Once you have come up with a great idea for an offering, how will you know if people will want to buy it? If they are willing to buy it, what will they want to pay? Will they be willing to pay enough so that you can earn a profit from the product? Wouldn’t it be great if you had some sort of crystal ball that would give you the answers to these questions? After all, you don’t want to quit your day job to develop a product that’s going to be a flop.
In a sense, you do have such a crystal ball. It’s called marketing research. Marketing research is the process of collecting, analyzing, and reporting marketing information that can be used to answer questions or solve problems so as to improve a company’s bottom line. Marketing research includes a wide range of activities. (By contrast, market research is a narrower activity. It is the process of researching a specific market to determine its size and trends.)
Although marketing research isn’t foolproof, it can take some of the guesswork out of decision making. Back to your great product idea: what, for example, should you name your product? Naming a product might sound like a minor decision, but it’s not. In some cases it can be a deal breaker. Just ask the bug-spray maker Out! International, Inc. In the 1990s, Out! International came up with what it thought was a really cute name for bug spray that would appeal to children. The product was called “Hey! There’s a Monster in My Room!” The problem was that the name itself scared kids. They wanted nothing to do with it. 1
Marketing research can help you with many tasks:
- Developing product ideas and designs
- Determining if there is demand for your product so you know whether or not to produce it
- Identifying market segments for your product
- Making pricing decisions
- Evaluating packaging types
- Evaluating in-store promotions
- Measuring the satisfaction of your customers
- Measuring the satisfaction of your channel partners
- Evaluating the effectiveness of your Web site
- Testing the effectiveness of ads and their placement
- Making marketing channel decisions
Closely related to marketing research is market intelligence, which is often referred to as competitive intelligence. Whereas marketing research involves solving a specific marketing problem at a specific point in time, market intelligence involves gathering information on a regular, ongoing basis to stay in touch with what’s happening in the marketplace. For example, if you own a convenience store, part of your daily market intelligence gathering would include driving around to see what competing stores are charging for gasoline or checking to see what types of products are being sold and advertised by them.
If you’re a small business owner, and you’re talking to your customers and suppliers about new product ideas, you’re engaging in market intelligence. If you go so far as to survey your customers with a questionnaire about a new type of service you’re considering offering, you are engaging in marketing research. In big companies, marketing departments are often responsible for gathering market intelligence. But they are by no means the only group to do so. (We’ll discuss more about who in the organization does which activities in a moment.) Students also gather market intelligence when they question other students about the best professors to take classes from.