Market Research Basics

If you are a product manager have you ever wondered what is the best way to conduct a market research? Well, here's some basics on market research (MR).

MR can be broken down into qualitative and quantitative. Qualitative research can be used to explore people's responses, reactions, perceptions etc. It's usually done with small samples. Quantitative on the other hand is used as confirmatory technique to confirm our assumptions, findings etc on a larger sample with some precision.

1. Qualitative techniques: The two most often used techniques are Focus Groups and Customer Visits. Qualitative techniques are also called as exploratory techniques. The focus of this research is to explore rather than confirm.
   

• Focus Group: Is usually conducted in a special room with a one-way mirror where the researchers can observe and hear the participants. A moderator conducts these discussions and can last for about 2 hours. The number of participants per group may range from 8 to 12.

• Customer Visit: Customer visits are carried on at the customer sites. This involves both observing the customers using the products as well as conducting a one-one interviews with the customer. Customer Visits typically involve visiting 20-30 customers.

Comparison

	Focus Groups			Customer Visits
Sample size	3-6 groups with 8-12 participants per group			20-30 customer visits
Cost	$7000-$10000			$20,000 upwards
Advantages	Group interaction helps find commonalities and differences in opinions. Reactions and perceptions can be watched			Great way to understand customer's usage and requirements
Disdavantages	Depends largely on the moderator. A bad moderator may not get the desired outcome			Loosely controlled and Lack of annonymity of the research sponsor.
Where to apply	Fits well in B2C			Fits well in B2B

I'll write about the quantitative stuff in my next post.

The mistakes people make in SWOT analysis

Most product managers claim to have made a thorough S.W.O.T (Strength,Weakness,Opportunities and Threats) analysis by just comparing the product features and offerings. This is a myopic view in my opinion. A thorough S.W.O.T analysis covers the entire spectrum of the Marketing abilities, Financial strength, Manufacturing abilities and Organizational strength. Analyzing this complete spectrum reveals and provides much more insight into the competitor than just comparing product features. Kotler and Keller in their book on Marketing Management have listed the following items in order to complete a S.W.O.T analysis.

Marketing			Finance
1. Company reputation			1. Cost or availability of Capital
2. Market share			2. Cash flow
3. Customer satisfaction			3. Financial stability
4. Customer retention
5. Product quality
6. Service quality
7. Pricing effectiveness
8. Distribution effectiveness
9. Promotion effectiveness
10. Sales force effectiveness
11. Innovation effectiveness
12. Geographical coverage

Manufacturing			Organization
1. Facilities			1. Visionary, capable leadership
2. Economies of scale			2. Dedicated employees
3. Capacity			3. Entrepreneurial orientation
4. Able, dedicated work force			4. Flexible or responsive
5. Ability to produce on time.
6. Technical manufacturing skill

This full spectrum analysis as can be seen gives us a much more detailed picture of our strengths and weaknesses than just comparing the product features. Let's take a large internet company competing against their startup rivals as an example. While the startup company may be agile, nimble and very responsive to market needs it may lack the large network of users, financial strength and distribution strategies to capture the market. This insight is much more helpful in developing a strategy rather than taking the small company head on with a one-one feature parity. Doing a complete analysis can save you the headaches of adopting a bad strategy and help you in channeling your team's energy in the right direction.