Introduction to Market Research and Customer Needs
Businesses can't succeed if they don't understand what their customers want. Imagine spending months developing a new mobile phone that nobody buys because it doesn't have the features people actually want! Market research helps businesses avoid these costly mistakes by finding out exactly what customers need and want before creating products.
Key Definitions:
- Market Research: The process of gathering information about customers' needs, preferences and behaviours.
- Customer Needs: Things customers must have (like a phone that makes calls).
- Customer Wants: Things customers would like to have but aren't essential (like a phone in their favourite colour).
- Primary Research: Information collected firsthand by the business.
- Secondary Research: Information that already exists and was collected by someone else.
💡 Why Identify Customer Needs?
Understanding what customers need helps businesses:
- Develop products people actually want to buy
- Avoid wasting money on unwanted features
- Spot gaps in the market (opportunities!)
- Stay ahead of competitors
- Build customer loyalty
📖 Needs vs Wants: What's the Difference?
Needs are essential requirements customers must have. For example, a student needs a laptop that:
- Runs word processing software
- Has reliable internet access
- Has enough battery life for lessons
Wants are desirable but not essential. A student might want:
- A stylish design
- A lightweight model
- The latest gaming capabilities
Primary Research Methods
Primary research involves collecting new data directly from customers. This gives you fresh, specific information about your target market.
📝 Surveys & Questionnaires
Written sets of questions given to customers.
Pros: Can reach many people; cheap to do online
Cons: Low response rates; people may rush answers
Example: Tesco Clubcard surveys about shopping experiences
🗣 Interviews
One-to-one conversations with customers.
Pros: Detailed responses; can ask follow-up questions
Cons: Time-consuming; small sample size
Example: Apple interviewing users about iPhone features
👥 Focus Groups
Discussions with small groups of customers (6-10 people).
Pros: Group discussion generates ideas; observe reactions
Cons: Some people may dominate; opinions can be influenced by others
Example: Netflix testing new show concepts
More Primary Research Methods
Here are some additional ways businesses gather firsthand customer information:
- Observation: Watching how customers behave in shops or when using products (e.g., IKEA observing how people navigate their stores)
- Test Marketing: Releasing a product in a small area to see how it performs before a full launch (e.g., McDonald's testing new menu items in selected restaurants)
- Social Media Monitoring: Tracking what customers say about your brand online (e.g., ASOS monitoring Twitter for feedback)
- Customer Feedback Forms: Short forms asking for opinions after purchase or service (e.g., restaurant comment cards)
Secondary Research Methods
Secondary research uses existing information that was collected by someone else. It's usually quicker and cheaper than primary research.
📈 Internal Sources
Information already within the business:
- Sales Records: What products sell best?
- Customer Databases: Who buys what and when?
- Website Analytics: How do people use your website?
- Previous Research: What did past studies find?
🌐 External Sources
Information from outside the business:
- Government Reports: Office for National Statistics data
- Trade Journals: Industry magazines and reports
- Competitor Analysis: Studying rival products
- Market Research Reports: Purchased from specialist companies like Mintel
- News Articles: Current trends and market changes
Case Study Focus: How Netflix Uses Research
Netflix is brilliant at understanding what viewers want to watch. They collect massive amounts of data about:
- What shows you watch
- When you pause, rewind or fast-forward
- What device you're watching on
- What time of day you watch
- What thumbnail images make you click
This data helps them decide:
- What new shows to create (like "Stranger Things")
- What existing shows to license
- What shows to recommend to you personally
- What thumbnail images to show you (they test multiple versions)
For example, Netflix knew "House of Cards" would be successful because their data showed:
- The British version was popular with their subscribers
- Films directed by David Fincher were highly watched
- Kevin Spacey films performed well
Result: They created a hit show by understanding exactly what their customers wanted!
Market Segmentation
Not all customers are the same! Market segmentation means dividing your customers into groups with similar characteristics. This helps you target your research and products more effectively.
👪 Demographic
Who they are:
- Age
- Gender
- Income
- Education
- Occupation
Example: Saga holidays target people aged 50+
🏠 Geographic
Where they live:
- Country
- Region
- Urban/Rural
- Climate
Example: Umbro sells more waterproof gear in rainy regions
🎯 Psychographic
How they think:
- Lifestyle
- Values
- Attitudes
- Interests
Example: Lush targets environmentally conscious consumers
Analysing Research Data
Once you've collected your research, you need to make sense of it! Here's how to analyse what you've found:
Quantitative Analysis (Numbers)
This involves analysing numerical data:
- Calculating percentages: "65% of teenagers prefer smartphones with larger screens"
- Finding averages: "The average customer spends £42 per visit"
- Identifying trends: "Sales of plant-based foods increased 25% year-on-year"
- Creating charts and graphs: Visual representations make data easier to understand
Qualitative Analysis (Words and Observations)
This involves analysing non-numerical data:
- Identifying themes: "Many customers mentioned poor battery life"
- Finding patterns: "Younger customers care more about ethical sourcing"
- Selecting quotes: Using customer comments to illustrate points
- Creating customer personas: Fictional characters representing customer types
Using Research Findings
The final step is putting your research to work! Here's how businesses use what they learn:
🚀 Product Development
Using customer insights to create or improve products:
- Adding features customers want
- Removing features nobody uses
- Fixing problems customers experience
- Creating different versions for different segments
Example: Apple adding water resistance to iPhones after customer feedback
💬 Marketing Strategy
Using insights to promote products effectively:
- Highlighting features customers care about
- Setting prices customers will pay
- Choosing advertising channels customers use
- Creating messages that resonate with target segments
Example: Nike creating different ads for different sports enthusiasts
Real-World Example: How Walkers Used Research
In 2008, Walkers ran their "Do Us a Flavour" campaign where they asked customers to suggest new crisp flavours. This was brilliant market research disguised as a competition!
What they did:
- Collected over 1.2 million flavour suggestions
- Identified popular flavour trends
- Created six finalist flavours
- Let customers vote for their favourite
The results:
- Massive customer engagement
- Free product development ideas
- Increased sales during the campaign
- The winning flavour (Builder's Breakfast) was guaranteed to be popular
- They learned what flavours different customer segments preferred
This shows how creative market research can both gather customer insights AND build excitement about products!
Common Mistakes in Market Research
Even big companies sometimes get their research wrong. Watch out for these pitfalls:
- Biased questions: "Don't you agree our product is amazing?" will get misleading responses
- Small sample sizes: Asking just 10 people isn't enough to represent all customers
- Wrong target audience: Asking pensioners about TikTok features won't be helpful
- Ignoring negative feedback: Criticism is valuable for improvement
- Not acting on findings: Research is pointless if you don't use what you learn
Summary: The Research Process
To successfully identify customer needs and wants, follow these steps:
- Define your objectives: What exactly do you need to find out?
- Choose your research methods: Primary, secondary, or both?
- Identify your target segments: Which customers should you research?
- Collect your data: Conduct surveys, interviews, etc.
- Analyse the results: What patterns and insights can you find?
- Apply the findings: Improve products and marketing
- Monitor results: Did the changes work? (Then the cycle begins again!)