Consumer research is the art of knowing the consumer's habits and preferences; it is not just a one off activity you do when you start up and then forget. You have to maintain your understanding of your customer's behaviours as their moods and tastes change and evolve.
There are many reasons you should carry out consumer research:
A study by the Harvard business review showed that they frequently found brand managers and entrepreneurs launching 'revolutionary' products seeking help, but when questioned about what research they had done to support the production and release of their products they found that many of them hadn't done any Market Research because they apparently 'knew what works and was safe.'
Coincidentally, it has been reported that around 75% of retail products fail to achieve the $7.5 million mark with the first year of launching, and it has also been found that many families repeatedly buy the same items. This may be due to several factors:
Is there a place in the market for it?
In 2002 Coca-Cola released a drink C2 with a $50 Million Advertising campaign. C2 was designed to be a hybrid between the original Coca-Cola and Diet Coke with the same taste as the original Coke and half the calories and carbohydrates like Diet Coke.
However, customers within the target market of 20-40 year old males didn't think the benefits were significant enough to warrant purchasing it and the product was soon rejected and removed from store shelves. Leaving an expensive failure for the large corporation.
Can the consumer easily see how to use the product?
In 2004 P&G launched a scent "player" that looked like a CD player and emitted scents every half an hour. In an attempt to increase initial sales through endorsements they hired Shania Twain to advertise the product.
This unknowingly confused customers into thinking the product was a music player, an air freshener or some horrifying combination of the two. As a result the product named 'ScentStories' failed.
If they had just done the market research with prototypes trialled and tested on the public they would have realised that it was confusing. They could have created a better marketing strategy that were less ambiguous and more appealing. If they had just done some market research maybe we would be reading this article on a 'ScentStory' right now.
The importance of carrying out research is to produce items that customers actually want rather than producing items that you want to sell and just hoping that they will buy them. You can avoid an immense amount of risk just by studying what your customers want.
Contrary to popular belief you can't sell absolutely everything, and you are not guaranteed to make a profit.
Without doing the proper research it is not possible to establish whether there is a place in the market for your business. (Has somebody already released something similar? Did that work?) And if there is enough demand for it, do you know exactly how to find those who are interested in it?
More important than anything else, market research can help you find out exactly what price you should be putting your products or services at. If you make it too expensive you won't sell enough, make it too cheap and you will run out of stock to sell or time to do your services.
As the marketing genius David Ogilvy said:
Advertising people who ignore research are as dangerous as generals who ignore decoded enemy signals.
So don't waste any time... contact us at Sabinelohmann@insightsresearch.eu to get you started on making your business everything it deserves to be!
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