Informal Research: Advantages and Disadvantages
Welcome to Unit Two, Video Two: Informal Research, Advantages and Disadvantages. In this video, we’ll discuss informal market research in more detail. We’ll talk about the advantages and disadvantages. Let’s get started.
Informal research includes any conversations about a new product. These conversations could happen with a variety of people through a variety of communication channels. The people could include local business people, but also family, friends, and acquaintances.
An acquaintance is somebody you know but not very well. The communication channel could be a casual conversation in person, over the phone, or Internet. Or it could be informal writing over the Internet, through email, or social media. Here is what an example could look like. A researcher could present the one sentence product description with a prototype if available, followed by two questions:
What do you think?
Would you buy it?
Let’s think about the advantages and disadvantages of informal research. The advantages of informal research are it’s easy, cheap, and quick. It’s easy because family, friends, and acquaintances are often willing to give opinions. Local business people may be willing to talk if they know the researcher, if they sell products related to the new product, or have a need for the new product. It’s cheap because often the biggest cost in doing research is the time away from paid work to do it. Travel, refreshments and other expenses should be lower if the researcher is communicating with people they know. It’s quick: not much planning is needed and conversations can be short.
Easy, cheap and quick all sound good. However, informal research has some serious disadvantages. Once disadvantage is that the results are usually qualitative and not easily measured. To understand this point more clearly, let’s look at some sample answers to the two common questions.
For “what do you think”, people could respond:
I like it a lot.
How do you measure these responses?
For “would you buy it”, people could respond:
I think so.
If I had money.
These are also difficult answers to measure because some of the words and phrases are not very clear.
Another disadvantage is that the results may be subjective instead of objective. Subjective means ‘based on personal beliefs or feelings rather than based on facts’.
Family, friends, and acquaintances will want to be supportive. They may say positive things when they may not really like a new product at all. A similar concern is that local business people may worry that a new product will compete with theirs. That means they may say they do not like the product when they might like it very much.
If the results are qualitative and possibly look subjective, there’s a risk that investors may not be persuaded of the value of the market research, which means they won’t provide funding. To attract investors, entrepreneurs must provide data that shows persuasive market interest in the new product. That shows this new product is an opportunity. Therefore, it’s difficult to use informal research to attract investors.
Even with these disadvantages, informal research can be a useful part of new product development, especially at the early stages, because it is easy, cheap, and quick. However, the fact that it’s difficult to measure, may be subjective, and may not be persuasive to potential investors, means that formal research is necessary as well. We will discuss this in the next video.