Why market research is so important for SMEs

Great market research creates great brands

The ultimate purpose of market research is to minimise risk and maximise ROI, by ensuring the business has total clarity when making important decisions about its customers, brands or service delivery.

Its not surprising then that most larger, B2B and B2C organisations have a market research budget that adds up to a significant proportion of their annual marketing spend and that they use it to inform decision-making across a whole range of important marketing issues throughout the year.

But it is surprising that, at the other end of the spectrum, many aspiring and successful £ multi-million SMEs still make no annual provision for market research whatsoever.
Some believe that they just don’t need it. Others think that it is the preserve of larger organisations with bigger budgets. And there are some that are wary that research agencies won’t understand their business and will produce research results that are overly simplistic and unhelpful.

All of these assumptions are typically wrong! Any business that has customers will benefit from a clearer understanding of how they think and behave – and what causes them to choose Brand A over Brand B.

Also, whilst some research agencies are generalists with experience of researching everything from loo rolls to Rolls Royces, others will specialise in areas such as IT, Telco, Financial Investment, Pharma, Healthcare, the Building Trade and the Public Sector.

The truth is, smaller companies will often benefit disproportionately from the research they conduct because it unlocks a level of consumer understanding that the business has previously not had access to.

4 key areas in which to involve a market research agency

A market research agency can be used to address a wide range of strategic and tactical issues. But there are probably 4 key areas in which market research is most used – and most beneficial:

1. Defining and monitoring the brand

The brand is part of the bedrock of any organisation. This is especially true for SME’s because their brand often is the organisation and if the brand fails then the organisation fails too.

The priority for any SME then, must be to ensure that the component parts of its brand are clearly defined and understood internally, so that they can be articulated externally in a way that maximises brand salience, differentiation and credibility.

Market research can play a pivotal role in creating this clarity by helping to define the brand’s:

• Value proposition: an encapsulation of what the brand offers and why the target should buy it.
• Hierarchy of features and benefits: reflecting the criteria of greatest importance to the consumer.
• ‘unfair advantage’: the individual advantages it presents over the competition.

It can then define the brand’s:

• Positioning statement: a shortlist of core brand associations that ensure the brand occupies a distinct place in the mind of the target market.
• Personality: the brand traits to be reflected in the way the brand is communicated.
• Essence: a shorthand for everything the brand is and does.

If these brand components are not clearly identified and understood the result is likely to be a confused brand team, a confused target audience – and very possibly a failing brand.

When they are clearly understood they enable brand teams to create more dynamic brand strategies, based on a clear understanding of what is important and why.

Moreover, they enable the effectiveness of the individual campaigns to be measured, with the certainty that they are focussing on the criteria of greatest significance to the development of the brand.

2. Launching a new product or service

New product or service development is the lifeblood of any business. However, depending where you look, new product and service failure rates are quoted as being between 60-85% – and this doesn’t even take in to account the number of projects that are abandoned before they even get to market.

High failure rates are due in part to the fact that companies either prefer to leave the target consumer out of the development process altogether – or bring them in at the last minute when their input is virtually redundant.

There are actually two stages of the development process where market research can be essential:

a) The Big idea stage

At Big Idea stage the organisation is still attempting to nail down the concept and achieve clarity in relation to some fundamental questions, such as:

• What is our value proposition – which elements are in and which are out?
• Who will buy it?
• How and when will the target audience use the new product / service?
• Which brands will it compete with – or replace – and why?
• What are the likely customer experience / usability prerequisites?

b) The prototype stage

Assuming the project makes it beyond the Big Idea stage a second round of research is recommended at the point there is something tangible to show or demonstrate. The purpose of research at this point is to de-risk the project by (for example):

• Fine-tuning the proposition and its targeting
• Clarifying the charging structure and pricing parameters
• Identifying the format and hierarchy of essential marcoms
• Evaluating proposed levels of customer experience / support

New product development spend often runs considerably ahead of budget before the project is abandoned or fails. This can be symptomatic of a project where stakeholders have been using gut feel to inform the development process.

With so much at stake for the SME, timely use of market research is the best way to ensure new product development is successful – and on budget.

3. Designing or improving the customer experience

Happy customers browse for longer. They spend more, return more regularly – and they spread the love! Unfortunately, bad news travels further and faster, so if your customer has a bad experience with your brand the chances are it will be reported even more widely.

As digital consumers we have all experienced websites that have caused us to moan to others because they are poorly laid out or difficult to navigate. Or because the essential information isn’t where we think it should be, or the checkout process is too clunky and time-consuming.

And all of us have at some point let off steam about a poor bricks and mortar experience too. Maybe it was due to the store’s layout, the way its fixtures were presented and stocked, the signposting, the attitude and support given by staff, the options for self-serve, the décor, the lack of child-friendliness, the way promotions were presented.

In this example, customer experience research could involve an assessment of:

• The route(s) taken by customers as they enter the store, navigate its aisles, find the appropriate sections, select the brands they want, head to checkout, pay for their goods, pack them and leave.
• The physical, emotional and sensory experience requirements of those customers at each touch point along the way.
• Any gaps between experience requirement and delivery.
• The impact that individual gaps may have on the customer’s shopping behaviour and attitude towards the brand.

Breaking down the shopping experience in this way enables the brand to identify the individual issues undermining the customer’s experience at both physical and emotional levels. It enables the brand to understand their individual and cumulative significance and it can be used to identify the optimal solution in each case.

This provides the brand with the information it needs to undertake a full cost / benefit analysis before deciding which elements of brand delivery to invest in and in which order.

4. Creating winning marketing campaigns

Great marketing campaigns create great brands. Mediocre campaigns create mediocre brands. Whilst this is a provocative over-simplification it makes the point that successful brands are rooted in successful marketing.

It is constantly surprising therefore that so few marketing campaign elements are researched during development – or measured afterwards to determine how successful they have been.

This doesn’t just apply to TV advertising, it applies to the myriad smaller marketing activities that SMEs undertake, including:

For example, when it comes to direct mail, email and web campaigns there is much that research can do to optimise response rates. This includes performing a basic review of the ‘usual’ pitfalls waiting to trip-up the unwary marketer:

• The ‘subject’, banner or headline: is it clear, relevant and impactful enough to gain and hold the target’s attention?
• The layout: is the content laid out in a way that promises to be easy to read and digest.
• The Five Second Rule: can the reader grasp the communication’s relevance and purpose within the first five seconds.
• The content: is it clear, relevant and motivating? Does it leave the target with real a understanding of what to do next?
• Images and graphics: do they actually add to the copy – or confuse?

To marketers these types of campaign often feel like ‘business as usual’ and as a result they don’t always get the level of attention they require.

The result can be a poorly conceived and poorly executed communication that fails to hit targets. In fact, it will probably end up costing the brand numerous (potential) customers too.

Getting a research agency on-board

If this article has encouraged you to get a research company on board, here are few quick tips for ensuring you get real value from your research supplier:

• Start with a clear view of the research need and objectives. How can research best help you minimise the business risk and maximise ROI in relation to the project you are undertaking.
• Write a detailed research brief explaining the nature of the project and giving all the necessary information. If you don’t know what to include, call the agency and ask them for advice.
• Don’t be reluctant to include your budget. Clients sometimes feel that this will encourage agencies to ‘pad’ a quote. It won’t! Agencies know they will be competing against a number of other agencies and will use the figure you provide to ensure they are offering maximum value for money.
• Encourage the agency to get to know your business. When you have selected your preferred candidate spend time briefing them and letting them ask questions. The more they understand the more value they will provide in the work that they do for you.
• Be clear and realistic about your timescales – the more time the agency has, the better their outputs will be.
• Think about the type of debrief you need. Think too about whether you need a pre-presentation – essentially a review of the debrief before it gets broadcast to your wider team. That way you can sense-check it for findings or recommendations that may need sensitive handling.

If you have any questions about how market research can help your business please feel free to call get in touch.