Monday, July 21, 2008

How to conduct market research

Young Inventors has asked experts for their advice for innovators and first-time student entrepreneurs. Scott Gingold of Powerfeedback offers his tips for conducting market research:

You have a brilliant idea for a new product or service. All it takes is funding and you can produce this product, it will sell and then you are off to Tahiti with your fortune!

In many cases, the result is not so positive. For example, consider the case of the NeXT Computer introduced in 1988 by Steve Jobs. The machine was a marvel in offering the first CD-ROM drive and multimedia capabilities. However, it could not run standard applications, as a result, software vendors hesitated to rewrite their code for the NeXT machine. The unfortunate outcome was the demise of this machine.

What can we learn from this case? Technical wizardry is not enough to ensure success of an innovation. Buyers have their distinct evaluative criteria. Your new product will succeed, or not, according to how it fares when evaluated by potential buyers. As the NeXT machine lacked useful applications, buyers passed on it and purchased Windows based machines to run Excel, Word, etc. The awesome technology of the NeXT machine was not enough to compensate for the aforementioned deficiency.

The Role of Marketing Research

Marketing research is not a substitute for creativity, technical training or inspiration. What marketing research offers is a set of techniques which, when properly used, can supply information about the industry, competitors and consumers. This information is an aid to effective decision making and acts as a means to reduce the risk involved in developing and marketing new products.

Marketing Research Methods Useful for the Aspiring Entrepreneur

There are hundreds of marketing research techniques which range from focus groups to sophisticated multivariate statistical methods. The objective of this piece is to offer suggestions for cost effective research which can be performed by a non-specialist and yield information for sound decision making.

Here are two sources for data, which has already been collected (Secondary data):
Trade associations collect data and conduct studies to serve the interests of their members. Much of this information is available at no cost to nonmembers. In addition, the staff members of these organizations can offer guidance about other resources such as industry experts and trade publications. Several years ago, a client had developed an improved design for the common warehouse pallet. His design was a higher priced alternative to wooden pallets. How could he determine the size of his market? He turned to a trade association of pallet manufacturers for detailed data to answer his question.

Another source to consider is the U.S. Census Bureau. On their site it is possible to access information on the demographics (age, sex, race, income, etc.) of the U.S. population. A basic and critical issue for creators of new toys is how many children of a specific age range or gender who live in the U.S. The Census Bureau data can be used as a means of estimating total market size.

Lessons Learned

Always start your marketing research efforts with a thorough search for secondary data. Initially, try using major search engines such as Google and Dogpile. It is well worth it to make an appointment with the Business Librarian at a good local college library. Librarians are experts in ferreting out relevant sources which can be invaluable. However, they need your input regarding the nature of your product and the major issues you face.

Good luck!

Scott Gingold is a pioneer in the realm of online research, and stands as a noted business-consulting expert. His company, Powerfeedback, offers full-service market research services including qualitative and quantitative capabilities. In addition to market research, Scott Gingold regularly provides his consulting acumen to companies of all sizes throughout the Country. Prior to forming his own company, he spent 20+ years in the highly competitive transportation industry holding senior management positions and specialized in turning red ink into black ink. Visit Scott's Tumblr site.

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