Market research is a topic that usually conjures images of suited managers watching a focus group behind one-way glass. A tired-looking woman talks about how she likes her crackers in the shape of a circle, while an equally tired father of four argues that square is the ideal cracker shape. Behind the glass, the cracker company managers scribble notes and come to the revelation that a pentagon-shaped cracker would appeal to both men and woman — the perfect cracker.
While this might be the reality somewhere, market research is not reserved for just giant cracker companies and it encompasses a lot more than focus groups. In fact, market research is about as down to earth as marketing gets.
Marketing is essentially about listening, learning and reacting to your customers. Everyone is familiar with the reacting part, such as building a Web site or sending out a coupon, but it’s the listening and learning part that separates successful companies from those that struggle.
For example, Blockbuster closed 960 stores in 2009 and intends to close another 545 in 2010. Is that because of the economy? Is it because no one wants to watch movies anymore? Of course not. In an article on About.com, Fortune 500 retail consultant Barbara Farfan writes, “Blockbuster’s results seemingly have little to do with the Great Recession ... Blockbuster’s leaders failed to ask or answer the question, ‘How can we make the movie rental experience better for the customer?’” Without asking that question, without listening and learning, Blockbuster had no chance at a successful reaction.
The reality is customers are always sending signals about what, when, how and why they buy the things they do. However, it takes careful observation and organization to accumulate all the pieces of information and combine that into a lesson you can react to. However, for the vast majority of carwashes, the only way you can maximize your investment and stay healthy despite weather, economy or any other threats, is to understand the answer to questions like these:
Which segments are your most profitable? Is it busy moms running errands, or is it commuters on their way home from work? How does that change on different days of the week or even hours of the day? Which neighborhoods respond to which kinds of promotions? What is the ideal price point for your top package? How long are people willing to wait to get their car washed? What level of quality are they looking for in that time and at that price?
There are literally hundreds of questions like these that can be answered only through deliberate market research. When you combine all those answers and all of those insights, you get a composite picture that is the foundation of a great marketing plan. When you do it continuously you can evolve your marketing and adapt to even the most rapidly changing market. The reality for the vast majority of carwashes is that this is the only way to stay healthy and continue to grow.
So the question is how exactly do we go about conducting market research? Let’s discuss six methods of listening to your market. Each will help you obtain data that tells you something about your customers and potential customers. When you put all the information together, you will learn about your customers and be ready to react accordingly.
It also is important to have some objectives or general goals in mind before you start collecting your data. What do you hope to accomplish by assembling this information? Market research might help you find the right price or determine the right assembly of services. It can help you discover which marketing tools work best and where, as well as figure out what you’re doing right and wrong and how to do more of the former and less of the latter.
Understanding clear objectives is important because information is only as useful as the decisions it enables.
Research Methods
1. Segmentation – This is the categorization of the different groups in your community and is based on a mix of characteristics, such as age, race, education level and income. However, it’s more than just a group of people that make the same amount of money or drive similar cars. It is essentially various lifestyle groups. The easiest way to determine which segments are most popular in your market is to purchase a segmentation report from a market research firm.
I personally use the popular Nielsen Claritas PRIZM system, which uses census data as well as consumer purchase data to categorize individuals into 66 demographically and behaviorally distinct segments. For example, segment 13 is called “Upward Bound” and is described as “the home of those legendary Soccer Moms and Dads. In these small satellite cities, upper-class families boast dual incomes, college degrees and new split-levels and colonials. Residents of Upward Bound tend to be kid-obsessed, with heavy purchases of computers, action figures, dolls, board games, bicycles and camping equipment.”
Compare that to segment 44, or “New Beginnings.” This group is described as “young, single adults ... a magnet for adults in transition. Many of its residents are twenty-something singles and couples just starting out on their career paths or starting over after recent divorces or company transfers. Ethnically diverse, with nearly half its residents Hispanic, Asian or African-American, New Beginnings households tend to have the modest living standards typical of transient apartment dwellers.”
Starting at about $100, you can print a PRIZM report on the population in a one-, three- and five-mile radius from your carwash, and it will tell you how many segments you have in your area and the population of each. When