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Creating Market Research Surveys

Anna’s is a high fashion store that experienced a high rate of returns on their women’s pants in 2008. Company executives found the return rates to be 43% (versus the industry 25%). After a strategy session, the company:

  • Launched market research at a cost of $150,000

  • Took 30,000 measurements of women in a metropolitan city where Anna’s is a popular store

  • Discovered that women had “square waists, narrow hips, and 2/3 ranged in size from 12 to 14

  • Changed the sizing of their pants to reflect their results.

When managers at Anna’s made the necessary changes to the pants, return rates matched those in the industry. This is an example of market research that leads to information that results in direct product design and changes.

Market research is the formal communication that connects an organization with the environment. The goal of market research is to use this connection to gain useful information to make better decisions. Market research, however, can be divided into three broad categories as seen in Figure 1:

  1. Exploratory – This type of market research is used by companies that want to gain more information about a specific market. Company managers may not know much about consumers in the area. Exploratory market research will allow them to find out information such as consumer demographics in the city. For example, the number of people who live in the area, what their salary segments are, what neighborhoods they live in, and their consumer patterns and behaviours. In this type of market research, the company doesn’t know much about the market or the consumer.

  2. Descriptive research – This type of research gathers information about the users of a particular product. If the manufacturers of a vacuum cleaner are interested in who buys them and what their requirements are, they will conduct descriptive research. This type of market research is much more specific than exploratory research because it asks more rigid and direct questions.

  3. Causal research - This type of market research looks at the cause-and-effect relationship between factors. Causal research is usually done in field experiments or laboratories so it is less commonly carried out than the other two types. A company interested in why consumers in one city purchase Product A more than Product B consistently will carry out field experiments with actual consumers.

1.1.Market research information areas

Market research surveys are designed to gather information from different areas. As seen in Figure 2, market research surveys help companies gather data from about markets and consumer behavior.

  • The Market – These types of surveys determine the actual size of the market. For example, luxury cars priced above $100K may have a total market size of 4,000-5,000 people in a given city. This determination is based on prior research showing that people who make at least a quarter of a million dollar in salary are more likely to buy these expensive cars.

These surveys also provide information consumer profiles, needs, and requirements. They answer the question: What do our customers want? They also provide data on market segmentation (such as gender, income, ethnicity, etc.) as well as growth trends. If a city has suffered job losses in recent years, consumer profiles would have changed. This allows companies to change their marketing campaigns towards providing more cost-effective products and more pricing deals.

  • Consumer behavior – These types of surveys determine consumer behaviors and perceptions. Consumers have particular needs and requirements. Requirements such as quality, price, and durability are important to consider when designing a market research survey. What consumers are buying, where, and how often they are buying them are all made into questions in a survey.

Perceptions of products are also included in these surveys. Consumers are asked: What do you think of Product A? General perceptions allow companies to track what consumers think over time.

  • Advertising – Companies use market research surveys to plan promotional campaigns. The goal is to ask present or prospective consumers what they want in a product or a service. In the survey, the name of the product to be launched is introduced so consumers can remember it. Market research surveys can also help a company evaluate promotions and sales activities. The more consumers are aware of a product, the more likely they are to complete these surveys.

  • Product development – Market research surveys gather information on product use and consumption. A company will get information such as consumers buying twice as many Soap A as Soap B. Surveys will also gather information on product differentiation. This allows a company to find out which segments of their consumers are buying which products. Market research surveys are also important in collecting data on consumer satisfaction with individual products. Finally, these surveys allow a company to track product innovation and its natural life-cycle in the market. If a product’s sales continue to decrease because of competition, for example, it is time to either make changes or remove it from the market.

  • Market structure – Market structure refers to the competition that a company faces. Research surveys help a company determine who the ‘big players’ are in the market. They also determine distribution structures. When a company brand (such as ‘Colgate’ or ‘Sony’) holds branding dominance in a city, new companies must make sure that their products can compete on other merits. These merits include lower prices and/or wide availability in large retailers.

  • New Products/Pricing – When launching a new product, a company must track its acceptance by the market. This is also true when an old or existing product is improved. To track its acceptance, a company gives out surveys to consumers who have bought the product. They are asked whether they are satisfied and whether they will continue to buy the product in the future. Companies will also use market research surveys to make sure that new products are benefitting from the company’s branding.

Market research surveys are also important in setting pricing structures. Do our prices work? This is the question that a survey should answer. They also determined price sensitivities and whether products are correctly priced among competition. Finally, these surveys allow company managers to predict the acceptability of future price changes and their impact on product sales.

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