Forget focus groups and mail surveys; with constantly changing markets and ever-increasing competition, companies are finding new ways to determine what customers really want.
Anything worth knowing about your customers, traditional market research can't tell you anymore
When Peter Shamir returned to New York City, in 1995, he slipped back into a lifestyle long forgotten. For the previous 25 years Shamir had lived in Jerusalem, where, in spite of political tumult, brutal wars, and chronic terrorism, life's pace seemed manageable--even serene. "Jerusalem is still a small city, very different from what I was entering," says Shamir. In Manhattan, everything was a blur: the cabs, the meals, the phone conversations. Each day Shamir was pummeled with raw insight into how Americans live. But he was more concerned with how they shop.
Shamir, age 47, had journeyed to the States as a scout for Sky Is The Ltd., a four-person Israeli-based start-up that distributes a wafer-thin cracker called Bible Bread. The company owners, Zack Shavin, Moshe Shuster, and Shuster's brother, Danny Yasoor, had dispatched Shamir, their vice-president of marketing, to launch Galilee Splendor Inc., a U.S.-based subsidiary that would sell the product throughout North America. But the Israeli contingent lacked critical knowledge: the group hadn't a clue about why the average American grabbed one cracker versus another. Shamir came to the States searching for answers.
For those who rank food shopping a notch above root-canal work, a season in hell might seem more appealing than Shamir's life in the United States. During his first six months he schlepped from family-owned convenience stores in Harlem to Von's supermarkets in Los Angeles. He met with dozens of distributors and brokers and peddled the product as he bobbed in and out of food stores in Detroit, Atlanta, and Nashville--to name just a few of his stops.
For the most part, Shamir was following a well-trodden path into American food stores. But the company needed more than just solid distributors to become successful. Driven by his own craving to understand the American consumer, Shamir would often cruise the cracker aisles to observe unknowing consumers. That casual research provided pertinent feedback.
"The average consumer took about 10 seconds to find the cracker they wanted," says Shamir. "Bible Bread would clearly not get noticed in the cracker aisle of one of the big markets." But gourmet, health-food, and kosher stores seemed to be a better match. Even the deli section of the larger markets held more promise. At least there, consumers were more likely to linger in search of new products. "We already knew we had a good cracker," says Shamir, "but the research let us know where to put it."
Since that time, Bible Bread has popped up in specialty and gourmet stores in 30 states. The number of stores has jumped by 50% in the past year, and U.S. revenues are projected to reach $1 million by the end of 1998. Although Galilee Splendor now has a better grip on its typical cracker customer, research efforts haven't slowed. Shamir, now based in Miami, continues to quietly stalk shoppers and gauge their reaction to Bible Bread.
But Galilee Splendor is a rare bird among small companies in its attitude toward market research. Most just assume that a market exists for their product or service. As Kathleen Seiders, assistant professor of marketing and entrepreneurship at Babson College, in Wellesley, Mass., puts it, "Entrepreneurs think they have divine intuition, which is fine if you're part of the audience you are trying to reach. But when you move outside that market, your gut instinct can let you down."
Shamir knew better than to trust his instincts alone when he arrived in the States. And by following his curiosity about shoppers, he unwittingly caught the latest wave in market research: a trend that shuns survey statistics in favor of passive observation of consumers and open-ended questioning. Increasingly, corporate behemoths and top-notch market-research firms have become disenchanted with traditional research methods and have opted for more creative avenues into consumer thinking. Experts may charge heavily for the cutting-edge services, but many of the new methods can be easily adapted by companies with even the tightest of budgets.
Consumer behavior has long been a preoccupation for corporate America. But in spite of the millions of dollars poured into the traditional survey-based approach, untold numbers of new products die on the vine each year. The ever-widening chasm between survey results and reality has emboldened marketers to question the old-style methods. One problem with surveys is that respondents can be less than forthright. They fudge replies to avoid seeming foolish or ignorant. Some experts claim that consumers don't always recognize the need for product improvement. "Consumers will sometimes create what we call 'work-arounds' to compensate for a product's deficiencies," says Dorothy Leonard, professor of business administration at the Harvard Business School. "Those consumers often aren't even aware that they want something better."
More to the point for small-company owners, surveys and focus groups are tremendously costly and time-consuming. A single focus group can run as high as $20,000, and it can take months--even a year--to collect data and crunch numbers from a massive survey. "By the time you 'know the market,' the market has already changed," says Raymond R. Burke, a market-research expert and a professor of business at the Kelley School of Business at Indiana University. "We are in the midst of watching a real shift away from survey-based research."
The shift is toward a vastly different breed of innovative--and sometimes outlandish--approaches that seek to unveil the consumer's hidden thoughts. Today's methods borrow liberally from anthropology, cognitive psychology, and--through role-playing--even the performing arts. Rather than invite consumers into artificial testing situations, marketers now charge out into the field to observe and examine consumers at work, in stores, and even at home. And then they analyze their observations.
Taken at their highest level, those methods demand the skills of a thoroughly trained professional marketer. But company owners can appropriate many of the new techniques to uncover an enormous amount of market information on the cheap. Best of all, unlike survey-based studies, that research doesn't require massive numbers of people. The object is to uncover an array of ideas that might help you improve your product. "You don't necessarily care if 20% feel one way and 80% think another," says consumer-behavior specialist Roger D. Blackwell, a professor of marketing at Ohio State University, in Columbus, Ohio. "You want a range of views."
