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How Market Research Works

        Money | Marketing


Let's go back to the first situation we examined at the beginning of this article. You are currently working as an employee, and you have an idea for a new product or service. The product could be anything -- a new way to package ketchup in a grocery store, or dry granules that you can use to "wash" your car without water, or a very cute stuffed animal. How do you find out if anyone wants or needs your ketchup package, your car granules or your stuffed animals?

Short of manufacturing the new product and selling it to see how many people buy, there really are only two ways to answer marketing questions ahead of time. You can find out directly or indirectly.

Let's look at the direct way first. To find out if people like your idea, you have to talk to people and see what they are thinking and feeling. You've probably been talking to people all of your life, so you are familiar with the many different ways to reach them. You can:

  • Call people on the phone
  • Talk to people face to face
  • Send an e-mail
  • Send a letter through the mail
  • Assemble people in a group and talk to them
  • Etc.

No matter which technique you are using for market research, your goal is to ask a set of questions and get back: A) a set of answers to your questions, and B) new ideas. Part B is important. In many cases you learn things that you never thought about by talking to people. For example, you might find that no one in the south wants your dry car-washing granules, but in the north, where water freezes in the winter, dry granules are just what people have been looking for. If you had not realized that previously, it can be a big revelation -- it can save you a ton of money that would have been wasted advertising your granules in Florida.

The indirect way to learn about the marketplace is to look at what's already out there. How many companies are making a competing product? What are their products like? How do they market them? The fact that there is a competing product tells you that there are some customers out there, and you can access your competitor's market research by looking at the products your competitor is producing. Assuming, that is, that the competitor did any market research.