Qualitative data methods deal with feelings and other non-quantifiable elements; such as, how customers feel about products and what influences their buying behaviour. Qualitative data is typically gathered through interviews and focus groups.
When undertaking market and customer research it is important to identify what your aim and objectives are – specifically what information you need to gather through this research.
Bear in mind though that each idea and market is different. There may be issues specific to your market which are of importance and need to be addressed. For example, road safety issues would be important for new bicycle products. Weather and tourism trends may be important for snow sports products for the Scottish Highlands.
Product testing requirements and regulations would be important to new make up products. Defining the key topics will help you to keep your research focused.
2 FUNDAMENTAL QUESTIONS
Market and customer research typically aims to answer two fundamental questions:
Quantitative (numerical/statistical data) research, gathered through surveys and questionnaires.
Primarily qualitative data.
Note: Be aware that buying behaviour will differ between geographies, influenced by different cultures, tastes and behaviours – ensure your research addresses this.
You have to show that you thoroughly understand the market place. This exercise will help you think about the key aspects when you are asked about your market.
Using the resources avaiable to you, such as the internet, library, magazines and trade journals, as well as the information you have gathered for previous exercises, complete the provided template, describing the following
All this will help you in not only providing a better understanding of your target market but also in validating that there is a true need for your solution.
To gain a more in-depth understanding of the specific needs and wants of your customers, the best way to gather this information is to communicate directly with these customer segments.
You may feel that you have already undertaken this activity by talking to friends and family and asking them directly what they thought about your idea, and more than likely they will have said that ‘it is great’ and they ‘would definitely buy it’… however be aware that this may not be reflective of real customers.
This can be done in a number of ways, such as through interviews, surveys, questionnaires and focus groups. Your approach will depend on your idea and the approach that you feel most comfortable with.
Interviews and Focus Groups will typically provide the greatest opportunity to gather in-depth, qualitative information; whereas you will typically get feedback from a larger number of potential customers through questionnaires and surveys. Qualitative research is incredibly useful in identifying the needs and wants of your customers.
We would recommend that you conduct customer research as early as possible in the process of developing your idea. This is because once you have identified and validated that there is a gap in the market, your idea can be shaped to directly meet the needs identified.
Typically focused on how people feel, what they think and why they make certain choices. This is typically undertaken through interviews and focus groups.
A data-led approach which provides a measure of what people think from a statistical and numerical point of view. This is typically undertaken through surveys and questionnaires.
Once you have identified your customer segments (for example, if your customer segment is women aged 20-30 years who buy skincare products) you will need to understand their buying behaviour. Where does this customer segment get information from before purchasing products? For example, in the case of skincare products, for this age group a common resource is skincare/ beauty forums or blogs.
Other ways of communicating with this potential customer segment may include social media, such as Facebook, Twitter and LinkedIn groups. For each customer segment the way you access these customers will differ- market and customer research will help you identify the most relevant approach for accessing your prospective customers.
You have to show that you thoroughly understand your customers. This exercise will help you think about the key aspects when you are asked about your customers.
As before, using the resources avaiable to you, such as the internet, library, magazines and trade journels, as well as the information you have gathered for previous exercises, complete the provided template.
Where you can't provide the relevant information, you may want to consider engaging directly with potential customers through a survey, focus group or interview.
As each customer segment is different, try to find out the following for each of your segments.
When starting out in business, applying limited resources to best effect is one of the key skills which have to be developed and applied. Because different customer segments are likely to require a slightly different approach; approaching all of them at the same time will over-stretch the resources of any business. At the same time as gathering knowledge on your target customers, it is important to consider the competition in each of these segments, and the required approach for each of these customer segments.
As such, Module 4: The Customer and Modules 5: The Competition should be considered in parallel with this section. What you learn from each of the modules will have an impact on the others.
For example, a customer segment where there are a number of highly active, dominant competitors might not appear to be an attractive option if you are seeking to enter that segment with a product which is competitive to theirs. However, if your offering is based on a technical improvement you have devised and protected you could change the route to market and business model by licensing your technology to one of the existing competitors in this segment.
Having identified and quantified your market and potential customer segments in Module 4, it is important that you start identifying the customer segments that hold the most potential for your business (as part of your business strategy). The exercise below will help you to identify the customer segments that hold the greatest opportunity for your business.
Select your top customer segments which you feel hold the greatest potential. Using the template provided, rate these segments against the assessment criteria using a traffic light system.
On completion of the exercise evaluate how each of your segments rated, and rank them in order of prioritisation.
It is important that you know the advantages and disadvantages of each approach. Here is a list of the the most basic of business models:
Selling the idea
Licensing/ franchising the idea
Design, market and sell your product (outsourcing manufacturing)
Undertaking the full process (sourcing materials, manufacturing, marketing, sales, distribution, support etc.)
As part of your market and customer research you will have identified information such as: what your customers buy, where they buy, how they prefer to buy and why they buy. Your next step is to identify the best way to access each of your customer segments (your route to market).
Be aware that different customer segments may require different routes to market:
It is important that you explore and identify how this value chain will work, understanding threats and potential opportunities. It is important to consider who plays an important role in your value chain – do you rely on one manufacturer or do you only have one main customer? Consider what would happen if tyour one manufacturer increased the cost per unit substantially (so that the product was no longer affordable) or your one key customer switched to a competitor?
You need to consider the strengths, weaknesses, opportunities and threats of your current value chain.