Why Do I Need Market Research Anyway?
Not too long ago Tian Yu Gao opened a toy store in the South China Mall. He was told the location he had his eye on was “prime real estate”. “This Mall will attract 70,000 shoppers a day. Your toy store will be one of the shops in our Mall that stands to make a lot of money”.
“70,000 shoppers, wow that’s a lot of people.” He thought.
So he went for it. He signed the lease, ordered all of his inventory, and opened for business.
Then he waited.
and waited some more.
One week and he hadn’t even seen a single customer, much less made a sale.
“When was the last time you sold something?” A reporter asked.
“Yesterday – I sold one toy. Once it took four or five days.”
He’s gotten used to slow days and while he’s doing his best to keep his chin up, it’s 2 p.m. and he’s yet to serve a single customer.
If his situation doesn’t change soon, he’ll be out of business.
Now you may be thinking, “Hey, Wait a minute! That’s China. I don’t live in China.”
Okay, okay, so Tian Yu Gao’s story may be an extreme example (especially if you don’t live in a ghost town), but it points to a deeper and more common problem.
Lousy market research.
It’s a problem regardless of where you live. Think back on your own experiences. How many times have you seen the always-empty restaurant nobody visits, infomercials offering products nobody buys, or businesses offering services nobody uses?
When was the last time you saw an ad from your local dentist or chiropractor that stood apart from the competition?
What about contractors? What do most of their vehicles say?
- Service Areas (e.g. commercial/industrial/residential)
How exactly are you supposed to be able to tell them apart? With nothing to differentiate them from the competition it usually comes down to…well, price.
These problems are everywhere.
Now, don’t get me wrong here. I’m not saying all of the problems in business are due to market research. What I am saying is, market research is how you find the answers you need in order to fix the problems you’re dealing with. We think that makes market research preeeetty important, but for many businesses it’s being placed on the back burner.
In Tian Yu Gao’s case, good market research would have told him that:
- The mall is practically accessible only by car or bus, making his toy store unreachable for a large percentage of the public.
- There’s no airport so he can’t count on tourists and frequent flyers to buy his products.
- There are no adjacent highways connecting the general public to the mall. That means he’s isolated. Revenues at his store and the mall will be limited at best.
Sure, with market research he would’ve learned a lot more, but at a minimum, the three points above would have raised some serious red flags against choosing that location. It would have saved him an awful lot of time and money, not to mention avoided stress.
Which brings us to you.
If you think market research isn’t something you need, or it’s a one-time, set-and-forget event in your business, you could be in the same boat as Tian Yu Gao.
How can you tell? Look for these symptoms!
- You’re forced to compete on price.
- You’re viewed by customers and prospects as a commodity.
- Customers or prospects are confused about what it is you do.
- Repeated “what makes you different?” questions
- The gimme-a-price-quote-I-can-use-as-leverage-to-get-better-deal requests.
- Atypical competition e.g. hundreds of businesses competing for the same exact customer.
These symptoms are just skimming the surface so keep following for more details. The information we’ll cover in this series will apply to four distinct categories:
Contrary to popular belief, Everyone is not your customer. Everyone will not do business with you. Fortunately, Somebody will. Once you find Somebody you’ll need to get to know them. What’s important to them? What do they need/want? What are they afraid of? What do they dislike? What are their values? How do they find what they want? What do they think of your business?
Is your Somebody willing to pay the price you have in mind? If not, why not? What are they willing to pay? What does it cost them to change? What happens if they do nothing? What’s the cost to choosing a competitor over you?
Where does your Somebody spend their time? What kind of communication does your Somebody want? Where and when do they want to be communicated with? Do they prefer in-person or impersonal communication? Self discovery or word-of-mouth? Digital vs. Off-line?
With the rise of the Internet a physical location is no longer the must-have it was once was. Convenience has become the new measuring stick. How easy is it for Somebody to find your product? How easy is it for them to get information from you? What kind of problems does your Somebody run in to when they try to buy from you?
We realize that’s a lot to take in, which is why you need to stay tuned. We’ll be going over each of these categories and how to find the information you need using free/low-cost methods.
This series will enable you to choose 2 different angles when approaching your Market Research:
- Comprehensive Market Research. Do the upfront work and complete end-to-end market research. You’ll get a complete view of where your business stands with the four categories above. This is ideal but it may not be doable for you. If it isn’t, go for…
- Focused Market Research. Spot treatments that focus on a few specific problem areas at a time. You’ll have what you need to put out fires now and build on small successes.
So what is your perspective on Market Research? Is it worth the time? Are you skeptical about Market Research solving problems in your business? Share your comments below.