Market research! Isn’t this the most commonly used term of the decade?
Reports say that even the biggest of unicorns have gone wrong with their market research. One such example is Coco-Cola.
It was 2004. Coca-Cola identified an opportunity for a new product which was supposedly their biggest launch since Diet Coke. Their target was 20 to 40-year-old men who liked the taste of Coke sans its calories and carbs (but not a fan of the bland taste or female-drink image of Diet Coke).
C2 was their new product targeting this demography. Essentially half regular Coke and half diet coke, C2 was hardly anyone’s favorite. Also, it was a massive sales disaster.
So what went wrong?
C2 found itself in an unpleasant situation at a time when the US market was ripe for a zero calorie drink which tasted good. Men wanted full flavor with no calories, not half the calories. C2 missed the spot!
Coca-Cola had allocated a huge $50 million marketing budget. C2 had a lot of marketing information pertaining to male drinking and diet preferences, and yet it bombed. How you ask! By a Market research that was skewed by irrelevant information.
Coca-Cola missed out a very important part in the entire market research process, which is asking the right questions to the right audience. This lack of proper research resulted in a product that did not meet the business expectations, caused an expenditure of $50 million dollars and even more valuable time. Worldwide, sales by volume get only by 2% which suggested that C2 had cannibalized the sales of Coke and Diet Coke.
Why is Market Research Important?
The importance of market research is never underestimated by a business. You are aware of the fact that the success of the business depends on the depth of understanding you have regarding the foundation of your industry which includes your customers, the domain, and competitors.
Market research can be a bit intimidating for a new business owner, but that is actually where you reap gold! We’ve listed out six factors where an effective research can help your business.
1) Focuses on Customer’s Point of View
Market research provides you with the ability to identify your exact customer, their requirements, and expectations. This is done by collecting and analyzing data about the product, service, and market. You help your business to set up a new channel of communication with the customers via research and feedback surveys. The data collected would help you to understand the exact customer needs so that you can customize your business and provide more value.
So how to start collecting customer feedback today?
The first step to start collecting customers feedback would be to create a contact list with all available contact details, use case and data of their existing products and services. Create a short and crisp survey asking for feedback on your company. The user data can be added to your survey and further used for analysis. One effective channel to directly collect feedback from a customer is the website. You can have a survey embedded in the website to measure the overall feedback from your customer.
2) Understand Your Competitors
It is extremely important to be familiar with the products and services offered by your competitors, as you can focus on your business and ensure it stands out. A proper market research would help to benchmark yourself against the competition in terms of strategy and pricing and ensure you have a leading advantage.
After the data collection, analyze it closely to explore any avenue that none of the competitors is exploring. This could be anyone amongst:
- a product or service not currently offered by your competitors
- a group of customers not currently catered for by your competitors
- an aspect of your business that makes it stand out from the competition.
Once you are able to identify the unique proposition with the data to back it, you may have to figure out the most effective way of communicating it to your customers. A few of the most effective ways are:
- A creative marketing campaign.
- An advertisement that is memorable and attractive.
- An effective slogan.
Focusing on a unique selling proposition is extremely vital, as it would represent your product or service before a competitor’s.
3) Test-ground for Success
Need help judging whether a new product or service will connect with your customer? You can carry out business experiments by putting in marketing variations in front of the customer. It is a common practice used to validate a large number of ideas in the field.
Test marketing is also an inexpensive way of reducing risk by testing marketing strategies before you can scale them. The following are common examples.
- Products & Services: Selling products and services as a trial before a full product launch. For example, a Pizzeria that offers 20 different toppings in two locations each to decide which to launch on a nationwide scale.
- Customer Service: Customer service that starts as a pilot. For example, a salon that introduces a policy for no tips and replaces it with an incentive program for employees to earn bonuses when customers are satisfied.
- Customer Experience: Customer experience testing such as a car service center that experiments with a WiFi lounge for owners to relax or work while the car is being fixed.
- Pricing: Launching a service such as an internet service provider with a flat pricing structure in one city to measure the impact on demand.
- Promotion: Promotional experiments would have a brand to test variations of an advertisement to connect with the audience. An example would be a soft drink brand in India, Paper Boat which uses nostalgia as the key element in their commercials.
- Branding: Brand related research like redesigning the logo or the theme of a particular brand.
An effective market research helps you with concepts and prototypes before you plan the full-scale implementation. Statistics can help you to decide the appropriate and concepts and ideas that your audience would love. Market research would ensure you save time and resources which is vital for a business to succeed If you need a bigger, broader and well-profiled sample, you can get that through SurveySparrow panel.
4) It Ensures Your Relevancy
To remain successful, a business needs to have a forecast, according to which they need to anticipate and react for sustainability and growth.
A classic example of a failure would be Nokia, a Finnish mobile manufacturing company. It was known as a global leader in cell phones and a company transforming feature-rich phones into fashionable accessories. Nokia’s failure can be attributed to a combination of 3 factors:
- Acquiring Symbian: This heavy investment in acquiring Symbian led to the obsolete platform, being tied to Nokia. Considering the investments made, they had no alternative options apart from implementing it in their phones. However, as luck would have it, the original iPhone released in 2007 highlighted many of the shortcomings of Nokia’s OS.
- Emerging alternatives: Both Apple and Google were focusing more to create a developer community which would encourage faster adoption by masses. The result was an enormous amount of apps being created for these platforms which could be monetized.
- Failed to strategize: Nokia was struggling to react to these sudden market changes. They started a new platform called the Maemo to fight the Apple and Google ecosystem. A new marketplace was being created called the Ovi Store. But it was a little too late. App store and Google Play already had gathered millions of apps to cater to most needs of people. Nokia was slow in execution too. Nokia N900 was a step ahead, but it was slow and not as polished as iPhone had come to be.
The quickest way to stay relevant is to run a tracking survey. A simple, recurring survey where you can see the trend of the data segmented by time.
5) Double Check if You have a Doubt. Accuracy Rules
Market research helps businesses with limited resources to reduce their financial risks. This means the firm should be really accurate with their data. There is a plethora of new solutions and algorithms available to market researchers which promises instant answers and solution. However, the accuracy of these solutions would be in question when not accompanied by marketing research that is grounded in social and behavioral science.
An organization may have to look beyond those inexpensive software solutions to get the accurate data to make the best decisions for their company. To boost your marketing research, ensure you incorporate the relevant methods in your annual business plan.
6) Expand Your Business
Market research is the best stepping stone for business owners who are looking to expand and scale up. Research benefits by showcasing the relevance of the product, launch, and development. Few key factors that could help to expand your business are:
- Analysing current and future markets.
- Strategize campaigns.
- Identify scope for improvement.
- Keep track of trends and future markets
- Ensure targets are realistic.
- Optimize results with the help of data collected.
Market research plays a key role in predicting the evolution of the market, which in turn helps for a successful business expansion and growth.
Understanding your target market is an extremely crucial step for an effective market research, to ensure that you ask the right questions to the right people. Questions that not only identify what people like but also what they dislike.
Coca-Cola learned their lesson after all. A year later Coca-Cola launched Coke Zero, a no-calorie, full-flavor product. Needless to say, Coke Zero was an instant success!