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Market ResearchSystematic collection and analysis of data relating to sale anddistribution of financial products and services. Market research is anearly step in the marketing process, and includes an analysis of marketdemand for a new product, or for existing products, as well asappropriate methods of distributing those products. Techniques inmarket research include telephone polling and focus group interviews todetermine customer attitudes, pricing sensitivity, and willingness to usedelivery alternatives. Most large banks have their own market researchdepartments that evaluate not only products, but their Brick andMortar branch banking networks through which most bankingproducts are sold.Market ResearchThe term market research encompasses a number of activities that aredesigned to connect marketers to consumers through informationgathering and evaluation. Market research provides businesses withinformation about their customers, their competitors, and their overallindustry. It is commonly used to identify marketing problems andopportunities, as well as to develop and evaluate the effectiveness of marketing strategies. Small business owners, because of their usuallylimited financial resources, have a particular need for adequate,accurate, and current information to aid them in making decisions.Market research can help entrepreneurs evaluate thefeasibilityof astart-up venture before investing a great deal of time and capital, forexample, as well as assist them in effectively marketing their goods andservices. Employing such marketing strategies as market segmentationand product differentiation would be nearly impossible without firstconducting market research.Although market research can be costly, it is often even more costly tomakeerroneousdecisions based upon bad or inadequate information.In fact, an average business spends between 25 and 50 percent of itsannual marketing budget on research activities. Conducting large-scalemarket research in-house is not possible for many small businesses,since it requires a comprehensive understanding of the problem to beaddressed, the market, and the application of research procedures. Butthere is a great deal of helpful information available to entrepreneurs

who know where to look, and there are many consultants, advertisingfirms, and market research specialists who offer their services to smallbusinesses for a fee.The information gathered through market re-search can be divided intotwo main categories. The first category—primary information— generally does not exist in acoherentform before the marketer gathersit in response to a particular question or problem. The most commonmethods of gathering primary market research information are throughdirect mail,telemarketing, and personal interviews. The other category —secondary information—has already been compiled and organized bya source other than the marketer. Rather than looking at a specificmarketing problem faced by an individual company, secondaryinformation generally tracks trends within a market, an industry, ademographic group, or a geographic region. A great deal of valuablesecondary information is available to small business owners at little orno cost. Some possible sources of secondary market researchinformation include government reports, trade association records,newspaper and magazine surveys, university-sponsored research, localchamber of commerce records, on-line services, and competitors'annual reports.Market research can provide small business owners with theinformation they need to answer a wide range of questions, including:Who are my customers? Where are they located? How much and howoften will they buy? and What product attributes do they prefer? Giventhe importance of market research—and its potential cost—expertsrecommend that businesses follow a step-by-step approach in order togain the most benefits from their research activieties.The first step in the market research process is to define the marketingproblem to be addressed. Next, a marketer should determine whatinformation is needed to solve the problem, as well as what sourcesshould be used to acquire the information. Many businesses make apreliminary investigation at this early stage in order to give theirdefinition of the problem more focus and to develop tentative answersthat can be tested during the next stage of the process. The third stepinvolves planning the research. This step includes selecting thetechniques to be used for gathering data and deciding on an appropriategroup, or sample, to be included in the research. Fourth, a marketer

actually gathers the necessary data. The fifth step involves analyzingand interpreting the information that has been gathered. Finally, themarketer reaches a conclusion about the marketing problem andtranslates the findings into changes in the firm's overall marketingstrategy.There are three general types of market research suppliers that canassist small businesses with one or more steps in the above process.Some firms specialize in conducting overall market research that theyrelease to a variety of clients for a fee. This type of firm includessyndicated services such as A.C. Nielsen and Company, which providesviewership ratings for national television programs. There are alsocustom market research firms that handle all aspects of the process,from defining the marketing problem and designing researchtechniques to evaluating results and formulating new marketingstrategies. In contrast, smaller, specialty line suppliers usuallyconcentrate on one aspect of the process. Marketers who wish to securethe services of a market research firm usually obtain bids from anumber of suppliers. The following sections provide more informationabout the various types of market research that such suppliers perform.

Types of Market Research

AUDIENCE RESEARCH. Research on who is listening, watching, andreading is important to marketers of television and radio programs andprint publications—as well as to advertisers who wish to reach a certaintarget audience with their message. Television and radio ratingsdemonstrate the popularity of shows and determine how much stationscan charge for advertising spots during broadcasts. Publicationsubscription lists, which are audited by tabulating companies to ensuretheirveracity, are important in determining the per page rate foradvertising.PRODUCT RESEARCH. Product research includes simple, in-personresearch such as taste tests conducted in malls and in the aisles of grocery stores, as well as elaborate, long-term "beta testing" of high-tech products by selected, experienced users. The objective of productresearch can be simple; for example, a company may tweak the taste of an existing product, then measure consumers' reactions to see if there isroom in the market for a variation. It can also be more extensive, as