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How Market Research Works

        Money | Marketing

Other Alternatives

Phone calls, mailed questionnaires and online surveys all offer advantages and disadvantages for companies performing market research. For example, a company might buy a list of addresses from a magazine, and then send questionnaires to subscribers. Many magazines sell subscriber phone numbers as well. Magazines are a popular source of addresses and phone numbers because magazines tend to concentrate customers with certain interests. For example, a woodworking magazine tends to have subscribers who are woodworkers. If you want to do research on a product for woodworkers, the woodworking magazine offers you an easy way to find potential customers.

Telephone and mail surveys tend to be fairly expensive. For example, if you have to mail out 20 surveys to get 1 response, it can cost $10 to $20 per response. Telephone surveys can cost even more.

That's where the Internet fits in. By using the Internet, either in the form of e-mail surveys or online questionnaires, the cost of market research goes down. E-mail surveys now have the problem that they look and feel like spam, and are often eliminated by spam filters. That leaves online surveys as a great way to reach lots of customers. The other advantage of Internet surveys is that they can be very fast. You can post a survey and get preliminary answers within 24 hours.

The survey system now available on HowStuffWorks is typical of this form of market research. Here's how it works:

  • Visitors who want to be a part of the market research program sign up to participate.
  • They agree to follow the rules, and in return they get paid for their work ($2 per survey filled out, in this case).
  • When a new survey is available, the selected participants get an e-mail that tells them the URL for the survey.
  • Participants go read the questions and fill in their answers.

As you can imagine, this technique can generate results very quickly. Answers start coming back within minutes of posting a survey and sending out an e-mail.

By using questionnaires and focus groups, companies can gain a great deal of information during the product design process. This allows companies to increase the probability of success for any new product or service that they create.