Increasing productivity and performance to grow your business doesn’t just happen, and it certainly doesn’t happen overnight. Market research and benchmarking will be vital tools to capitalise on opportunities and adopt best practice techniques.
Long gone is the industrial age when companies had little concept of, or interest in, market or consumer preferences. Today, in what IBISWorld chairman Phil Ruthven refers to as the ‘infotronics’ age—driven by information and electronics—companies are forward planning from the outside–in, rather than the inside–out, giving rise to the need to engage in market research on an economic, industry, and consumer level.
Market intelligence—the result of the research—is now crucial to run a successful, innovative, forward-thinking business in the new age.
This year, Australian business will spend about $900 million on market research, says Ruthven, and this will grow steadily over the next five years.
Nicole Donegan, co-director of market research firm StrategyCo, says there are two main reasons why businesses need to do market research. “It could be because they’re thinking of implementing a new product or service, and before they make an investment in that new product or service they’ll determine if there is a need or market for it. Or, they could be looking to improve their business. We do a lot of work with business-to-business clients and we get them to rate the service they’re getting and identify where improvements can be made.”
Market research can then be specifically targeted at one or a number of environments depending on the objectives, such as the industry or sector, the supply chain, customers, government, and the economy. Accessing the information required will then come under two key types of research: qualitative and quantitative.
Qualitative research involves gauging the opinion of customers, for example, and is often conducted via face-to-face or phone interviews, group discussion panels, and so on. “It is an intense form of inquiry, which is based on obtaining an in-depth understanding and a thorough examination of key areas among key target groups,” explains Donegan.
Quantitative research is more about measuring the size or growth of a market or how much market share a particular product or company has. Quantitative research should consist of a large number of respondents from the target group being asked to complete a survey, for example. “This stage is essentially seeking to verify and explore key findings/concepts and themes determined in the qualitative phase. It is the stage that provides the statistical validation for theories and findings,” Donegan adds.
Information Sources
Market research doesn’t have to break your budget. In many ways, with so much information available these days via electronic means, research can be conducted by the business owner or manager. However, ensuring that you obtain the most accurate and insightful information is crucial to reaching your goals for doing it in the first place.
Ruthven breaks down the following types of external information sources available:
* industry associations
* meetings/conferences/workshops
* technical information from the likes of analysts and testing authorities
* management consultants
* market research (qualitative and quantitative methods)
To avoid going into information overload, it’s important that business owners have clear objectives for doing the research, and ensure that their information sources are accurate and will deliver the outcomes (results) required.
This is where Donegan believes professional market research firms can be most valuable. “We always say there’s two choices: they can do it themselves and the benefit is there’s a lower cost. The advantages of outsourcing, however, are that people tend to be more open and honest if they know they’re [reporting] to a third party. When we do it, we always say the results will be anonymous.
“The advantages are also in the way the questions are structured and our ability to decipher the results and present them. If they have a researcher in-house with experience, they can do it but sometimes the honesty and openness is impaired if they do it that way.”
The business owner can then be as little or as much involved in the research process as they want to be, she adds. “It depends on how they want to handle it. We’ll talk to them from the outset and say, ‘what do you want to achieve out of it?’ That’s the key thing—why are you doing this? Is it to improve business, to change the way partners behave, is it to introduce new products? If we know that at the outset we’ll work out how to structure [the research], we’ll work out the project plan with them, what we need to do and what we need from them, and how involved they want to be. Then we’ll implement it.”
It’s important, then, to find a market research firm that is able work with your needs and objectives. Some may specialise in certain industries or sectors, some may focus on consumer research, and all will use varying research methods. “Talk to a few different people and make sure you’re talking to someone senior in the organisation,” advises Donegan. “Make sure the research company understands your business because it’s really important for them to be able to understand what you want to get out of it.
“We get a lot of our work through recommendation, so network and ask colleagues who they’ve used. Get a few quotes and make sure you like the person you’re dealing with.”
Whether you conduct the research yourself or use the help of a service provider, actually turning the results of the research into effective outcomes is most crucial. “It is a very important step in the process, and that’s where you do need very clever strategists inside a company or employed to help you do that,” says Ruthven.
“We find that’s where a lot of clients get stuck, they get the results and then say, well now what do we do?” admits Donegan. “Clients need to understand how to use the results to get benefit for their business. We recommend they set goals for what they want to achieve so they can look back and measure their ROI. There’s no point doing the research and putting the report in the drawer. It also helps to do some comparative research so you might need to do it again in 12 months or two years to see how your performance has changed. If you’ve implemented changes, have they worked?”
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