Market Research Insights For Fast Growth
With Kola Owolabi
When you follow a woman to the market, you should get ready to stay long there. She may have all the money in the world, but she still wants to buy at the lowest prices available. So she goes round in search of deals, price tags that give her sense of satisfaction of getting the best value for as little money she spends. Because women happen to go to the market more than men, at least talking about markets where consumer items are sold, it is normal to expect that most customers found trying to buy things in markets are very rational people, who shop for value only and cannot be fooled by any hype, no matter how strong it may be.
So if your product or service is meant for a market with very rational people, you must prepare to take to the market products and services that pack the most value in terms of maximum utility with the lowest price tag. That is why research is necessary in the world of business today. How do I develop products and services that offer customers better value for their money than my competitors? That is the focus of research in business or in short what is called market research.
When you conduct research on how you are going to get your product or service into the market with the better value than what your competitors are offering, you have taken the first step. The next step is how to utilize the research for the benefit of the business, that is commercializing the research. The orientation for commercializing research is how do I get a product that has the best long term value to my company to the market?. The product that gives best long term value is the product that fetches you more profit at the end of the day.
It should not be a product that fetches more customers. If customers are rushing you and at the end of the day you are not able to make profit, the product is endangered and will soon disappear from the market. What I am saying is that don’t take a product to the market at the cheapest price just to make sales or just to have cash flow. Unless you have a digital business where product costs are negligible, your research must incorporate a product development model for optimal pricing.
Optimal pricing is a matter of life and death when it comes to the issue of market success. If you consider the Chinese model of business development you may think that their prices are very cheap and so they are sacrificing profit on the altar of just making sales and having cash flow. Prices of Chinese products are about the cheapest in the world and that was how they won everybody over to buying from them. However, it doesn’t mean that they don’t make profit like businesses in other parts of the world. If they were not making profit, even though their government was supporting them, one day they would have run out of cash and would have disappeared from the scene. The presence of prosperity all over China today is the fact that they have been making comfortable profit even with their low priced products. The secret is that they use a product pricing strategy that is different from the strategy in use in other parts of the world. In other parts of the world they use cost based or cost pushed pricing methodology. That is they put together all the costs that are used in producing a product. After that they add the margin or profit they expect to make to arrive at the price to sell the product in the market. The Chinese employ an opposite methodology. They arrive at the price first. Then they subtract the margin or profit they are expecting to make from the market price. The balance left is the total amount all the costs that will be used to produce the product must be. So they are not driven by costs of inputs but by the ultimate market price.
The analogy is simple. If they had fixed a price that is just 30% of what others are selling they would have still been able to bring the same product to the market. It is just to look around and shop for how to get low priced inputs for production.
So, when engaging in market research for your product or service, what you are expecting to happen at the market end is what should shape or guide your efforts. That is, how to make the product or service commercially viable in terms of market relevance and competitiveness. These must be on top of what you consider as important.
Kola Owolabi (FIMC) Fellow of the Institute of Management Consultants is the CEO of David Solomon Consulting Limited based in Igbesa, a surburb of greater Lagos, in the vicinity of Crawford University. The organization is into Market Research activities like Consumer Research, Competitive Research and Industry Research as well as preparation of Marketing and AI powered business plans.
Kola Owolabi can be reached by phone or WhatsApp through 08023203198.
