Psychometrics and market research

We are all different. We think differently and we find different tasks more or less easy to do.

For instance someone who is very confident may rely on their intuition. In an area where they have lots of good experience this may be fine. If they want to do something new they are exposing themselves to risk.

Someone who loves people and motivating or enthusing others may well talk to people they know to get information. The risk is that the information may not be objective, ie influenced by the person asking questions.

Someone who loves figures may analyse what has gone on before - but may find it difficult to be confident on predicting the future.

Other people prefer to become very knowledgeable about their product - and other products or services in the market.

All approaches are valid, but incomplete. You may find that you do one or two of the above, but not all.

In order to make good decisions, especially where investing time and money it is important to develop an approach that encompasses a variety of approaches. You may find this hard - perhaps working with a colleague that enjoys the bits you do not is a good way forward.

If you are a small business owner you may not want to spend more time and effort on research - however it does not have to take a long time - and does reduce your risk of failure.

Does customer service matter?

Customer service clearly matters. Companies like Kwikfit are more about customer service than mending cars and are more successful as a consequence. McDonalds is about service, as are most fast food companies.

What about hotels?

Somewhere in the list of "why we buy" is enjoyment, rather than convenience or necessity. Sometimes we stay in a hotel because it is in a nice place, nice building, and we can do things we like. A comment got me thinking recently.

We stayed in 2 hotels - in one they got our booking wrong, the UHT milk was off in the coffee, it always took 10 minutes to serve, and nothing matched. In the other, everything matched and service was almost like Pizzahut, timely, friendly, and very organised. A straw poll was taken and the first hotel was chosen. We felt able to relax, and actually we were able to overcome two small issues.

In the first hotel it was probably no accident that there were only 3 people staying. In the other, it was full. If that was the pattern - then customer service matters.

The question is why do we as customers go for the better marketed, more easy to find, better serviced offering? Are we always that lazy? Whilst both hotels were in the same village, both lovely buildings, and similar locations. What if the choice had been between one of them and an "express" chain? Similar price, similar everything, other than one building would have been functional and process orientated, and the other traditional English.

Then the answer is more about risk avoidance. e.g. If abroad - would you go to a McDonalds or a local restaurant?

Something to investigate.... As individuals are we in the business of limiting our disappointment, even on holiday? (its not about delighting your customers - is it more about the perception of risk)

If this was your project to investigate how general this was - and then how it applied to individual cases... what would you do?

Picking winners - hypothesis testing

Many people who start businesses for the first time do it for a whole host of reasons. Getting out of corporate life, inventing something and falling in love with it, or simply just wanting to have their own business. Possibly down the list of reasons is the opportunity they have identified has a real chance of making good money for them.

People who start new businesses who already have a business understand what is involved in setting one up and making it work. Perhaps the opportunity appraisal is at the top of their list of drivers.

Does the combination of experience and appraisal mean that existing business owners are more likely to be successful?

Statistics suggest that this is true - hence having someone in your team who has previous business experience is very valuable.

It is not foolproof - methods that work for one business do not always repeat. There is just a greater likelihood of them working.

We are interested in collecting data at the moment about drivers to start up new businesses and then monitoring how key decisions are being made. If you are interested in being part of the study - do get in touch.

Research on the hoof

The Bath and West Show June 2010

I have a love of coffee and could remember that previously there have been lots of stalls selling ground coffee. Whilst you can find every "difficult" product under the sun - ie those that do not sell on the high street, there was no ground coffee to be seen. I was there for 4 days and looked pretty hard.

4 years ago there was lots of coffee ground by individuals hoping to catch the eye of supermarkets.

During this time the market has matured and the supply chain settled down. Ground coffee or even coffee shops are no longer "growth" markets in the same way as they were and to some extend consumers have made their choices on brand.

Breaking this down - it is useful to research things over time - you get a picture of how things are changing. This is an example of longitudinal research.

I was working with a wood pellet supplier - Energy2burn - and with a bit of questioning it was a good opportunity to look at the competitive landscape. It was possible to work out margins, concentration ratios, marketing strategies, and predict behaviour. It helped match what I already knew about some companies to reality. This is called cross referencing.