Market Demand
To get a better idea of profitability when looking at primary and secondary market research data you can observe the rate of adoption that is commonly associated with industry products:
Calculating demand for market potential and sales estimates can be further refined by using one of the following example methods:
1 - total market demand = number of buyers X quantity purchased b average buyer per year X price of average unit
2 - total number of households in target region X those who can use it X those who can purchase it X etc.
Market Research
Primary data - information gathered for a specific purpose
Secondary data - information previously collected for another purpose
Both primary and secondary data must be relevant, current, accurate, and impartial.
This data can be gathered via numerous methods, most of which are obvious:
observation
survey
experiment
mail telephone
personal
online
sampling group, size, procedure (random, random from split up groups, convenience, judgment, quota)
questionnaire
instruments
There are several ways to observe consumers and collect their thoughts. Interviews, focus groups, surveys, previously created documentation, and simply watching them are the main ways. Each of these methods will work to a degree, but it is usually a time and cost constraint on the observer that limits which methods will be used and to what degree they can be used.
Interviews are usually the best observation method, but also have the highest cost. Surveys are one of the easiest and lowest cost methods, but also one of the least effective. This is because the effectiveness of gaining consumer insights is usually proportional to the relationship that exists between the consumer and the observer. Observers and consumers with stronger relationships tend to have discussions where more is disclosed. More disclosure equates to more completeness. The more experienced the observer is, the less formal and structured the set of questions will be. Usually, it’s considered good practice to ask very open ended questions, funneling down to specific questions only when more detail or clarification is needed. It’s also important to not force the ordering of questions because this invites agendas and can be sensed.
The observer’s job is primarily to listen, but also to record non verbal communication. All verbal communication should be taken care of by an audio recording or video recording if necessary. After the observing process is done, the observer should record their feelings and views. The purpose of consumer observation and interviewing is to generate ideas, check assumptions, form a thesis, find information, and seek opinions. By combining both what is conveyed by those being observed as well as the observer, a more complete picture can be painted.
A few more details about interviews and observing : Watch your own reactions and voice inflections to avoid biasing the interview. Interview 10-15 people; focus groups should be 4-5 for small groups or 6-12 for larger groups. Avoid asking why questions. Address terms of confidentiality and make sure that all the interviewer’s questions are answered. Use an interview discussion guide (IDG). An IDG helps organize topics and provides a funnel mechanism to make sure the interviewer is aware of what general questions should be asked, what specific questions are possible, and what transitions should be used.
Example IDG
As long as you have a good sample size and your sample reflects the needed demographic, following the observation guidelines expressed above will allow you to gain insights that are not only impressive and important, but ones that are correct as well.
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