Conducting Market Research the Right Way

You’ve heard the story before. When Coca-Cola replaced their original soft drink with new Coke in 1985, things went haywire. People began to hoard original Coca-Cola, some identifying the situation as a business opportunity and reselling original Cokes on the black market for a higher price. After conducting over 200,000 taste tests and spending close to $4 million in product development, Coca-Cola was forced to remove new Coke from the shelves, and was left with $30 million-worth of the detested concentrate. So what went wrong here? Joe Benjamin of B2C says it was a flaw in their market research.

Market research is a crucial element of product development. If you can’t identify and target a market with your product, who will you sell to? If you know your market, but don’t know enough about them, how do you fulfill their needs and meet their expectations? Coca-Cola was a well established brand by 1985, and knew who their market was, but not what their market wanted. They never asked their customers if they even wanted a new Coke! Clearly, customers did not.

Market research can be divided into two types: primary and secondary. Primary would be information like customer-feedback, while secondary would be hard data and statistics. As displayed by Coca-Cola, and as more companies are realizing today, while secondary data is necessary, primary market research is what secures sales. You need to know what your clients want. Primary market research can include exploratory research which yields more open-ended information from potential clients, and specific research that can be used to solve a problem. Entrepreneur suggests the best way to gather this information is through interviews or group surveys. Make sure you’re specific about everything; who you survey, what questions you ask, etc.

With food or beverage products, it would be helpful to host focus groups, as Miles Masci of Perfect Fuel discussed in a previous interview. Focus groups are  small group interviews where you sit down with five to seven potential clients and have a moderated discussion. Peter Cohan, President of Peter S. Cohan & Associates, says “I can't think of a faster and less-expensive way to find out whether a startup is taking the right path in developing a product.” With a focus group, you should assign a moderator and timekeeper so that you can be present in the discussion and reflect upon it afterwards. By utilizing focus groups, Masci and his team at Perfect Fuel were able to alter and refine the taste of their chocolate energy snacks based on consumer preferences.

When considering focus groups, Anita Newton, Head of Marketing at AdKnowledge, warns against biases. Moderators should appear as neutral as possible; this includes dress, body language, etc. When asking specific questions, moderators should avoid leading questions. Newton gives a specific example: “Some people think working out more than five hours a week can be bad for you. What is your opinion? Instead, reframe the question in a more neutral manner. ‘What is your opinion about people who work out more than five hours a week?’” Finally, make sure that you have a diverse, evenly spread demographic of participants from your target audience.

Service providers like Basecamp utilize user-experience as their source of primary market research. Basecamp is a project management tool that has traditionally been used internally by companies. They recently announced that they are working on a new version of their tool that will allow businesses to externalize their progress and share project updates with clients, without clients seeing all of the behind-the-scenes work. To test their new service, they are conducting what they call participatory market research. “The only way we’re able to judge the quality, fit, and finish of the solutions we provide those firms is by proxy,” says co-founder, Jason Fried. “We can talk to more customers, hire consultants, buy reports, and read white papers. But those kinds of research can’t replicate the direct input of having the experience yourself.”

Market research is a time-consuming but integral step to any product or service launch. As Coca-Cola, Perfect Fuel, and Basecamp have shown us, today you must go above and beyond a simple collection of data or internet search to ensure success.