Market research doesn’t have to be complicated and expensive. This article discusses how using tools and resources currently available to you can prove to be the most effective method for getting started.
Despite myths you may have heard about the complexity and high cost of conducting market research, Vistage Associate Kelly Allan and Margaret Morgan of Kelly Allan Associates Ltd. say research can be conducted both cost effectively and efficiently.
Three Important Questions to Ask
Margaret, who works as a resource to upper management executives, suggests you ask yourself this important trio of questions before hiring a market research firm:
- If you magically got the information you need gratis tomorrow, what would you do differently in your company?
- Why would this particular piece of information give you the confidence to make a specific change rather than choosing an alternative?
- Are you sure this information isn’t already available somewhere in your organization?
“The sad truth is that most firms hire expensive outside assistance to get information they could get for free within their organization,” Margaret emphasizes. “Since they couldn’t extricate the information from the clutches of the company’s computer system, they pay for it instead in the form of market research.
Reasons Not to Conduct Market Research
Market research obviously is not appropriate for all situations. Margaret gives two useful reasons for not conducting extensive market research:
- You already know the answer, but you don’t want to act on it. Instead, you commission an expensive survey to acceptably rationalize delaying action for at least six months. With any luck, the company will have reorganized so the results no longer will be valid, or the results will be so vague you can interpret them to validate staying on the same path.
- You need a number or a quota to prove a point, hold on to a piece of turf, get elected or get a bonus.So, you hire someone with impressive credentials to get that number or demonstrate that quota for you.
Guidelines for Conducting Market Research
“Most organizations have the information they need at their fingertips and don’t even realize it,” explains Kelly. When do you need a statistical survey and when will a rough idea do? There is no simple answer, but here are some guidelines:
- Most organizations have more information stored than they realize. If you can take information you already have and get your answer by putting it on a simple chart or basic graph, you do not need to undertake the time, trouble and expense of a statistical survey. Do not pay for information you already have.
- Are you listening to the right people within your organization? Very often when faced with a problem, you assume that only people “like us” can solve it. Often that problem is knotty, only because the organization is entrenched in assumptions. What is difficult for you may be simple and straightforward to your custodial staff, your security personnel, your mailroom clerks or other staff.
How do you know if the information you’re seeking is critical?
This step is often skipped. If you cannot answer the question, “How would we know whether this information makes a positive difference to our business?” you are probably wasting money by conducting market research.”Remember that a statistical survey can’t predict the future — that’s your job — but it can tell you a great deal about the past or a point in time that will assist you in predicting the future,” concludes Kelly.
Myths About Market Research
The following are six of Kelly and Margaret’s favorite misconceptions about market research:
- Market research requires a Ph.D. in higher mathematics and should be carried out only by experts who charge large fees.
- Good market research is always expensive and rarely understandable (i.e., if it’s not expensive, complicated and extensive, it can’t be useful to your business).
- To understand what you need to know, you have to survey all the people on your customer/prospect list.
- Since good market research is expensive, complicated and often impossible to evaluate, you don’t need to conduct research. It’s OK to go with a seat-of-the-pants approach: “I know my people and I know my customers.”
- Non-professionals should not attempt a random sample because they cannot reliably handle a table of random numbers or hand-held computer random number generator because: 1) it’s too complicated 2) your organization has a deeply entrenched cultural allergy to them.
- It is perfectly acceptable to select a sample from your customer base by an incantational method to get a “sort of” random sample that will give you the holiest of all marketing research goals–a representative sample.
Truths About Market Research
Fortunately, the reality of market research is much easier to deal with. Kelly explains:
- Market research does not have to be prohibitively expensive.
- You do not need to be an expert to conduct or understand the results of market research.
- Even if you decide to hire an expert, you do need to be an integral part of the process.
- You do not need to survey everyone on your list to get the information you want.
- Market research can make a difference to your success.
Kelly L. Allan is founder and senior associate of Kelly Allan Associates Ltd., a Columbus, Ohio-based virtual company with 15-plus associates. He has been in business since 1974 and is a management-consultant columnist for the 35-newspaper chain American Cities Business Journal. Kelly also has published articles, commentary and letters in a variety of journals and magazines including Fast Company, Personnel Journal, Marketing News and Inc. Margaret Morgan consults with CEOs and boards of directors. She worked closely with Dr. W. Edwards Deming, and is an expert in statistical methodology and quality management.