Knowledge is Power
Marketing research helps you understand your competitive position, spot opportunities, lessen risks and take better decisions. It is more then just market research, which is concerned only with examining aspects of a given market, such as its size, location or growth potential.
Marketing research can give you indications, but it cannot give you answers. What it can do is allow you to make marketing decisions based on the best, most up to date information available.
This briefing will cover:
- Using different research methods.
- Sources of information.
- In-house and commissioned research.
- Budgeting for marketing research.
Types of Research
Five areas provide key market intelligence.
A Customer research looks at who you sell to and who else might buy.
- You need to know the numbers and types of people who might become customers.
- You need to understand as much as possible about customers’ and potential customers’ behaviour, needs, expectations and buying patterns.
- You are looking for possible segmentation opportunities. The more precisely you can identify each market niche, the more you can sell to it.
- Loyalty and satisfaction levels among your existing customers are key factors. Any shortfall among your competitors’ customers offers an opportunity.
- You need to know how customers view your customer service.
B Product research looks at what you are selling, how it compares with other products and how it might be refined and developed.
- You need to establish the competitive position your products hold.
- You need to test the potential acceptability of new products and services.
- You need to be aware of new technology that may provide opportunities or threats.
- Research can help you understand where your products are in their life cycles.
C Promotion research looks at what impact your publicity spend is having.
- How effective is your activity?
- How do you use your sales force (including telesales)?
- How effective are your advertising, point-of-sale materials, mailshots, social media and website?
- Does your company’s image help – or does it work against you?
D Pricing research tests whether you could be selling your product for more.
- Investigate perceptions of price versus value, both among customers and among non-customers in your target markets.
- You need to know wether your product’s positioning is right for its price point.
- Full and up to date data on competitors’ prices is an important factor in many business decisions.
- You need to know, preferably before you try them out, what the effects of discounts or loyalty bonuses would be.
E Distribution research examines how your product gets to the marketplace.
You may not be aware, until you do the research, of all the direct and indirect channels your product passes through.
- Who are the intermediaries that stand between you and your customers? Do the brokers or wholesalers who matter recommend you to end-users?
- Does the bulk packaging of your goods help or hinder your sales?
- Are the transport methods you use cost-effective and appropriate to the size, weight and fragility of your product? Do your delivery times suit the customers?
It is easy to do too much research. Nice to know information is a luxury. Focus on the critical factors in your key markets.
What Do You Need to Know?
You need to know what you want from the research before you can decide on the depth, mehtods and justifiable budget.
A Use exploratory research for ‘quick and dirty’ clues to aid real-time decision making.
- For example, are there local customers for your domestic plumbing service who do not even know you exist? If so, a door to door leaflet drop may bring good results.
This initial research may uncover the need for more detailed analysis. Exploratory research will often tell you why a product or service is not working, or why one product sells more than another.
B Invest in detailed research when you need to put flesh on the bone.
- You will want concrete, detailed data to inform your planning decisions.
For example, how many high-income families within ten minutes’ drive of your office might be in the market for outdoor jacuzzi installations costing £2,000 each?
C Causal research can be extremely valuable but is often hard to carry out and interpret. It is aimed at answering ‘what if’ questions.
- For example, how would raising your prices affect your sales volume?
Where it is appropriate, desk research is the cheapest and quickest research of all. It can be very useful for broad-brush exploratory work.
Much of the data will be available to yoy at little or no cost, from internal or public sources.
A Internal sources are free, reliable and usually instantly available. They can yield valuable data about sales volumes, buying patterns, customer size and location and causes of dissatisfaction.
- The key sources are account records, sales reports, customer records and records of queries and complaints. Do not ignore informal feedback from your employees.
- Your internal sources may not be set up to make access to this kind of data easy. You may need to change your methods of recording information.
B There is a wealth of external sources to investigate, especially the Internet
External data will be especially important when you are launching new products, entering new markets or starting a business.
- Major sources include government statistics (UK and foreign), trade associations, trade press and professional journals, business magazines and the business pages of the national (especially broadsheet) newspapers.
For example, data from these sources will help you understand the size of national and regional markets for your products.
- Universities and research organisations can often provide specialised technical data.
- Your local Business Gateway can give useful local, regional and UK survey information.
- A wide range of data is available commercially on a syndicated basis, with detailed, highly specialised reports costing a few hundred pounds each.
Always check survey dates, as old data can be dangerously misleading.
The external data you find may be in useful forms. It may have been collected for other purposes, or be from a sample that does not tally with your target group.
Field research is usually more expensive and difficult to organise than desk research.
There are three main ways of gathering data.
A Use questions to reveal what people think.
- The best form of questioning is usually face to face (singly or in groups).
- Interviewing by phone is cheaper, but demands good technique and may be less revealing. People may resent the call, or you may not have their full attention.
- Postal questionnaires are cheap – and you may be able to piggyback on your own existing mailings. Email is even cheaper.
Make questionnaires easy to respond to.
All written surveys produce low response rates and those who reply will be a self-selecting group, which may be untypical.
For example, pensioners may be over-represented in postal surveys.
Make survey questions open-ended, so they cannot be answered with a yes or a no.
B Use observation to reveal what people do, rather than what they say or think they do.
- For example, how do shoppers behave at a particular point of sale display?
C Use experiments to see what people will do in a particular, controlled situation.
- For example, will people choose your cakes in blind tasting tests?
The usefulness of field research depends on the clarity of the questions, the reliability of the sample, the researcher’s skill and the clever interpretation of the data that is collected.
Quantity or Quality?
A You must base quantitative research on samples that are big enough to give reliable information, if you aim to establish statistically valid data.
- This means that your survey must usually involve questioning at least 150 people.
- Scripts must be used, to make sure all participants in the study are asked exactly the same questions.
B When you need to know about people’s feelings and motivation, you must use qualitative research methods. These are concerned with depth, rather than breadth.
- Participants are encouraged to give detailed answers and discuss their opinions, rather than just replying to a strict questionnaire.
Qualitative research is often done in small groups, known as focus groups.
- Allow plenty of time for qualitative work. It always takes longer than you expect.
- Qualitative research is harder to analyse than quantitative research.
The danger is that you allow the opinions of the loudest or most talkative members of a group to carry too much weight.
Talking to customers and ‘keeping your ear to the ground’ are familiar low-key forms of qualitative research.
Can You Do It Yourself?
Non-specialist desk research can usually be handled in-house. DIY field research will only work if it is set up properly, right from the start.
A You must be clear what data you require.
B You will need certain technical skills.
- For example, in designing questionnaires and running focus group discussions about new products or advertising.
If you and your employees do not have relevant experience, it may be a false economy not to call in some outside help.
C You must give the individuals doing the research enough time to do it properly.
D There must be a realistic budget to cover the costs involved.
- You may have to pay for the printing, and perhaps mailing, of questionnaires.
- You may have to pay to hire a hall – or even a research lab, where you can video the discussion and observe people’s reactions through one-way mirrors.
- You will have to pay respondents’ travel expenses.
Focus group participants are often paid a small incentive. This is usually £20 to £30.
Choosing an Outside Agency
Small businesses often cannot use agencies, because most agencies will not work on projects where the budget is less than £3,000 to £5,000.
This is not greed. If you cannot afford enough interviews, your results will not be reliable.
‘From ensuring customer satisfaction through to planning effective marketing, research can provide the market intelligence needed to ensure business success, enhance competitiveness and maximise profits.’ ~ Jane Galbraith, Market Route Mapping
A Find out what kind of reputation the agency you are considering has (in general and in the particular area of research).
- What do previous clients say?
B Decide how comfortable you would feel about working with the research agency.
- Do you trust the people you have met?
- What relevant experience and qualifications do its employees have?
C Be realistic about the likely scale of fees.
- Fees will reflect the work to be done and the agency’s supposed status.
- Can the project be scaled down?
D Consider whether you should be using a freelance researcher.
- A freelance may be the best affordable option, especially for qualitative work.
If I can be of any assistance based on this information and you wish to discuss further, please get in touch with Jane at email@example.com or call 07825 284865. Visit us at Market Route Mapping.