Today, registering a site may be all it takes to launch a business. It will be difficult to gain a market share as long as the company is dependent on customer preferences, channel requirements, and competing offerings.
Market research has been used by traditional and electronic businesses to increase their chances of being successful. Market research, in its ideal form, is similar to scientific research, a loop of “learn, confirm, and repeat.”
First, we collect relevant market data. We then use our observations in order to formulate hypotheses regarding our most promising prospects and their preferred buying methods. We then test our hypotheses by observing the responses of prospective customers (and sometimes the channel and the competition).
We use the information we gather to refine our approach, continuing to monitor, influence, and test purchasing behavior.
Market research, when used systematically, is more than a tool to predict the success of a new product. It is a two-way dialogue between the company and its audience. When treated as such, market research becomes an ongoing source of information on opportunities for innovation and improvement.
Only a few of the biggest companies were able to afford to research every aspect of consumer behavior. Even these companies did not engage in a continuous dialogue with the entire market.
Internet connectivity and data collection behind the scenes are now a reality. A new generation of businesses has a 24/7 direct link to all potential customers via the Web.
Market researchers online are “wired” into their world just like a day trader or a cybergames genius kid. Browser-based applications can make product releases such as software upgrades and promotions such as media and website content instantly available to all market participants.
The researcher can also see the market’s response instantly. The only thing one needs to do is look at the Web traffic reports that are usually built into the back end of a site.
What does this mean for a company’s marketing activities? Let’s take a look at the first website of a young Internet firm to get an idea.
The Idea
What are some things you can do online? Gemvara is a Lexington-based online jeweler that bets you’ll buy custom-made jewelry through its new site, Gemvara.com.
Gemvara offers a unique customization option that allows customers to choose their favorite gemstones and precious materials when purchasing any jewelry item from the company’s stock. Substitutions will be reflected instantly in the price and photo of the piece, making it simple to “redesign” any piece according to a color scheme or budget.
The Story
Matt Lauzon was a Babson College student in 2006 when he won the Babson Annual Business Plan Competition. He also made BusinessWeek’s Best Entrepreneurs under 25 with his idea for a web platform that would allow customers to create custom jewelry.
The start-up company made headlines in 2008 when it received Series A funding of $5.8M from two venture capital firms, Highland Capital Partners and Canaan Partners.
The company began to build a management team that was consumer-savvy in late 2009. Gemvara.com began accepting online orders in February 2010.
What Now?
It is a good start to combine the ancient jewelry industry with current technology (a Web platform) in order to facilitate a growing trend — mass customization.
The next steps are just as crucial to the success of the company as the achievements already achieved.
Gemvara, like any other new business, must create a marketing strategy to develop a sales funnel. The social and business infrastructure that is available on the Internet today gives Gemvara its 21st-century edge.
What does that mean? The job of a marketer is to attract and engage “the right” buyer. We can reach millions of Web users in just a few hours by using popular sites and social networking while measuring “attraction” as well as “engagement” with sophisticated and easily accessible Web traffic statistics.
See how Gemvara uses the Web to guide a prospective buyer through all the steps needed to start a sale.
Attract and Reach
Attracting shoppers’ attention is the first step. It is difficult for newcomers like Gemvara to be found among the thousands of existing jewelry retailers on the Internet.
Solution? Gemvara advertises on comparison shopping sites, which have a lot of traffic and are well-known. This is to redirect customers back to the company’s site. Gemvara added a new product for every piece of jewelry that a prospect created, as the more content an organization has, the better it will appear in search rankings.
Word-of-mouth is a marketing’s best friend. Gemvara’s “Share on Facebook button” is located next to your picture.
Clicking on the image will reveal a message hard-coded below it: “I created this piece at Gemvara – The World’s Largest Selection of Customizable Gemstone Jewellery.”
Engage
How can you make the customers buy after you have attracted their attention? They should at least be viewing a few pages each time they visit. They may not return if they only look at one page.
The first and most significant statistic Gemvara has chosen to monitor and act upon is the bounce rate. This is the percentage of site visitors who leave after viewing only that particular page.
The company employs a similar tactic of trial and error to improve the experience for shoppers on its entire site. Gemvara concentrates on the pages that have the highest bounce rate and attempts to reduce it.
Dan Marques is Gemvara’s Director of Online Marketing. “When we first launched the site, our bounce rate on some of the catalog pages was terrible,” he says. “We looked at the other sites and found that theirs had price tags while ours did not.”
Gemvara’s bounce rate was brought down to average by adding prices and experimenting with different ways of displaying them.
Marques is able to guess the reason people leave, either by comparing it with a competitor who has been in business for a while or simply by looking at the screen. Marques will then fix and retest the screen design one feature at a. He will also test the customers’ responses before and after every change.
Gemvara will conduct usability testing through a third-party vendor if there is no obvious solution or the results don’t improve. It used to take a lot of time and money to find the right users. There are now many options available for online testing that are faster and cheaper.
Marques also tracks the percentage of customers who customize their purchases. Marques says that the customization rate for Gemvara is not just a measure of engagement but also a sign of how well their business idea is taking off. “Our value proposition” is customization.