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Many businesses begin with an idea for a product or service and thrive when it proves a hit. But gut instinct about what people want will only take you so far. Sooner or later you will need more detailed information about your target audience.

This is where market researchers come in, talking to consumers and gathering intelligence to help you make the right strategic decisions. Information about what people think allows you to plan accordingly, regardless of the type of activity you are about to embark on.

If you are developing an idea for a product and planning to spend large sums of money on its launch, it is wise to check that your target market is as enthusiastic about it as you are. For example, when Britvic created a range of innovative products recently, it tested them out on its target market to ensure that it invested only in those that proved to have potential.

You might also want to know what you can do to improve the service you offer your customers. MyTravel used research to find out what people look for when booking a trip and to find out where it was underperforming in comparison with its rivals. Similarly, Asda asked shoppers what they really care about to establish how it could boost customer satisfaction.

You can also use research prior to an advertising campaign to discover which creative idea works best - an approach used successfully by companies such as Arla Foods and Guinness.

Consumers' verdicts may not always be welcome and you may have to abandon a cherished project. But that is preferable to pushing ahead with what could prove to be an expensive flop. In some cases, a few tweaks to address consumers' reservations can make the difference between success and failure.

What you can be sure of is that you will be getting an objective view.

'Market research has no vested interest, unlike a lot of marketing disciplines that exist to provide a specific service,' says Simon Lidington, chairman of the Market Research Society.

There are two ways to carry out market research. The quantitative method involves asking a statistically representative sample of consumers specific questions and measuring the responses. This enables you to analyse, for example, the proportion of your sample that would buy the product you are developing, how many are not sure, and how many would definitely have no use for it.

The other technique is qualitative. This approach offers people the chance to describe their reactions in their own words. This means you can find out exactly what they like or dislike about your idea, enabling you to make relevant changes.

Both these methods of research are widely employed; for example, newspapers run polls to find out what people think about various issues, and in politics, parties rely heavily on focus groups to gauge reactions to policy initiatives.

Gathering research

Quantitative information can be gathered from people in the street, by ringing consumers at home or from online or printed surveys. However, for the results to be meaningful, you need to make sure you are asking people who represent your target market: consumers of the right age, gender and level of affluence. The sample also needs to be large enough to provide a statistically meaningful result.

The drawback of this approach is that you will only get answers to the questions you ask. By contrast, talking to people face to face can reveal things that might otherwise never have occurred to you, opening up further opportunities.

When Volkswagen took over the Czech Skoda car brand in 1991, it decided to talk to Skoda's customers to find out what made them want to buy something so unstylish. To its surprise, Volkswagen discovered that Skoda drivers were proud of their choice and enthusiastic about the brand. It turned out that this was because Skoda had a very strong service ethic and cared about its customers. Having made this connection, Volkswagen began to follow Skoda's example, transforming the way it was perceived by its own customers.

Samsung used research to find out the type of innovation its consumers wanted to see, rather than creating products driven solely by advances in technology. Research International created a carefully chosen focus group for the brand that included creative people who were also sufficiently technically savvy that they could suggest ideas that might be viable.

This approach produced several hundred innovative concepts.

Anna Lilleengen, senior client consultant at Nunwood, describes market research as 'pixie dust', because of its power to transform brands. 'Countless brands have found renewed vigour and inspiration from information discovered through research,' she says.

Nunwood has established a system of benchmarking for Somerfield that enables it to set targets in each of its stores. It is based on quarterly customer satisfaction surveys provided by researchers who talk to shoppers.

The scheme reveals which stores are succeeding and which need help, driving improvement as well as motivating store managers.

The agency also helped Norwich Union Direct discover what customers think of its service, from the initial quotation stage through the lifecycle of the relationship. 'This helps us improve the elements that have the biggest impact on satisfaction, boosting customer retention and revenues,' says Nigel Gollop, insight manager at Norwich Union Insurance.

Valuable insight

Market research has its critics. Some claim that marketers hide behind research instead of having the courage of their convictions. But David Iddiols, managing director of HPI, argues that this is not necessarily the case. 'Switched-on companies view it as a lamp that throws valuable light on marketing and product development,' he says.

Others object that a lack of imagination on the part of consumers can stifle innovative thinking; Henry Ford once famously remarked that if he had asked people what would help them get around quicker before setting up the Ford production line, they would have answered 'a faster horse'.

This implies that research will tell you only what people have done, not how they will behave in the future. However, proponents argue that this is also a myth. 'Anyone who has attended a consumer idea-generation workshop knows how accurate simulated product sales can be,' says David Walker, UK client service director at Research International.

Nor is it true that the impact cannot be quantified in terms of bottom-line results. When premium milk brand Cravendale attempted to find out why it was not performing as well as expected, research by Millward Brown showed that it had failed to convince consumers that it was superior to ordinary milk. The agency recommended an approach that emphasised the pleasing taste of the product, which led to the return on its advertising spend increasing fourfold.

Profitable recommendations

Millward Brown also investigated consumer views on behalf of a sparkling-water brand, finding it had more growth potential than any of its rivals.

Analysis of the research showed that the company could capitalise on this by identifying different occasions when the product could be consumed.

When this recommendation was implemented the brand increased its share of the market by 50% and is now third in its sector.

Similarly, the agency helped a struggling telecoms brand by identifying weaknesses in the brand message and customer service. The company addressed the issues and experienced a jump in subscriptions of 42% year on year.

When designing a research programme it is important to be aware of the pitfalls. A common mistake is to set out with a pre-determined idea of what you want to know. This means the research will return views that match your preconceptions when what you really need is creative thinking.

Giving your chosen research agency the freedom to design the research itself helps avoid this, as it can probe consumers with questions that you might not have thought of asking.

Success also depends on the results being used properly. 'They need to be objectively interpreted and used as an aid to inform judgment rather than as a crutch,' says Janet Richards, research director of RDSi.

Some companies might prefer to focus their marketing spend on trying to get consumers to make a purchase, rather than asking them questions.

But knowing what your prospective customers want in the first place means they will need little persuasion. Viewed that way, market research is one of the most important tools you can apply.

CASE STUDY - VISITSCOTLAND

Tourism agency VisitScotland used qualitative market research to optimise a pan-European marketing campaign. It needed to know what consumers would respond to and whether different approaches would be required for Germany, France and Spain.

Research agency Nunwood set up two workshops in each country segmented into walkers, tourers and city breakers. Discussions centred on possible objections to Scotland as a holiday destination, such as lack of awareness of what it could offer. Responses to images of Scotland were used to elicit views.

A key insight was that consumers' interests were similar in all three countries, which justified a single pan-European creative, leading to big savings.

A second round of research was carried out to evaluate different creative executions. Print ads and inserts were released across Europe in the summer of 2004.

Return on investment jumped from 13:1 to 25:1 compared with a similar campaign in 2002. Brochure requests increased by 68% in Germany and 126% in France. There were an extra 180,000 hits on the French and German websites - up 200% from 2003.

Annabel Kohler, international marketing manager at VisitScotland, says: 'These results prove that a centrally co-ordinated campaign with a consistent approach and message resulted in more efficient use of budgets, as well as increasing interest in Scotland as a holiday destination.'

Such was the success of the project that it won the award for Outstanding Research at the Marketing Research Awards last year.

MARKET RESEARCH - DOs AND DON'Ts

- Do plan research when your business is quiet, rather than when sales are booming

- Do be flexible about the methodology: your agency may have an imaginative approach that you had not considered

- Do consider all the results, not just the ones you want to hear

- Don't read too much into the comments of one group of consumers or individual; look at the big picture

- Don't rely on research to guide decision-making; use it alongside information from other sources

- Don't have preconceived ideas about the outcome of the research.