Market Research, in a Nutshell
Very many small companies need market studies but do not get
them. They think research is too difficult and two expensive, but it doesn’t have
to be.
What is a Market
Study? A market study is an effort to obtain information about an area or
group of people to which you might try to sell products or services. This
writer once did a study with phone calls to just two buyers. Their responses
were enough to assure him that the product could be sold and to provide ideas
about how to sell it.
Why Do a Market
Study? Almost the only valid reason is to obtain information that is needed
to solve a problem or answer a question. A common question, for example, is: “can
I sell my product in the USA (or Colombia or France or Japan)?”
How to Get a Study?
There are three ways to obtain a market study: (1) buy one that has already been
prepared, (2) prepare one yourself or (3) hire a consultant to do it. It is
very rare to find an existing study that fits a particular company’s needs.
Doing it yourself is an option, but only if you have the required time and
expertise. Hiring someone can work well, but you must say exactly what you want
done and stay in contact with the person or company who is doing the work.
What is the First
Step? The first step in market research is to prepare a study design. It
should say: (1) what problem you have to solve or question you have to answer,
(2) what information is needed to answer the question, (3) how and where the
information can be obtained, (4) how it will be tabulated and analyzed and (5)
how it will be used.
How Much Does
Research Cost? The cost can vary from a few hundred to several thousand
dollars. An important principle is that one should not spend more on research
than the results will be worth. A major
tool manufacturer, for example, can spend much more than a small producer of
marmalade.
How About an Example?
Suppose you want to know if it is feasible to enter the U.S. market with a new
brand of hearts-of-palm. To answer that question, you will need, at a minimum,
information about production cost, transportation cost, interest among
potential distributors, their volume and quality requirements, branding and
packaging, the level of competition, and prevailing prices. Some data might be
found on the Internet in studies done by export promotion agencies in countries
that produce palm hearts, and some by telephone interviews with companies in
the United States that distribute canned vegetables. Prepare an outline of the
report in advance, so the data can be fitted into it. Then, review the report
carefully and obtain any other information that is needed to arrive at a
decision.
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