MARKET RESEARCH separates perception from reality! It solves your mysteries! Market research is factual. Let’s talk cases.
Case one: A retailer, who is catering to the DIY business and carrying extensive hard parts inventory, thinks he wants to add installation to his business, but analysis (market research) of the local marketplace shows enough well-planned and -operated installer businesses already fulfilling the needs of the population.
He decides, “I shouldn’t go into my own installation business.” Then he thinks, “Maybe these installation businesses need a local supplier with excellent hard parts availability and hotshot delivery. This will help get cars off the lifts when the vehicles require a part not on the shelf.”
A market research strategy would be to find out if there is adequate hotshot delivery currently available. If there is a void and Mr. Retailer is willing to meet the required price (after analyzing his cost of delivery and looking at his remaining margins), he can become a hotshot and add the same business he thought he wanted to compete with.
This case means business expansion — where it will work and yield profit, although at diminished margins.
Market research differentiates your wished-for perceptions from the real business situation. It gives you solid, defensible facts in place of the “I know . . . I feel . . . I wanna be . . . I’m afraid . . . ” vagaries in planning situations.
- provides an accurate assessment of situation.
- gives you the insight from which to define strategy.
- stocks the tools with which to develop business tactics.
- allows the execution of tactics with greater efficiency and accuracy.
Case two: New competition is coming to town. A big-time name shows up at the city or county planning commission with a leased plot to ask for zoning approval of its development plan. Yikes! What are you going to do?
The emotional reactions may be to cut your prices or to bury your head and know that your customers love you enough to withstand the friendliness, the crisp marketing, the overwhelming parts availability and the glamour of the new store — to say nothing of the prices. Or, you could consider going out of business. Nonsense.
It’s time for some market research before you take price-cutting action or resolve to run away or ignore the real world activities in your market. Market research can tell you not only what your competition is doing, but also what your customers and prospects expect from a business like yours. Used correctly, it puts your business on the right path, giving it specific direction. It can save you from costly experiments going in the wrong direction, away from profitability.
Worth the investment?
Market research is an important component in your business plan. You need it to live. Market research is good.
What’s more? You can afford it. As an automotive parts and accessories seller, you’re not bankrolling Nielsen to evaluate national TV programs for national market research.
Market research is worth your investment (which could be minimal), because it provides specific direction. Going without could cost you more in the long run because you might change your marketing strategies without the necessary information. What if you guessed what should be done with no information? If the fact-absent strategies you choose are wrong, the tactics you choose to implement those strategies are doomed to failure.
The good news
Market research gathers objective data. It reports what’s going on, and provides facts to help business planning. It tells you exactly what your customers and prospects want and expect from you. And, it can look into the short-term future of customer expectations.
How do you go about this? What should you do?
The good news is that, when doing market research, you get to talk to people. You talk to customers and prospects. You also talk with owners of other non-automotive DIY-type businesses in your community to learn about what they know. Their customers may be demographically similar to your target customers.
The hard part of the good news is to decide what conditions and what to ask them.
The even harder part of the good news is your acceptance of the fact that consumers may know more about your business than you know about your business.
In case one, the tactic was simple. The retailer who wanted to enter the service business had to observe the existing service and repair facilities, talk with some people and make a determination whether or not there was room for one more business of this type in the town. He also had to decide what unique selling proposition (USP) he had to offer to differentiate his business from the others in the market.
In case two, where the big name is coming to town, you have several market research choices. No matter which (or if all) technique you choose, you must talk to consumers of automotive aftermarket products, not only your customers. Talk to the other guys’ customers. Why? Because these men and women are your customers-to-be.
| When you’re conducting research in your own stores (the casual intercepts your employees make with in-store shoppers), make this activity look a little more formal by having your associates dress just a little differently from those who are not collecting data: perhaps a jacket, and probably a button which could say “On official assignment,” “Checking customer satisfaction,” or “Talk to me — I’m listening.”
Techniques to the trade
What are some market research techniques? Well, you can use one-on-one interviews. You can intercept customers and prospects to find out what their needs and expectations are. You can conduct focus groups. Also, you could do a broad-base community research project, but I don’t recommend that for local retailers or jobbers. Each of the other techniques has a different level of reliability, and collectively, they build a well-rounded picture. A blend might work well in this instance.
A focus group or two could be comprised of dedicated DIYers from your customer base and from your competition’s customers. An employee can be coached and trained to ask customers a specific set of questions while they are in your store. Also, in-depth conversations with individuals should set up the trick.
The trick is to use what you’ve learned from listening. Done correctly, market research will provide specific answers that will jump off the page when you look at the data.
Research is insurance
Another nonspecific in market research is the right budget. There are no hard rules of thumb.
You must talk with the discipline’s professionals (not necessarily national firms — small and local firms do good work, too) to find out the answers to the following questions: “If I spend this, what do I get?” and “If I want to find out this, how will you do that, and what will it cost me?”
The rationale for spending anything at all is this, “If I don’t spend it on the front side of my change, what will the back-end cost be if I’m wrong?”
Think of research as front-end insurance. Think of ongoing, or repeated, research as continuing the insurance coverage. Research insures that you have the pulse of the market. This means that you know what your customers and prospects expect and what your competitors’ customers expect of their retailers. Research also confirms that your premise is still solid — that the markets or consumers’ needs aren’t changing.
The next question is: “Can I buy market research? Is the data I need sitting on some shelf?” Probably not. You need local data. Your local research tells you that you should be heading in a specific direction.
The Polk Company, a national resource, is the exception. The Polk Company’s vehicle registration data for your specific area will help you stock what you need to stock to keep your customers happy. Automotive part suppliers have used Polk data for decades to plan their regional and local warehousing inventory balances.
What if you operate in a NIMBY (not in my backyard) market? For example, if you see a lot of Hispanics in your neighborhood, ignore the national facts and concentrate on local realities. Go with your marketplace: a lot of new Hispanic residents repair and maintain their own vehicles. They also buy accessories. Use market research tactics to ask them what they want from you.
The crucial thing is knowing your local market, understanding it and responding to it. That counts. That will make you profitable. That’s market research.