Some small business owners think of market research as a luxury for large companies with deep pockets, not as a tool they themselves might use.
That perception isn’t accurate, says Amy Merrill, president of Data for Decisions in Marketing in Fairlawn, a full-service market research concern whose clients include car dealerships, real estate agents and insurance brokers, as well as corporate giants such American Greetings and the Sherwin-Williams Co. Small businesses can reap the same benefits from consumer surveys as multinational corporations, and at a cost that’s more affordable than their proprietors may imagine.
“The value far outweighs the cost,” she says. “You’re moving forward with a strategic operating plan instead of seat-of-the-pants management. It saves money in the long run.”
According to Merrill, companies conduct market research to validate theories about the marketplace and to build confidence among their investors. The best time to conduct market research is before the implementation of a product, program or plan.
Businesses that skip doing their homework are often forced to return to the drawing board. Merrill remembers the client who invested heavily in an advertising campaign that didn’t produce the projected sales. A subsequent test conducted with consumers revealed it contained the wrong message.
“At that point, it was kind of like bailing the ship out with a spoon,” she says. “The money had been spent.”
In contrast, an area builder avoided a similar situation by conducting market research before using a material not traditionally used for construction in its product. When results indicated that consumers thought of the material as “weak and flimsy,” the business embarked on an ad campaign addressing their misconceptions.
Merrill says the tab for a survey conducted by her company is generally based on the incidence of qualified respondents and the length of the interview with them. The cost of conducting and analyzing a single 10-minute telephone interview with a consumer is about $20; business-to-business interviews are $25 to $30 apiece.
The price of conducting a 12-person focus group runs between $5,000 and $6,000. The focus group is used to elaborate on open-ended concepts — for example, a company is considering the expansion of a product line and wants to find out what the public believes are the benefits of such a move.
Merrill says some small businesses begin their foray into market research with a mystery shopping program, in which the customer base is replicated and a report written on the services received.
“Web surveys are fast becoming the methodology of choice, especially for business-to-business interviews,” she says.
Those who provide the all-important list of e-mail addresses can commission surveys that are completed quickly and at about half the price of a telephone survey. Purchasing a list of e-mail addresses for a broad-based survey, on the other hand, costs about the same as a telephone survey but cuts completion time in half.
“We conducted 500 interviews in less that 2 1/2 days during a recent study,” Merrill says.
Merrill cautions businesses against trying to save money by testing concepts with friends and family of employees.
“They’re too close to the issue,” she says. “They’re really not an objective audience.”
Ditto for bringing complete strangers into their facilities. Subjects may only say what they think the company wants to hear.
The beauty of using an independent market research firm, she says, is “nobody knows who the sponsor of the research is.” How to reach: Data for Decisions in Marketing, (330) 867-0885
Lynne Thompson is a free-lance writer for SBN.
