Starting a new business or expanding a new product line requires taking risks and is a necessary component for success. With limited resources and an exceptionally competitive market, entrepreneurs know risk needs to be aptly calculated. Employing market research helps you sort out the risks involved.
The benefits of market research for any business range from finding hidden niches and preserving capital to building customer loyalty and identifying more business opportunities with existing customers.
But, before you take the plunge, understanding the customer by way of market research, it’s important to know the common pitfalls encountered by in this path. Avoid these 12 common mistakes to gain better insights and success.
1. Failing to do any market research: Do you really know who your customer is or what they want? Do you know what the potential market is for the product/service you are about to launch? Before taking your business to the next level, do your research and avoid the pain of barking up the wrong tree.
2. Poor Sampling: This is the most important mistake to avoid. If you ask the wrong people to answer your questions, your whole analysis can be flawed. Always be sure to define your sample at the start. Write out who you want to talk to and why. Define the rules which will, in turn, define who is included in the audience. Then decide whether your audience should be divided into sub-groups that may require further analysis or cross-comparison.
3. Be clear about the quality that you want from your sample: This is increasingly important as the rise of access panels has meant that it is often not questioned whether they have professional respondents. This applies to both qualitative & quantitative research, as well as specialist recruitment.
4. Ambiguous questions: Asking flawed questions that produce flawed results. Market research is essentially the study of people and what motivates them. If the scripting of your survey is flawed to start with, then you’ll never get the feedback that will help you make strategic decisions. It’s worth investing in expert advice at the very start of your study.
5. Conducting research that is broad but shallow: Avoid asking questions that deviate from the core objectives of the project. If you feel that some of the off-topic questions are relevant for the company, then ensure that they deserve a separate search.
6. Think its costly: The challenge small business owners face is to afford the costs of conducting market research. Marketing research costs can range from a few thousand dollars to upwards of $25,000 annually. Although it’s a learning curve for them, a solid market research professional is invaluable. Spend the time to learn what you don’t know and need to know.
7. Big company attitude: Assuming that you know the industry and the customers. You carry plenty of baggage and preconceived notions of customers’ needs and wants. Test your assumptions on the market for real insight on customer attitudes and behaviour. All too often business owners will downplay the importance of gaining customer insight by market research.
8. Not getting information from a reputable source: Buying market research reports cheaply or buying twice. Or at worst, blow your whole budget on useless data. Work with a company that has established connections with trusted information sources.
9. Relying on family focus groups: Don’t rely solely on the feedback of family and friends for an objective view when it comes to a business-critical decision. Use a broad cross-section of respondents that aren’t just going to tell you what you want to hear.
10. Having a poor choice of reference materials: Researching new product ideas, concepts, packaging or advertising campaigns? Then think about what, and how you are going to show these to your audience in order to evaluate them and obtain the best market feedback and real insights.
11. Interpreting statistics wrongly and failing to see when one or two opinions distort the overall picture: Ensure you have the appropriate skill set to look at raw data and ensure that any outliers are removed before the analysis phase so as not to give false results.
12. Analysing information too optimistically and then kidding yourself that it supports your preconception: No matter how much you hope something to be true, the evidence will speak for itself. Using an external market research agency provides an unbiased view on interpretation of the results.
– Shantha Kumari,
Sr. Technical Writer,