Underestimating the value of simple MRD's will cost you dearly

There is no way you will gain market share without advertising; let it be word of mouth or big cinema adverts or competitions in conjunction with some of their re-sellers, and business partners. But before you even begin to work on a marketing strategy, you need to seriously consider market research.

So why mention advertising and promotions when the topic is market research? For the simple fact that we see advertising as such an important part of gaining market share, forgetting that there can be no effective advertising before we've done effective market research. The importance of market research is vital in the correct distribution of your products and/or services to the right, if not perfect, target market... but it is also of the utmost importance in reaching the right market with your advertising.

I can mention a couple of examples where big companies with experienced specialists working for them neglected doing effective market research and ended up paying more than just money for their blunder. I can mention even more examples where big corporates lost money and market share because a rather trivial thing like the colour of their product didn't grab the South African market by storm as it did overseas. I can mention examples where brand names took a dive in the dust because of the lack of proper market research. A simple example is: some companies believe that you need high exposure to all South Africans to gain market share and brand loyalty, while most of these big companies are also very much aware of the fact that 80% of your business comes from 20% of your market. Imagine how much money you will be spending on for e.g. a cinema advertisement because you have this great and highly creative idea for a kick-butt cinema advert, forgetting that you actually sell a product for the entry-level market who rarely, if ever, can afford the luxury of going to the movies. The thousands of rands you would have spent above the line could be used far more effectively below the line, by appointing agents and/or reps to sell these products directly to your target market, or by having in-store competitions in your top re-sellers, and so on.

Worse than that may be that you think you are selling a product meant for the lower LSM groups in South Africa, because that's where the product you are importing sells best in the United States, while proper and effective market research would have shown you that our market is totally the opposite to the market in the United States when it comes to your specific import product. So, you end up closing business because "the product just doesn't sell in South Africa," and some other business man sees what you haven't seen, grabs the opportunity and makes millions...in his first year of operation.

Now, many people think that market research involves big money and people with white coats, a pair of thick spectacles and a whole bunch of degrees. This paradigm immediately makes the small business owner think of tearing up all his ideas of opening up an import-export business or some other business. The fact, ladies and gentlemen, is that you cannot afford to not do market research when you chuck your pension money into the business you want to build up for your future and to pay your kids' university bills. If you are prepared to throw R250 000-00 into a franchise opportunity or some other business idea, you have to be prepared - and I said HAVE TO be - to put some money aside for proper and effective market research. It won't cost you lots and it will end up saving you time and money.

The effective market research questionnaire needn't be long or complicated. You also don't need to question thousands of people, as long as you get your questionnaire spread over the correct demographics in the right place. If you already have a self-sustaining business running like a hot rod, don't think for one moment that a couple of questions on a piece of paper won't help you predict the future of your business and where you operate from and the market you serve.

We have, on many occasions, employed temporary staff, paying them R15-00, or so per hour over school holidays, to walk up to people and ask them a couple of questions. In the case of your customer being a re-seller, I suggest you make sure they are OK with bringing in some temps to ask a couple of people a couple of questions. I also suggest you keep your market research questionnaire short and sweet with as little as possible open-ended questions if you want to put your information on a graph later on. On many occasions we only asked ten questions, but probing questions, and at first this seemed very trivial, however, after capturing all the information into a graph, the picture unfolds and only then do we sometimes realise the true value of effective market research.

One of the other benefits of keeping your market research questionnaire short is that you can get to so many more people. Remember, you are not taking census, and unless you want to build up a database questions like name, telephone number, address, how old are you, how many children do you have, etc are irrelevant, and some people may find it a bit suspicious. Keep your questionnaire concise and to the point, especially for those few people who don't feel like standing around answering questions asked by some high school kid on holiday, dressed in jeans, a t-shirt, cap and a clipboard in his hand looking way too eager to earn his R15-00 per hour, or still miserable because his dad forced him to earn some money this holiday.

If you value your product, your company and your success you will also value market research...it's just one of those things you will have to do sooner or later.