How to Do Market Research
Just as marketing must be done one customer at a time, market research cannot be done in a mass market, demographic style focus group. At least not if selling more at higher prices is our objective. Here’s why:
- Market research is inherently product focused and price competitive. When we put people in a room and ask them to discuss a product, we are invariably locked into discussing “what would you pay for this?” That’s self-defeating when marketing’s purpose is to avoid price competition.
- Market research is theoretical. Aside from being price focused, nobody in a focus group knows whether they would actually pay for the product in a real market situation. There are many products I would theoretically pay for but don’t own; that is, I think they are worth their price, but I cannot afford everything I want and have chosen to own other things instead. We all have, but it’s not the kind of decision we can foresee in a lab setting. The fundamental question is not “Would you pay $x for this?” but, “What will you do without to have this?”
- Market research cannot account for marketing. With a degree of irony, it is exactly because market research cannot account for marketing — the entire process of creating experiences and expectations that grows demand and increases your customer’s willingness to pay for being your customer.
So what do we do?
Marketing is an AiA™ process. That means it only works when you get your Ass in Action™. Similar to fitness. We can read and learn a lot about physiology, nutrition, and exercise — how to grow muscles, build endurance, or lose fat, but until we get our Ass in Action in the gym, we are not going to grow, build, or lose.
Most things are like that. Marketing is not an exception. The only way we learn what does and does not work is by marketing to real customers. The data we should be paying attention to is not contrived from focus groups, but created in a real market:
- Customers’ Responses. What our paying customers say to and about us, both formally and informally is more telling than anything said in any focus group. Ever.
- Repeat Customers. No focus group or research can ever tell us whether a customer will become a repeat customer, because that depends entirely on the expectations and preferences she or he develops by being your customer.
- Referred Customers. This is the most telling bit of data. Until we are profiting from a stream of referred customers, we are not marketing correctly. We only gather it by listening to our repeat customers.
The biggest benefit to AiA market research is that it is the ongoing process of growing our market and our profit, rather than paying for essentially useless data.
What do you think?
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Next topic: The Myth of Markets and How to Build One