From a modern business perspective, market research is an essential tool and a necessary condition for successfully entering a market. However, during difficult economic times and with shrinking budgets, how can businesses conduct market research most effectively and at the lowest cost?
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“Testing the Waters”: What You Need to Do
Marketing experts often use the expression ‘throwing stones to test the path’ to describe the nature of market research. Put simply, this activity is like an advance team scouting the way to help minimize business risks.
If preliminary fieldwork is conducted carefully, the business can accurately identify market demand and clearly profile customers and competitors. The likelihood of successfully bringing its product to market is then very high.
Market research also helps businesses promptly recognize customer reactions to products or service quality, potential problems in the current market and future business opportunities. Testing the waters is therefore essential; the important questions are how, where and how far to test.
According to statistics from the global market research association, market research in Vietnam has grown well in recent years but remains at an early stage overall: around 33 million USD in 2010 and approximately 40 million USD in 2011. This spending is quite low compared with regional countries such as Thailand (nearly 100 million USD/year) and the Philippines (over 80 million USD/year)…
Many Vietnamese businesses seem rather unenthusiastic about this activity, especially at a time when all spending must be tightened. Unfortunately, this also means they may miss many important opportunities.
Afraid of losing a small shrimp, only to let a big prawn slip away?
For many small and medium-sized businesses, spending a large amount on market research exceeds their financial capacity, so they see it as a “luxury” reserved for the industry's major players. Consequently, even while understanding its practical benefits, many businesses reluctantly decline market research or commit to it only tentatively.
Many managers worry that the business will spend a substantial amount on this activity only to receive information that contradicts its expectations. This creates a fear of ‘losing the small shrimp.’ Yet without ‘stones’ to test the path in today’s competitive environment, a business can easily become trapped without a guiding compass and ‘lose the big prawn.’
According to Tường Tuấn Thông, General Director of Định Hướng Market Research Company (FTA), businesses should be even more diligent about conducting market research before launching marketing campaigns in the current period to ensure victory, because opportunities to try again after losing are very limited.
Meanwhile, Lý Trường Chiến, a consultant in strategic management restructuring and human resource development, says businesses should change their perspective and regard market research as an investment in risk control and opportunity identification, rather than a cost burden. Only then can businesses confidently use its full benefits in their strategies.
Market research on a tight budget
In fact, businesses with limited budgets still have many ways to conduct market research wisely.
Tường Tuấn Thông said that, before approaching a market research company, businesses should do some “homework” to minimize unnecessary costs: clearly define their needs and the study's specific objectives to avoid cumbersome, costly surveys yielding information of little practical value.
Businesses can also collect information on competitors, market trends, and potential customers themselves through market and consumer reports in the press and online. Most major market research companies, associations, and chambers of commerce provide some reports and surveys free on their websites.
If you persist, you will certainly find an enormous amount of research and analysis from leading experts without spending a penny. Of course, this method takes a great deal of time, and most of the information is at the macro level.
For specific surveys tailored to a business's needs, Mr. Lý Trường Chiến says businesses can also hire market-research consultants with extensive experience and years of work at foreign market-research companies to save costs.
This approach is also widely used by small and medium-sized businesses abroad. However, it has a major drawback: research quality depends entirely on the talent and experience of the expert you hire.
Therefore, before deciding, you need to research the projects the consultant has completed and learn about them through the companies they have worked with. Another option well worth businesses' attention is to use students pursuing master's degrees in economics.
Most of these courses require students to conduct field research into the market. You may be able to obtain good research results at negligible cost, provided, of course, that you are willing to be open in sharing information with the students.
| For small and medium-sized companies, using financial resources efficiently is essential. Entrepreneur Pete Slosberg, founder of the famous American beer brand Pete’s Wicked Ale, offers an interesting story of using modest funds effectively through his experience conducting low-cost market research.
To conduct market research for a new consumer-product idea, Pete Slosberg, then Director of Pete’s Brewing, made a bold decision: use MBA students at the Anderson School, University of California, Los Angeles (UCLA), instead of hiring large firms. UCLA's Anderson School of Management is one of America's prestigious MBA schools. The study aimed to determine whether retailers would accept a new product. This was not a complete business plan, only a feasibility study from a product distribution perspective. MBA students conducted it over 4 months, surveying more than 500 local retailers. The results were very promising, and Pete’s Brewing spent only USD 2,500 instead of USD 100,000 to hire a market research firm. According to Pete Slosberg, if you understand what you need and knock on the right doors, you can obtain valuable market research reports without spending much money.
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MINH DIỆP
(Excerpt: Saigon Entrepreneur Newspaper)
