When companies look for ways to increase revenue, they have few options. They can attract more customers for their existing products, raise prices, or offer new products to the public. The problem is that the development costs of creating a new product are often significant. Investing limited resources in that development carries a certain level of risk. After all, if a new product fails to generate sales, the resources that were allocated to its development are wasted. Because resources are finite, their waste is even more costly since they cannot be allocated elsewhere.

In order to limit their exposure to risk, many businesses will conduct market research surveys prior to developing new products. While these surveys cannot guarantee success, they can eliminate much of the uncertainty. Below, I'll explain a few of the reasons why you may want to survey your market. I'll also describe a few strategies for deploying your survey.

Reasons To Use Market Research Surveys

The main reason to survey your market prior to developing a new product is to identify the likelihood of generating sales. This goes far beyond merely asking people if they would buy it. These surveys can help you determine if a need or desire for the product exists in the market. And if so, will people pay for it? A market research survey should help you gauge whether those who show interest in your company's new product have the necessary discretionary income and the willingness to spend it.

Surveying your market also provides other useful insight. Assuming you design your survey properly, you'll be able to learn whether the revenue you hope to generate is sustainable. If your business is investing substantial resources in developing your new line, you'll want to be reasonably confident that sales won't deteriorate after the first year.

Your survey can also help you identify potential hurdles that may impede your company's success. For example, how severely will price and availability impact sales? That is, will consumers be price sensitive? Will a short-term supply shortage create a lasting problem? Also, you can determine to what extent, if any, your company's new product will cannibalize an existing product line.

Survey Strategies

Consumers are becoming more resistant to participating in surveys. Everyone's time is limited, so they're less apt to give it away. That said, there are several approaches to conducting a market research survey, including web-based, phone, mail, and personal interviews. Mail and phone surveys are being used less often today because people screen their phone calls and are quick to discard mail they perceive as "junk."

Personal canvassing is still used because many consumers are more willing to participate with face-to-face interaction. And web-based surveys are steadily gaining widespread use because people can answer questions at their convenience. That said, using personal interviews is expensive. And web-based surveys are hindered by people's natural aversion to spam email (which normally will contain links to the online survey).

Talk Is Cheap

It's also important to note that consumers often have a tendency to act in a way that contradicts their survey answers. For example, a well-designed survey may give every indication that your company's new product will be a success. However, upon launching the product, you may find that sales lag far behind the expectations you had based upon your survey data.

This doesn't mean that surveying your market is useless. Doing so is, in fact, extremely valuable. But, survey data alone does not completely eliminate the element of risk inherent in developing and launching a new product line. If you're considering introducing a new product and have the resources available, survey your market. The data you collect may suggest that you expedite the launch or abandon it entirely.