To Do Market Research or Not?
Deciding whether to conduct market research to address a particular question is something that many organizations find to be extremely difficult and time-consuming. There are four key factors that should influence the decision on whether to implement a proposed research study.
1. Will the cost of doing the research exceed the value of the information? The options are to conduct the research, or go ahead and introduce a new product or service without research. The latter can be done without research costs, but is risky. The success will depend on the judgment of the people who developed the product/service and how well they know their customers.
The advantages of the no-research approach include:
- The new product or service can be introduced on a faster timetable. It would provide incremental revenues more quickly than would the case with a delayed entry. Quicker entry protects the ideas from being copied or preempted by an industry competitor.
- The ultimate volume and profit potential of the new product or service will be available much sooner, since actual sales are immediately obtained.
- Information on consumer acceptance of the new product or service will be more accurate than information that comes from any research option.
The advantages of the research approach are:
- A company can test all the different elements of the new service package, with target consumers in order to identify its strengths and weaknesses and the areas of confusion. As a result the company will be able to modify the elements of the new service or product to minimize its weak points and emphasize the strengths.
- A company can go into the market with a stronger overall program than if no research had been conducted.
2. Is there enough time to do the research? Time can be important in situations like these:
- The product is seasonal, e.g., swimwear, lawn-care products, winter sports, etc.
- The product is a fad product with a very short life cycle.
- The product can easily be copied by a competitor and only the first to market will be successful.
3. Is research capable of providing the information that is needed? The three factors here are:
- Are the participants in the research capable of answering the questions desired of them, in such a way that will provide reliable results? For example, participants with very little experience with a certain technology are not likely to give useful results.
- Are the consumers willing to provide the desired information? People don’t like to provide information about their income, toilet habits, sexual behaviour, religious behaviour, etc.
- Will people do as they say they will? It is very easy to say that if such a product were available, the respondent would buy it. However, experience has shown that in many cases the actual purchases and/or use of products are lower than estimated by market research.
4. Will the results of the research be believed and acted upon? Many companies use research for the purpose of confirming their previously held beliefs, and if the results do not agree with them, the research is discarded. One way around this problem is to get the organization’s acceptance to the data gathering instruments and a commitment to accept the results prior to the research.