This post is prompted by the question "How does one gauge factual potential of an idea without paying big bucks to a market research firm?" raised on Twitter by @stallionCEO to @start24x7.
Companies and brands need to continuously understand the market, customer needs, get feedback to their products, etc. The standard way of doing this is to do market research. Unfortunately, market research usually costs a pretty penny and many, particularly startups being hard pressed, are unable to commission market surveys.
Does the high costs of market research mean that startups and other not so well off companies have to do without the luxury of market and customer insight and work as if blindfolded?
No. Not at all.
There are many market research techniques that are not costly. And then there are alternatives to the costly part of market research.
Do you really need fresh research?
Are you sure that you need fresh research to find your answers? It is highly possible that some one else has researched the same question before and the answers may even be public in places like Slideshare. A simple Google search could lead you to mines of information. Websites like World Bank, Reserve Bank of India, OECD, UNDP, Energy Information Administration and so on are mines of data that you would otherwise pay a consultant for - and chances are that the consultant would go to the same sources anyway -
With enough secondary data you may be able to do away completely with the intended market research or even cut down its scope and hence the costs dramatically.
If you do decide to go ahead with the research, you need to break it down into its key cost elements. Lets look at the key elements of cost in market research.
Depending on the research agency concerned and the sample size this may in fact be the biggest of all costs in a market research. Most agencies outsource this work to specialized field agencies and just add an a "management fee" on top of their bill.
Can you do with a smaller sample?
The sample size required for a market research is determined by the total population, the confidence level and the confidence interval you require. As the population size increases, the sample size tends to stay constant and there is no point in having huge sample sizes unless you want to delve deep into the results. Confidence levels are usually 90% 95 % or 99% and confidence intervals are normally around + or - 5%. Reducing the confidence levels from 99 % to 95 % almost halves the sample size you need! Similarly increasing the margin of error also dramatically reduces sample size and costs.
You can play with the numbers here and possibly settle for lower confidence intervals and higher margins of error to keep research costs down.
Can you collect responses online?
Field agencies charge huge fees per interview ( starting from Rs 50 per contact and up to Rs 500 or more depending on the type and accessibility of the respondent. Can you do your survey online and reduce these costs?
There are any number of hosted survey software like SurveyMonkey that you can use to run a survey online. Even if a small part of your survey is done online, there is that much reduction in costs.
Where to get online respondents from?
This is a fairly obvious question and the answers are also equally obvious, if you look around.
A good starting point is your customer and contacts database. Pull out all the email contacts and visiting cards you have accumulated. See how many of them qualify.
Leverage your social networks including Linkedin Groups and Ryze and Twitter and Facebook to get respondents.
Advertise with Google Adwords to draw prospective subjects to your survey, You can target your Adwords campaign to respondents with the required demographics.
Offering a reward like a lucky dip prize is a sure way to increase your response levels dramatically.
Use college students
If you still need to get the data from face to face contacts, a group of smart college students can get it done for you at a fraction of the cost that a field agency would charge. Here you need to ensure that they are not filling the response sheets sitting at the corner coffee shop!
Do you need a sample at all?
This is a good question to ask before you set out to do a sample based market research. Do you really need a sample survey? The Delphi method, pioneered by the Rand Corporation is an accepted market research method. Simply put, the Delphi method is nothing but asking a group of experts for the answer and making them arrive at a consensus by presenting back to them the anonymous summary of the answers.
You can automate the Delphi process here.
You could get experts for a Delphi session from the same sources listed above, including your various social networks.
By going the Delphi way, you could reduce your market research costs dramatically if not eliminate them altogether .
Once the sampling is done and the data has been verified, input and cleaned comes the analysis. Most MR agencies outsource this task also. we will come to that in a minute.
Data analysis typically comes in two flavors. 99% of all data analysis is nothing but cross tabs in Excel (or OpenOffice for that matter). The remaining 1% is done in software like SPSS.
Cross tabs are fairly simple to do if you have access to the source data (like from your online survey). For the SPSS work, you can approach the same people who do the work for the research agencies.
The report and the presentation
Do you need a detailed report? Some thing that puts in words what the cross tabs say, and that too in colour printed at twenty rupees a page? Ask the agency to be kind to the environment and do away with all the paper and also reduce the costs in the bargain.
Do you need some one from the research agency to fly down to your city at your expense to read it out to you? Can't you do that over a phone call if not over chat or Skype? I know market researchers are not that technology savvy, but...
Do you need an agency?
Finally, if you can do all this, do you really need that costly agency to do the market research for you? Can't you do atleast the basic stuff yourselves?
written by Alex Jones, March 03, 2011
written by Market Research Reports, November 07, 2009
written by CHINTA SWAMY PRAKASH RAO, November 03, 2009
written by Market Engineering, October 30, 2009
written by Mrutyunjay, August 11, 2009