Researching your Market

What is marketing research?       Why do it?         How to do it.

Trash and Peanuts  

Some marketing research material is nothing but trash. Marketing research can be done for peanuts -- even with peanuts. Shocking statements? Perhaps, but both of them are literally true. 

Take trash, for instance. Inspection of outgoing waste is a practice at many small restaurants. People may order the Flounder a la Marzipan because of the novelty of the dish; but if a restaurateur finds most of it leaving the table uneaten, it had better come off the menu because it won't be in demand much longer. 

You can use trash positively, too, to find out what people like. It may not be very dignified to check trash cans for cartons and containers, but they are a direct indication of what consumers are buying. You could also find out what competitors are selling (or at least ordering) by checking their trash. 

The point here isn't to turn you into a scavenger, but to suggest that marketing research isn't necessarily only done by sophisticated staffs of statistical technicians working with powerful computers and grinding up figures from elegant surveys. Marketing research doesn't have to be fancy and expensive. 

It can be done with peanuts, as one creative discount merchandiser discovered. During a three-day promotion the merchant offered customers . . . all the roasted peanuts you can eat while shopping in our store. By the end of the promotion the merchant had litter trails that provided information on the traffic pattern in the store. Trampled peanut hulls littered the most heavily traveled store aisles and heaped up in front of merchandise displays of special interest to customers. By studying the trails, the merchant learned where customers went in the store and what they wanted.

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WHAT IS MARKETING RESEARCH? 

Basically, marketing research is just what the merchant did with the peanuts. Find out what catches customers' attention by observing their actions and drawing conclusions from what you see. To put it more formally, in the words of the American Marketing Association, marketing research is the systematic gathering, recording, and analyzing of data about problems relating to the marketing of goods and services.  

Marketing research is an organized way of finding objective answers to questions every business must answer to succeed. Every small business owner-manager must ask 

   *  Who are my customers and potential customers? 

   *  What kind of people are they? 

   *  Where do they live? 

   *  Can and will they buy? 

   *  Am I offering the kinds of goods or services they want --  at the best place, at the best      time and in the right amounts? 

   *  Are my prices consistent with what buyers view as the product's value? 

   *  Are my promotional programs working? 

   *  What do customers think of my business? 

   *  How does my business compare with my competitors? 

Marketing research is not a perfect science; it deals with people and their constantly changing likes, dislikes and behaviors, which can be affected by hundreds of influences, many of which cannot be identified. Marketing research does, however, try to learn about markets scientifically: to gather facts and opinions

in an orderly, objective way; to find out how things are, not how you think they are or would like them to be; to find out what people want to buy, not just what you want to sell them. 

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WHY DO IT?

It's tough -- impossible -- to sell people what they don't want. Remember the New Coke problem?) That's pretty obvious. Just as obvious is the fact that nothing could be simpler than selling people what they do want. Big business does marketing research to find out what consumers want. Small business needs market research too. 

For once, small business holds an edge. The giants hire experts to define the mass market in which they sell. Owner-managers of a small business are close to their customers; they can learn much more quickly about customers' likes and dislikes and buying habits. 

Small business owners often have a feel for their customers -- their markets -- that comes from years of experience. But experience can be a two-edged sword, as it includes a tremendous mass of information acquired at random over a number of years, information that may no longer be timely or relevant to making selling decisions. In addition, some facts may be vague, misleading impressions or folk tales of the everybody knows that variety.

Marketing research focuses and organizes marketing information. It ensures that such information is timely. It provides what you need to:

   *  Reduce business risks. 

   *  Spot problems and potential problems in your current market. 

   *  Identify and profit from sales opportunities. 

   *  Get basic facts about your market to help you make better decisions and set up plans of action. 

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HOW TO DO IT 

You probably do some market research every day, without being aware of it, in the course of your routine management activities. You check returned items to see if there's some pattern. You run into one of your old customers and ask her why she hasn't been in lately. You look at a competitor's ad to see what that store is charging for the same products you're selling. 

Marketing research simply makes this process more orderly. It provides a framework that lets you objectively judge the meaning of the information you gather about your market. The flowchart shows the steps in the marketing research process.   

                    Market Research: The Process

Define the problem (or opportunity).   Assess available information. Gather additional information, if required. 

         1.  Review internal records and files; interview employees. 

         2.  Collect outside data (secondary and primary). 

Organize and interpret data.   Make a decision and take action.   Assess the results of the action. 

What You Can Do 

Marketing research is limited only by your imagination. Much of it you can do with very little cost except your time and mental effort. Here are a few examples of techniques small business owner-managers have used to gather information about their customers. 

Discover Your Local Library 

Large companies generally have a wealth of data available on many business problems. Smaller companies often ignore such data because they are unaware of its existence, although it may be as close as next door. 

The local public, trade school, college or university library is a prime source of inexpensive, targeted information about business topics such as competition, the law, government, society, culture, economics and technology. 

Although the resources of public libraries vary widely, the library's four walls and the size of its collection do not limit its service. New information technologies have changed libraries dramatically. Moreover, many academic libraries are open to the public. 

A typical library includes reference and general books, periodicals and possibly one or more specialized collections. Several tools and services help one find material. 

The first is the card catalog, either in a system of individual cards or in a computer. The systems list books by author, title and subject, periodicals by title and subject. Call numbers indicate the item's location. 

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Indexes help find information in leading magazines, journals or newspapers. Among these are the Business Index, the Business Periodical Index, the Public Affairs Information Service Bulletins (PAS), the Statistical Reference Index, the Wall Street Journal Index, NewsBank, the American Statistics Index and the Index to U.S. Government Periodicals. 

These indexes list articles according to subject headings; they supply the title and author as well as the publication title, date and page number. Indexes are available in several formats including printed versions, optical disks, film, CD-ROMS (compact disk read-only memory) and on-line data bases. 

General information and statistical data can be found under various subject headings, such as small business marketing, marketing to Hispanics, marketing to young adults, household income of the elderly and export marketing. 

Information about industries and individual companies can also be found under Standard Industrial Classification (SIC) headings. SIC is a uniform coding system developed by the federal government to classify establishments according to economic activity. Codes for specific industries are listed in the Standard Industrial Classification Manual. Four-digit codes define specific industries such as SIC 2653, corrugated and solid fiber box manufacturers, or SIC 5812, eating establishments. Most federal government economic data and many business and industrial directories use SIC codes. 

If a local library's collection does not contain the material you need, an interlibrary loan may be available. Most libraries are linked with other libraries, which permits patrons to borrow books and get photocopies of articles. At larger libraries, a computerized telephone hookup to distant data bases can provide a wealth of information in minutes. 

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License Plate Analysis 

In many states license plates provide information about where the car's owner lives. You can generally get information from state agencies on how to extract this information from license numbers. By taking down the numbers of cars parked in your location you can estimate your trading area. Knowing where your customers live

can help you aim your advertising for good effect. Or you might analyze your competitors' customers and direct your advertising to try to win them for your business. 

Telephone Number Analysis 

Like license numbers, telephone numbers can tell you the areas in which people live. You can get customers' telephone numbers on sales slips, from checks and credit slips and the like. 

Coded Coupons and Tell Them Joe Sent You Broadcast Ads 

You can check the relative effectiveness of your advertising media by coding coupons and by including phrases in your broadcast ads that customers must use to get a discount on a sale item. This technique may reveal what areas your customers are drawn from. Where they read or heard about the discount offered in your ads will also give you information about their tastes. 

People Watching 

You can learn a great deal about your customers just by looking at them. How are they dressed? How old do they appear to be? Are they married? Do they have children with them? Most owner-managers get a feel for their clientele in just this way. Run a tally sheet for a week that keeps track of what you're able to tell about your customers from simple outward clues. It might confirm what you've assumed, or there might be surprises. 

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Customer Comment Cards 

Give cards to your customers that solicit their opinions about your business. Ask customers to drop the cards off before they leave or mail them to you. Analysis of this information can help you spot potential problems and identify opportunities to increase customer satisfaction. 

Do, Don't Overdo 

The key to effective marketing research is neither technique nor data -- it's useful information. That information must be timely; your customers' likes and dislikes shift constantly. You'll never know everything about a particular problem anyway. It's much better to get there on time with a little than too late with a lot. If you spend too much time gathering too much data, going for a sure thing, you may find your marketing research is nothing but trash.

Contributors to research and text J. Ford Laumer Jr., James R. Harris, Hugh J. Guffey Jr., Vaughan C. Judd  Associate Professors of Marketing Auburn University Auburn, Alabama Robert C. Erffmeyer,  Ph.D.Assistant Professor of Marketing Western Kentucky University Bowling Green, Kentucky.

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 Researching Your Market

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