick day or appliance repair would send about half of them into debt.

And while marriage appears to ameliorate some economic hardship for both men and women across races, the data indicate that the positive effect of marriage on net worth is particularly amplified for black and Hispanic women.

The report offers a number of possible explanations for the wealth gap, including prior and current institutional factors (such as wage disparities and access to fringe benefits in the workplace), as well as a higher rate of being targeted by predatory lenders. (A recent study by the National Council of Negro Women and the National Community Reinvestment Coalition, the authors point out, found that across income groups, black and Hispanic women were much more likely to be caught up in expensive loans than white women.)

But a number of policies, the authors argue — enhanced employment opportunities, support for self-employment and microenterprise, incentives to save and stronger social insurance — would go a long way toward closing the wealth chasm: