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(b) Researching

Market research

Market research is the gathering and analysis of information about customers or markets. It is often considered a very important component of business strategy. Market research aims to discover what people want or need. It can also identify how they act - or might act. The use or mining of all the data held by businesses today may be thought of as market research as it is proof of customers' preferences - but this should be recognized as customers past preferences. This may point to a weakness in all the analytics - you are analysing the past.

Market research is a key tool, particularly for businesses start-ups, in providing important information which can be used to identify and analyse the market size, market needs and competition. It is possibly a factor that can contribute to 'competitive advantage'.

Market research includes social (demographic etc) and opinion research. It is the systematic gathering and interpretation of information about individuals or organizations and uses statistical and analytical methods and techniques.

It can be used not only to identify how to market a product but also how to actually design the product - the concept of 'design to cost'. In very simple terms, the design starts with the fact that your product cannot cost more than x to make and you have to design within that limit.

There are two major types of market research:

- Primary research, subdivided into quantitative and qualitative research. Primary research consists in research to collect original primary data - but is it original? You could do your own primary research, and this is often what successful starts-ups do.

- Secondary research (also known as desk research) involves summarizing, collating and analysing existing research and data.

Own research

This is what the majority of businesses large and small do - and presumably in a satisfactory manner, as businesses continue to operate and grow. Own forecasting can use any of the methods suggested in this chapter, but a key issue for success is that the forecasters really understand their:

- business;

- economy;

- markets;

- customers;

- marketing 'strategy'.

An obvious list. I have used the possessive to make the point that particularly for the smaller business, successful owners know their patch, as it were. This may be something that is overlooked for new entrants: do they have the necessary local knowledge? Proof of lack of research and knowing your patch can be found time and time again in UK companies that believe they can simply 'open up' in the United States or China, for example. I really do wonder if the executives who blindly enter these markets have ever visited the countries and got to know the cultural and business conditions; maybe for the United States they have visited Disney Land!

Worked example: forecast for a pilot cafe/restaurant outlet

A company in the hospitality sector has plans to open a pilot cafe/restaurant near the entrances to conference centres worldwide. On discussing the plan in a very preliminary manner, a number of issues were mentioned:

A The initial property in the United Kingdom is ideally situated, opposite the entrance - guaranteed footfall. But do guests not wish to get away from the venue - back to their hotels or just home? Will behaviour be the same in other countries?

B The outlet is to be a French-themed cafe/restaurant as there are no other such outlets in the locale. But is it to be a cafe or a restaurant? Will 'French' be attractive to the potential customers?

These were just the first issues. Could research help? Yes.

There are similar conference centres around the world -you could find out what sort of restaurants are nearby and how successful they are and for what reasons. The first question that should be answered is: does a conference centre generate any business for a restaurant and, if so, how much? If so, what are the forecasts of events at the conference centre? This could be a real leading indicator.

The distinction of cafe versus restaurant is very important and does tie in with what conference-centre visitors demand. It could be light (cafe) meals midday, then restaurant meals in the evening.

This may seem all too obvious to executives, but time and time again I come across examples of where some basic research and certainly web research would show some ideas to be non-starters or often indicate opportunities.

The point of this section is that 'own research' is invaluable. Own research can be improved by:

1 taking time out;

2 using everyone's brains - brainstorming;

3 logically ranking the issues - eg for the example above, the number one issue is whether the existence of a conference centre really guarantees business;

4 using appropriate research methods if needed;

5 guaranteeing as many elements as you can;

6 speaking to your clever accountant!

Surveys

This may well be an area where outside specialist help should be enlisted, as surveys have to be carefully planned and executed. It appears easy to ask a few (relevant) questions, get the answers and draw conclusions. It is well known in opinion polling that the design of the questions(s) can very much affect the outcome - you can get the answer you want!

 
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