Focus groups, market research surveys, paid surveys, online surveys, market research studies… it seems as though there is so much market research carried out, nowadays. With so much research, large established companies, upstart entrepreneurs, and everyone in between who has a product to sell will all have the same question at some point in time: “Is paid market research worth it?” Clearly paid market research is helpful to some since it would not exist and thrive as a business if it were not. Therefore, the question is not whether or not it is worth using in general, but whether or not it is a tool that is appropriate for a specific instance. To begin to answer this question we must consider a number of factors and determine how they apply to our particular situation.
The most obvious consideration in determining whether to use paid market research is the budget that is available for such a thing. There is a broad range of research sources and methodologies, each with their own relative costs. For the most part, you get what you pay for, with more money typically buying enhancements like more specific customer targeting and in-depth analysis. You can hire a freelance researcher who will typically work for less than what you would pay a full-service firm. Data collection companies can also be hired, which is best for companies who have their own analytic abilities.
There are plenty of sources of less expensive or free research that may be completely sufficient. For example, secondary research is completely free but requires time and labor. The same can be said for free survey sites, though these add the complication of being able to reach your target audience and having them be willing to give feedback. If there is a local college with a marketing department it can even be possible to work with a professor and class of students to have them do some amount of the legwork, with the caveat that these are amateurs instead of a professional firm. If your product and operation can afford some of these tradeoffs then going for a lower cost or even free research option should be seriously considered. Be careful when making this choice, however, because using research that is inappropriate for your business can end up being more of a waste of time and money than you may realize.
The source of paid research needs to be considered. Most agencies pay their panelists, which is not a new practice, but with the growth of the Internet as a medium for research this is both a positive and a negative. Since panelists and survey takers are paid, more responses from wider demographics may be gathered. Unfortunately, over the Internet, anyone can say anything and the money on offer may attract respondents who can easily misrepresent themselves and give false responses. There is a conundrum faced by these researchers. Offering too much monetary compensation makes the survey too attractive to those that do not fit the target audience, but not offering enough can cause respondents to speed through their answers and give lower quality feedback. When hiring a firm or paying for data, it is therefore important to know how the information is gathered and decide whether or not it will actually be useful for your business.
In order to make informed decisions about the majority of your business operations, it is very important to understand the habits of your target customer. Devising the marketing strategy is one of these major decisions that benefits from this understanding. Even basic knowledge, such as whether or not the target demographic has a major online or social media presence, can help drive the decision. You would not use data gathered from online surveys to market a product that is made for seniors, for example. If your target demographic is easy to reach and fairly responsive then free research may be sufficient, but if they are a niche group then a specialized research firm would be more appropriate.
In the same way that the audience can help steer the marketing strategy, the product itself must also be considered. If it is similar to products that are already widespread then there is guaranteed to be plenty of secondary and observational data readily available at little to no cost. Conversely, if it is a very new idea or enough of an update to an old product that there is little certainty as to how it will be received, then it is worth the investment in a good paid research product to ensure it is positioned and advertised properly. Failure to do so can run the risk of the product flopping entirely and losing much more money than the upfront research would have cost.
Though not an obvious consideration, the selling channel that your business uses can also help determine whether or not you need to pay for market research. Specifically, if you are using a channel that inherently provides its own research or at least allows for such a thing to be done easily, then you do not have to go out and hire someone else to do it for you. To illustrate this point, consider a grocery store chain and a luxury car brand. Grocery stores stock countless products, each with their own target audience. There is so much mixed data that it is quite difficult for this type of business to do their own marketing research. Luxury cars, on the other hand, are a specialized product that is made for a specific type of person and usually sold only in their own dealerships. If the car brand decided to have their salesmen ask particular research questions when buyers come in, they know for certain they are getting valuable information from the exact audience they are targeting and, therefore, do not have to spend money to get someone else to assemble a panel of their potential customers for the purpose of asking these questions.
There is no doubt that paid market research can be a powerful tool in the right hands when done properly. It is not, however, always a necessity. As with all aspects of running a business, you should do your own research and decide what will work best for your operation before assuming you must spend a great deal of money in order to achieve the result you desire.