The true value of market research

Research can add immense value to strategic business decision making and result in a measurable return on investment. The value of market research is not just about making more money; it can also be used to significantly save money. It does save you the cost of getting it wrong.

The most successful companies have been successful because they know and understand the market they operate in and can take efficient (marketing) actions. If we look at big companies such as Frucor or TipTop, for example, its common practice to test markets before the start of a marketing campaign or the launch of a product.

However, market research is not only for the big companies. It is accessible and affordable for SMEs as well. There are several ways to keep the costs of research low, including using custom-tailored surveys testing key aspects, partnering with other businesses to conduct a survey, and using cost-effective online tools.

The right kind of market research will help you understand and target your customers demands. It delivers the basis for strategic and tactical decision making to grow your business and increase sales.

What is right for you in terms of research methods and solutions will depend on your goals and objectives. What are you trying to achieve through the research? What are you aiming to change or do differently as a result of the research?

In other words, market research needs a clear objective to be able to help you achieve your business goals. It needs to have a clear aim to uncover information relevant to your specific purpose.

A recent Key Research study showed that the most common reasons for using market research were: to identify trends and opportunities, to ascertain consumer perceptions of the organisation and its competitors, to evaluate marketing and advertising, to develop new products/product extensions and to avoid risk. Nearly three quarters (74 percent) of responding New Zealand businesses stated that they undertake regular market research projects.

Every research project and the development of its methodology needs to be based on the respective business goals and objectives in order to add value and deliver the best return on investment. This includes the selection of a research method or a combination of research methods, the sample size and scope of the research, and the selection of target groups and timeframes.

More than facts and figures. Facts and figures unfold their full meaning when they are analysed in a specific context, such as a branding or marketing concept, customer satisfaction, new product development, profitable investments or new market penetration.

But research is about more than facts and figures. The key consideration is to obtain strategic recommendations which can give direction to decision making. How can research assist you in achieving your goals and increasing sales?

Researchers can ask your customers what they think about your products or what they like or dislike. But they should also ask if they would buy more or do anything differently if you changed the product to suit them better. Rather than simply reflecting a picture of the past, research should offer a guide to the future.

Instead of delivering a statement like You have 35 percent share of the market, a well designed research project can deliver actionable recommendations, such as You can increase your share to 40 percent, gaining an additional $3 million, with a new service aimed at the 55+ age bracket. Market research has now been transformed into a profit making investment delivering strategic insights.

Of course, these strategic insights then have to be turned into actions. With the knowledge about what your customers want and how to give it to them, you can optimise your products or services  and maximise your profit. After all, business is about making money.   NZB

Stephanie Prause is marketing and research manager at market research consultancy Key Research. www.keyresearch.co.nz

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