Market Research: Save Yourself Time and Do It The Right Way
Kevin Jones – It has always been important for small businesses to do marketing research. But at least from my vantage point, most small businesses don’t rely on as much marketing research as they should, despite the facts that there is more useful information readily available than ever before and (thanks to the Internet) it’s easier than ever for small businesses to do quality marketing research at a reasonable cost.
The American Marketing Association defines marketing research as “the function that links the consumer, customer, and public to the marketer through information – information used to identify and define marketing opportunities and problems; generate, refine and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process.” The AMA definition continues by saying that “marketing research specifies the information required to address these issues, designs the methods for collecting information, manages and implements the data collection process, analyzes, and communicates the findings and their implications.”
The AMA’s definition, while certainly authoritative, is long and involved. I can boil it down to something more concise: Marketing research is asking questions and gathering information that will help small business owners to make better business decisions.
Unfortunately, time spent conducting marketing research does not generate any revenue for the business. Because of that, some business owners look at marketing research as unproductive – something that’s nice to do, but not always a necessity. Time has an opportunity cost and some feel that time spent on marketing research is time that could be spent on “more productive” activities, like building a web site, developing a new series of print ads, making sales calls, or other marketing activities. However, if a week’s worth of time is invested in marketing research that saves a year’s worth of time pursuing the wrong target market customers, then it is a superb investment.
Small businesses generally have smaller budgets to work with and, while they may have more time than money, they still have to be concerned about the opportunity cost of time spent on marketing research. So, for small business owners who recognize the importance of doing marketing research, but who have little or no budget to work with, here are some tips:
- Use secondary research – Secondary research is “other people’s research” – research that was conducted for another purpose, but which may still provide valuable information for your questions. Examples of secondary research include the U.S. Census, ESRI demographic reports, First Research industry reports, and the Dun & Bradstreet Million Dollar database. The “rule of thumb” among marketing researchers is to always look for secondary research, and only consider doing primary research if secondary research doesn’t meet your needs.
- Use simple methods – When conducting primary research, keeping things simple will save time and promote higher response rates from subjects. For example, don’t use a focus group when a brief survey using Survey Monkey will do the job. You’ve no doubt been asked for your ZIP code when checking out at some retail stores. This is a simple, yet effective way to determine exactly where customers are coming from.
- Use low-cost providers – The “do-it-yourself” approach may make sense for you. But there are lots of low/no-cost resources to tap into out there to provide the information and expertise you need. Examples include college or university marketing classes or intern programs; libraries (don’t overlook university libraries – they’re not just for faculty and students); trade associations; and, of course, the Indiana Small Business Development Center. The ISBDC won’t do your marketing research for you, but we have access to some excellent secondary research and we can help you develop an effective plan for your marketing research project.
- Systematize customer communications – Create systems that ensure regular communication between the business and the customer. Ask for customer feedback on a regular basis, using a “bounce-back” post card, an e-mail survey, or follow-up phone calls. An on-going, systematized approach means you’re less likely to need special (costly) research projects because you’ll have a steady flow of information and you can tweak that system to meet your needs.
So, how much marketing research should you be doing? The simple answer is “As much as you can afford to do.” And that is probably more than you think you can or should be doing.
And when is enough enough? As long as there’s a pay-off, a benefit, resulting from your marketing research, you should continue. So, as long as the marginal benefit of your research is equal to or greater than the marginal cost, it makes sense to continue. While it is fairly easy to measure marketing research costs (in dollars or time spent), it is not always as easy to measure the benefits. Benefits may come in the form of increased sales revenue or cost avoidance. Or they may simply come in the form of peace of mind that you have when you know you’ve made a business decision with the best information available.
Kevin Jones is a Business Advisor for the Central Indiana Small Business Development Center, an organization with the mission of having a positive and measurable impact on the formation, growth, and sustainability of small businesses in Indiana, and to develop a strong entrepreneurial community. Kevin can be reached at firstname.lastname@example.org.