Customer Market Research Primer

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1 Customer Market Research Primer This factsheet acts as a primer to the basic concepts of Market Research and how a business or individual could do their own research. Market research is an effective way of finding out what customers want, what are the market trends and what customers are likely to find interesting. For the research to be useful, a representative sample of your customer base/target market needs to be used. Such research is generally used for analysing the target market, assessing customer needs, assessing the viability of a new product or learning about customer satisfaction. There are two types of market research, primary and desk. Desk research uses internal information such as customer sales records and published information such as trade information or government publications. This area of research will be covered in detail in another factsheet. Primary, or field research, is undertaken within the market itself and is designed to get specific information from specific people. This is usually undertaken by professional companies but can be carried out by a business itself. Primary research can take one of three main forms: Personal interviews use a set questionnaire. The answers are recorded and later correlated with other answers. Refusal rate is low Results are accurate Non-verbal communication can be used Questionnaire can be longer High cost per interview Inaccuracies may occur when recording answers Large set up costs e.g. the recruiting and training of interviewers

2 Telephone interviews involve a set of questions being asked over the phone. Answers are later correlated. Large number of interviews can be conducted Interviewers can be based in one place and directly supervised Cost per interview is low Wider geographical areas can be covered Not everyone has a phone Questionnaire must be short Non-verbal communication cannot be used Response rates are lower Hard to determine a good time to call Postal surveys are sent to a sample population (a free gift or prize draw may encourage responses). Questionnaires must be concise, short and easy to understand. Information can be correlated on return. Cheap to reach a wide range of people No interviewer training required Respondents can answer in own time Cannot influence the amount of responses Refusal rate is much higher than the other forms Cannot clarify contradictory answers Questionnaires must be very short to encourage a response Results may not be representative When deciding on which method to use the key factors are: Amount of time available Accuracy of the results required The type of people you are intending on targeting Geographical placing of the people you are targeting Each form of research has its own merits and the most appropriate method for the desired result should be chosen. Field interview The field interview is the part of market research where you ask your customers a series of questions in a uniform way. Everyone has been caught at an inconvenient time by a pushy market researcher, and this has earned field interviews a bad reputation.

3 By taking a few easy steps you can avoid annoying your customers: Be courteous Conduct interviews during 'sociable hours' If someone tells you it isn't a convenient time make an appointment to conduct the interview another time Explain the subject matter to the interviewee in a way that won't influence their answer Make the interview as short and pleasant as possible Who, what and when? Before you start interviewing decide whom you want to talk to, bearing in mind your objectives for the research. The number of people you speak to depends on the importance of the decision you are using market research to make. As a rough guide to test market potential, you would normally speak to a minimum of 500 people but more typically between 1,000-2,500. Or, to test the price of a product you would speak to at least 200 people. There are types of field interviews that are particularly useful for small businesses: Door-to-door interviews Interviews conducted in the high street or a shopping centre Salespeople conducting interviews among your regular customers Retailers asking customers questions each time they come into a shop Asking questions, recording answers Design a form that lists the questions you want to ask and include enough space for the answers. Before you start be familiar with the questions. When talking to the customer: Ask questions in the order they appear on the form Use exact wording Repeat if it's not understood Ask questions in a neutral way Use probing techniques, such as repeating questions, repeating answers and encourage the interviewee in a way that won't influence their response Write down the answers on the form as said by the interviewee. Don't paraphrase or abbreviate the answers or you could find that you bias the results. Read back the answers to make sure the interviewee agrees that's what was said When carrying out field interviews always provide a name and a contact phone number. Don't mislead your customers as to the amount of time the interview will take. And keep all the information you collect confidential.

4 Qualitative and quantitative research Qualitative research is used for finding out in-depth information about your customers or target market. The results can be difficult to analyse as they are generally based on open-ended questions; however, they can give you a good feel for how the public or your customers perceive your business. This type of market research is mostly concerned with identifying the thoughts and observations of consumers. For example, qualitative research could be used to determine public awareness or customer satisfaction. Quantitative research is used to find out customer and market information that can be expressed in numerical form. The research process needs to be carefully planned, as it will affect the way in which the data is analysed. The results are normally displayed in graphical format for easy comparison. It can be used, for example, to determine how many products were sold in London during the last five years. It could even be used to find out how satisfied customers were with the product (e.g. by using multiple choice options of very, somewhat, not at all). It could not, however, let you know customers' various opinions and perceptions of the product (e.g. 'it didn't live up to my expectations'). Outsourcing It may be cost effective for your company to hire a market research firm to design, conduct and analyse the research. Outsourcing your research requirements is especially useful when targeting an international market, as there are other issues to consider such as culture, language, comparability, local expertise and market development. Most BMRA agencies either have subsidiaries overseas or working partnerships. You may qualify for a subsidy for international research, check on Research stages The stages of both types of research can be divided into the following sections: Target customer groups: decide what aspect of your market it is that you want to investigate. Your company in general or a particular product or service? What information about your market will be useful to you? For example, the launch of a new product may prompt research of advertising effectiveness. Separate your customers into market segments. This will help to compare and contrast the data. Plan the type of data you need to research and plan a budget and timescale for the research process. Data collection techniques: there are many techniques that could be employed to gather the desired results. Some examples include:

5 Observation In-depth interviews Structured interviews Questionnaires Choose the most suitable of these, ensuring that it will produce the results you require. The main collection techniques for quantitative research are searching through existing records or conducting questionnaires. These should be constructed for the purposes of analysis. Questionnaires are beneficial as they can be issued to a large sample population, and the respondents have time to reflect upon the answers. However, there is a possibility of a low response rate, and questionnaires can limit opinions and range of answers. Scope: what is the sample size of your market? Will it be limited to the UK, or will it need to be translated into different languages and sent to different countries? Limiting the target market may be useful so that the results can be divided into groups of market type. Also consider factors such as location, cost, language, etc. The scope may be limited by your budget. For example, postal questionnaires can be costly if you send large numbers via Royal Mail. Reliability: the larger your customer sample, the more likely your results will be accurate. Maximise the style and format of data collection to improve reliability within the results and allow for some errors during the collection process. There are reliability tests that can be applied to check questions in a survey. Analysis: this may need to be performed by a professional as the diversity of results means that an unbiased, experienced third party is often needed. It is more time consuming, but often effective to display results in a chart or graph format. This will involve sorting and filtering the data via specialist software. Consider using the positive comments from customers on your promotional literature as testimonials. Long term: remember that attitudes and beliefs change. It is recommended to update results on an annual basis. Be aware of external changes, or changes within your company, as a prompt to refresh the research..

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