Market Research Facts

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:

Groundbreaking Market Research

Delegates at Globalpark’s forthcoming Mobile Research Conference in London will be among the first to hear findings from a groundbreaking research project that could be the answer to problems that have previously challenged market researchers.

Heval Ceylan, Experience Director at MESH Planning, will take to the stage with Linda Neville, Portfolio Planner at Coca-Cola, to share findings from a mobile research project they worked on last year.

Using a three-stage approach they set out to elicit responses in real-time.

The project used the mobile as one research platform to help Coca-Cola understand the various touch points respondents – who had been recruited through an online panel – had with a short list of specific brands. The first stage of research involved an online questionnaire to understand people’s relationships to the brands.

Then using their mobile phones for the second stage of the project, respondents were asked to text whenever they came into contact with one of these brands over a period of a week and reply to a text containing a code frame using four simple characters.

These texts provided information including where they saw the brand, how they felt about the touch point and how likely that made them to choose the brand next time.

The mobile approach met a number of the key objectives: it provided research findings in real time, allowing Coca-Cola quickly to make changes in their ongoing “topical” campaign in newspapers as the results were analysed; it was deemed the perfect platform for reaching the target market of 25-49 year old ABC1 respondents and it was able to capture experiences with the brands being measured as they happened, including photos.

Conference delegates will gain other useful insights from the project: how MESH Planning was able to integrate the results of mobile research with those from the online platform; how online diaries were used by the respondents to see what they had submitted; how the MESH research team were able to instruct respondents in the methodology throughout the project.

Source:www.mobileresearchconference.com

Market Feasibility Study

A market feasibility study is an analysis of the viability of a product or service. A feasibility study focuses on helping answer the key objective of “should we proceed with the proposed project idea?” All activities of the study are directed towards helping answer this question.

The feasibility study will help you to identify if there are opportunities in a market or market segment. This type of survey is usually carried out before writing a business plan. The results from this survey will provide strategic direction of the idea or project. It is very important to conduct a market feasibility study before launching a new product/service in the market. Below are some reasons why it is important to conduct a market feasibility study:

• Helps in narrowing business alternatives
• Identifies new opportunities in the market
• Identifies reasons to or not to proceed with an idea
• Enhances the probability of success by addressing and mitigating factors that could affect the project.
• Provides quality information for input in strategic decision making
• Helps in securing funding from lending institutions and other monetary sources
• Helps to attract equity investment.

When planning to run this type if survey, it is important to understand the key issues you want investigated in the survey. In essence, a good market feasibility survey will cover the following key areas:

• Main players in the category of interest
• Brands playing in the category
• Market segmentation
• General usage behaviour
• Purchase patterns
• Master brand and sub brand SWOT

The above are key areas that can be covered in a market feasibility survey. The list above is however, not exhaustive.

Wishing you success !!!!

Feasibility Survey integral part of start-up success

Do you know that 90% of start-ups fail within six months of operation? This figure is shocking, isn’t it?.

Majority of enterprising people with brilliant business ideas find themselves in trouble a couple of months down the line.

Without knowing what hit them, they find themselves unable to pay their daily business expenses.

The question is what causes this high failure rate in the first place? There are several reasons attributed to start-up failures. Below I will profile a few key ones.

• Lack of knowledge about the market
• Insufficient Capital
• Poor Management
• Poor Location
• Lack of planning

I will focus on the first item – Knowledge about the market you are planning to do business in is very critical in ensuring success. First and foremost any budding entrepreneur needs to identify a niche in the market – in other words a market niche is an unserviced or an opportunity identified in the market which is under serviced. After identifying this gap in the market the second step is to find out if that gap is profitable. To find out if there is real need for the products/services identified, there is need to gather market insights about the identified market (niche).

How do you get or establish market insights from the identified niche/ market? This where market research comes into play. Market research conducted to find out whether an idea is viable or not is called  a ‘Feasibility Survey’. The aim of this market research survey is to find out if the proposed idea/s are viable and accepted by the target market.  A feasibility study is the analysis of a concept to see if it will be a success or not. It takes into account:

• Operational (will it work?),
• Economical (costs Vs benefits)
• Viability (can it succeed?)

Results of the market research survey often determine whether the concept should be implemented or not. When developing a feasibility survey he following 5 key questions must be addressed:

1. What is the actual product or service?
2. Who are the targeted customers?
3. What is the benefit of providing your product or service?
4. How will you get the product to the customers?
5. Who is already providing the service/products you want to sell

It has been proven that the 10% of start-ups, who make it, utilize market research before embarking on setting up their businesses. I will be covering in depth the elements of a feasibility survey. For free advise feel free to contact me here.

To your success!!!!