Basics of Market Research

8/8/2019 Basics of Market Research

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Basics of Market Research

Market research surveys are the stock in trade for gathering any sort of market information. The

aim is to gather information from a small sample of a market in order to be able to predict what

the whole market wants.

In principle anyone can conduct their own market research surveys given the time, an openness to

listen and a little bit of learning. We have a number of other DIY resources.

Types of market researchMarket research surveys can be divided in two - quantitative research and qualitative research (a

third category is observation studies, but these are less common).

Quantitative research (quant) is about getting the hard measures of a market - market share,

how many people think... , how many people saw our advertising, how many people would buy...

. Qualitative research (qual) is about the softer issues exploring why people do things or think

the way they do. These types of survey are usually complementary - you might explore the

reasons why people buy in qual, then measure how important these reasons are in quant.

Quantitative surveys mean getting people to answer fixed questions in questionnaires. These

questionnaires can be completed over the telephone, face-to-face, through the post or via the

Internet. Because the objective is measurement it is important that all people answer the same

question. Changes to wording can dramatically change your measurements. Consequently

quantitative interviewers are trained not to stray from the script and good questionnaire design

is extremely important.

Qualitative surveys are about exploring an issue with people. There are no fixed questionnaires

and interviewer use their interviewing skill to draw views and opinions from people using a

discussion guide (there are some differences in the US and UK views of how qualitative research

is conducted). There are two main approaches to qualitative research -depth interviews (one-on-

one interviews) and the focus group (aka discussion group) where the group dynamics means

that individuals spark ideas and discussion off each other to explore a topic. It is important that

the qualitative interviewer doesn't bias the discussion and lets the interviewee(s) describe things

in their own terms - how something is said can be as important as what is said. Qualitative work

is typically carried out in person, but it can be conducted over the telephone or over the

Internet.

Both quantitative and qualitative research are based on the notion of sampling to identify who to

talk to and the idea of the interviewer as an unbiased observer or collector of information.

Samples


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At the core of market research is the idea of a sample. A sample is a group of people drawn at

random from all those people who are in your chosen market. By "drawn at random" we mean

that each person in the market has the same probability of being questioned as any other. For

instance if you had a database of customers and wanted to select customers "at random", you

might put this list in alphabetical order and take every nth person.Some care is needed in choosing how to select a sample. If you do not make the sample

random, you risk introducing bias and so get misleading results. For instance if you choose 1

in n people from a telephone book, you miss out all the ex-directory phone users, who are more

likely to be the wealthier individuals. Typically a researcher will use their judgement and

experience to trade off the quality of the sample against the cost or difficulty of contacting the

right people.

Sample sizeIf you took a random sample of UK voters and 25% said they would vote for the Blue party you

would want to know how accurate this was. Random samples are subject to known statistical

laws which describe how accurate each sample is likely to be.

If your sample was 10,000 people you would be 95% confident that this reflected the views of all

voters +/- 0.85 percentage points. In other words there is a 19/20 chance that the "real" share

of the vote for the Blues would be 24-26%. (95% is the usual level of confidence quoted, but

you can estimate accuracy to any confidence level - 99 in 100, 999 in 1000 etc).

Because contacting people and making interviews costs money, there is a trade-off between

sample size and required accuracy. If in the example above the sample size was different you

would have different levels of confidence.

Sample size Error (95%level) Accuracy range of "25%"result

10,000 +/-0.85 24-26%5,000 +/-1.20 24-26%1,000 +/-2.68 22-28%500 +/-3.80 21-29%100 +/- 8.49 17-33%50 +/-12.00 13-35%10 +/-26.8 0-52%

If you look at the table above, there is practically no benefit in going from a sample of 5,000 to a

sample of 10,000 yet your costs would have doubled. In fact, accuracy doubles every time you

quadruple your sample so accuracy can be very expensive.

Nonetheless, the sample size you use depends on the type of survey you are trying to carry out.

If you are trying to assess the impact of small price rises or changes to attitudes after an

advertising campaign, or changes to satisfaction then you may want real fine accuracy (to +/-

2%). But if you just want a "yes/no" decision you can take a broader view of results and


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accuracy of +/-10% may be entirely suitable. For most quantitative market research studies a

common rule of thumb is that you aim to talk to 100 people for each significant subgroup in your

market.

Note that the sample size is pretty much independent of the size of the market you are looking

to research (unless there are very very few customers - under 500). So the error in researching

a market of 100m customers is almost exactly the same as in researching a market of 100,000.

You can't cut the sample for a smaller market.

For qualitative research, the aim is not measurement but exploration. Consequently sample size

is less of an issue. Of more importance is to get a complete picture of how a market works.

However, clearly if you only talk to 5-6 people the usefulness of the research will be less than if

you talked to 12-16 people.

Quantitative questionnaire designGood questionnaire design makes it easy for the person answering to answer and is clear,

unambiguous and doesn't lead the person answering in one direction or another.

Common problems are to ask questions that are too difficult to answer (eg "Would you buy X in

five years time?"), or unclear in their meaning ("Do you think relationships will change the

world?"), or have double meanings ("How hot was your spicy pizza when you ate it?"), or contain

two questions ("Do you think corrupt politicians and charity workers should be eradicated?"), or

lead in some way ("Do you use your air-polluting gas-guzzling car less often than you use to?"),

or fail to address the problem from the interviewees point of view (ignoring key service elements

is common).

The order in which questions is asked can also be important. The adverts that can be

remembered without prompting (ie spontaneously - Which ads can you remember seeing) are

more likely to be top-of-mind than those remembered with prompting (Which of these ads can

you remember seeing). Questionnaires, therefore typically run from the very general to the very

specific as this also helps the flow which reduces the time taken to complete the interview.

Consequently, interviewers are trained not to lead the interviewees and to probe to get fuller

answers (Why is that? Could you clarify that for me? Could you explain), without prompting (Did

you say Mustang or Mazda?).

Ideally all questionnaires should be piloted. To find that questions don't work after speaking to

1000 people is not very helpful. However, a good initial test even before a pilot is to ask a

member of your family to complete the questionnaire as this will typically highlight the most

glaring of problems.


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Qualitative research designsThe design of qualitative research depends on the subject and the audience and the skills of the

interviewer/moderator. If the subject is personal or private then depth interviews will be better

than group discussions, if the subject is more widely considered and discussed then focus groups

may be best as the stimulation for discussion comes from the group members. For certain types

of respondent (eg business people), a face-to-face group discussion may be not be feasible

although telephone conferences or email groups may be alternatives.

Interviewers themselves are also important in the qualitative process as the level and quality of

probing and questions will depend on the interviewers understanding of the subject at hand, in

order to identify areas that need clarification or further exploration and to provide a point of

reassurance to draw more out of the interviewee. It is difficult to discuss the issue of hedging

with a financial director unless you recognise that this might have something to do with

exchange rate risks and to have some understanding of what the implications of hedging could

be.

Often in qualitative research, it can be difficult for the interviewee to express themselves

adequately in words particularly where you are looking at the emotional appeal of something as

opposed to its practical features and benefits. Researchers use a lot of games and prompts to

draw out different views. For instance in projective techniques researchers might ask someone to

say "If X were an animal, what type of animal would it be?"and then explore the reasons behind

these views. Most researchers have a kitbag of tools and techniques that they find useful to help

capture views and responses. Typically the closer you are to the creative design arena, the moreexotic these techniques become. But for most work, plain vanilla qual with an interviewer who

knows the subject area (but doesn't lead the respondent) are to be advised.

Group discussions add another twist as the interviewer in the guise of a moderator has to ensure

that the group captures and includes the views of all the participants. There are dangers that one

or two voices pre-dominate negating the benefits of the group environment.

A key element of qual research is that you should record the discussion and then transcribe

notes later. Relying on memory is often not good enough and listening to the discussion guide a

second time can change your opinion of what the interviewee really meant. Typically qualitativeresearch is reported as finding supported by quotes.

Doing it yourselfTypically the main problem with DIY is not so much not being able to do it, but not having the

experience of what works and what doesn't. For more advanced subject areas, design expertise


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can be crucial. Having said that if the first run is not crucial, then the experience will be really

helpful subsequently whether you do-it-yourself later or buy in expertise.

The key steps are:

1. Select the type of research you need (Qual/Quant)

2. Choose how you want to get in contact/recruit the relevant people

3. Design a questionnaire/discussion guide

4. Recruit the relevant people/interview them/send out the questionnaire

5. Amalgamate and analyse the results.

The recruiting/interviewing task is the biggest. There are many companies that will just do

fieldwork for you or arrange interviews if you provide them with lists. There are also manyDP/transcription companies that will process your completed questionnaires or transcribe your

interviews for analysis. All these steps can be carried out by hand, but the biggest issue is

normally time which is where sharing the workload will help.

In terms of cost, most market research is charged on a time basis plus a management/design

fee. If you took a general face-to-face population study of 1000 people. You might allow 15

minutes for the interview, 20 minutes finding/contact time, 10 minutes for processing each

questionnaire - so 45 minutes per interview or 750 hours of time (100 days), on top of which

would be added time for questionnaire design, production and dispatch, interviewer briefing and

management, creation of tables, analysis and presentation. Typically on a straightforward survey

these elements should add about 15-20 days, although at a higher daily rate.

For more complex studies, contact time can have a far larger impact on the cost than the actual

questionnaire length. However, questionnaires that are too long demotivate interviewers and put

respondents off research and typically need high levels of incentives to encourage completion.

For on-line surveys, sample cost can be a extremely large element of the final bill.

Qualitative research is charged on a similar basis to quantitative research, but as sample sizes

are smaller it is typically less expensive. However although recruitment is far less expensive, the

interviewer is more expert and interview and analysis time and costs are typically higher

reducing the difference in cost between small quant and larger qualitative work.

Research via the Internet

The Internet has become a major force for carrying out market research with customers via on-line

surveys and on-line groups, but also for intelligence gathering on competitor and market

developments.


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Our specialist on-line survey site is at SurveyGarden for a demonstration or for more information

contact us via the email address below (also see our On-line research Hints and Tips).

Quantitative survey design and implementationQuantitative research conducted on-line via internet or web-based surveys can take a number of

forms and formats - Web-based questionnaires, pop-up Web surveys, and online polls depending

on the task. With increasing numbers of people across the world using the internet, this has

opened up a range of new interview and research techniques that go beyond those available on

paper or the phone. This includes more sophisticated computer-driven surveys that respond to

customers' choices, and long-term tracking where individuals provide feedback over time, not

just in one survey.

The main elements needed for online quantitative research are

1. an online questionnaire

2. a means of accessing the right audience.

Often it is this second part that is the most difficult as there are many providers of basic online

questionnaire tools.

On-line questionnairesMuch on-line research is largely a mirror of the types of survey that are found conducted using

pen and paper, or via the telephone, and most basic online survey providers work at this simple

level. However, as a computer is used to mediate the questionnaire, a wide range of additionaloptions become available to the researcher, that would not be possible in traditional approaches.

For instance there are a swathe of trade-off research techniques and interesting alternative

techniques such as non-linear questionnaires where the respondent chooses what to answer -

the choice being part of the data to be collected, and examples such asdelphi-style surveys

where respondents complete their own data, but are then shown the results of other people and

given the chance to change their mind.

Web-interviewing also adds a new dimensiotn to telephone interviewing. It allows telephone

interviewers to be more widely distributed whilst centralising the data collection, but it also

allows complex mixed-mode surveys - known as Web-assisted Telephone Interviewing (WATI).

In a web-assisted survey the respondent logs in to the survey to see prompts and information

(ideally tailored to the individual) while being interviewed by a professional telephone interviewer

allowing more complex types of questionning. (A second option is a telephone recruit to web, but

this remains largely self-complete).

On-line samples


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The main concern for on-line surveys remains the sample. The potential sources for sample

include your own lists, but also external sources. With concern about spam and a requirement for

opt-in to receive emails, the safest source of information is often on-line research panels. Some

are now very large and have been shown to be as reliable as telephone and face-to-face

techniques. However, there can be data quality issues and questions over 'professional'respondents. For this reason it is important that data is quality checked as questionnaires come

in, and secondly that the representativeness of the panel is fully understood.

In business environments where surveys are being conducted among named existing customers

and contacts, on-line surveys provide a serious alternative to postal and telephone research and

often make it much more cost effective to carry out business-to-business research. However,

some control is needed over the sample to prevent survey fatigue and consequent declines in

response rates. We would also recommend that the survey itself looks good and meets the

design standards of the host company's own website. To customers this is another piece of

company communication and so should reflect the brand standards of the business.

Where a broader market is being considered and email information is less widely available, some

care is needed to ensure that an on-line survey will represent the wider market. However, for

"finger in the air" style research, on-line research can be a very effective way of testing the

water.

We have our own on-line survey software which means that design, questions and even adding

new question types is possible, and we have our own conjoint software. In addition we can host

your on-line surveys, or you can take advantage of our design skills at our specialist on-line

survey site, SurveyGarden where you can find demonstrations including on-line conjoint research.

Qualitative online discussion groups onlineLike conventional qualitative online research, discussion groups are used to explore issues

and ideas with customers to gain insight into what they want and how they think.

There are three main on-line techniques, chat based discussion groups (held in "real-time") and

e-mail discussion groups where a conversation takes place over a period of days between group

members via email, and a forum or community-based approach.

These techniques are led by a moderator. Typically chat dicussions are quicker to carry out, but

can be relatively shallow compared to other qualitative methods. Email groups on the other hand

allow for considered opinions of your product or service. In a forum format, customers are more

able to pursue their own discussions and a forum or community approach also allows for

elements of quantitative measurement and evaluation to take place.


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The advent of broadband connections also makes it possible to carry out combined internet and

telephone discussions where the moderator controls stimulus sent to respondents over the

internet.

Blog monitoring and text scrapingIn some categories, discussions and comments appear spontaneously in blogs, on social

networks or in areas such as Twitter allowing the researcher to eavesdrop into on-going

conversations or to monitor discussion topics and feedback. This discussion can be monitored

and text-analysed to look for trends, hot topics or issues that the business needs to address. As

'free' research it can and does provide a useful pulse of the market, but it needs to be cross-

checked against standard market research as sometimes it is the loudest voices and not

necessarily the most representative voices that make it onto the internet.

Market Intelligence

An alternative to pure market research is to use market intelligence approaches to finding good

background information from a wide variety of sources. Competitors and journals are continually

producing information about products and services that you need to know about. Currently it can

take hours to monitor all the key sites for information. We can do the monitoring for you and

provide headlines and links to the top stories in the format you want see our specialist

site Notanantfor a live example of an on-line Market Intelligence System

Market Intelligence

Market Intelligence is about providing a company with a view of a market using existing sources of

information to understand what is happening in a market place, what the issues are and what the

likely market potential is. See some examples of our work.

Market Intelligence can be divided into two spheres

y Market Intelligence based on external data

y Market Intelligence based on internal data

Often Market Intelligence relies purely on external data such as analysts reports, but there is often

a great deal of untapped information internally that would give you an insight into your market,from sources such as databases and prospect lists, and an holistic view can prove very insightful.

Market Intelligence from external data


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Market intelligence from external data is normally gathered through what is known as desk

research. This means sourcing and analysing published information to build a picture of a market

and to try and answer some specific commercial questions such as what is the market potential.

Central to successful desk research is the ability to track down sources of information (we list

more than 180 sources) and to provide the right level of analysis. For example identifying whoyour competitors are and analysing their market position against yours to find strengths and

weaknesses and indications of new developments.

Related to desk research is list building. This involves seeking out lists of likely prospects or

partners for relationship or network building and finding out key information about the company

for marketing purposes.

A specific form of Market Intelligence is competitive intelligence. This is typically undertaken on

an on-going basis and involves the collection of news, materials and other information about

competitors from a wide variety of sources. Because of its on-going nature, Competitive

intelligence is more about putting structures in place than specifically finding one-off pieces ofdata.

Market Intelligence from internal dataMuch marketing intelligence information can come from making better use of existing

information. For instance by carrying out database analysis on orders taken it may be possible to

understand where you have cross-sale and up-sale opportunities, or to understand what type of

customers are your most profitable.

Database information is not the only source of market data. Your website may also include a

high degree of valuable information about who is looking for your products and services. Web

site traffic analysis can help you understand what customers are looking for and why.

Finally, don't overlook knowledge about customers, markets and competitors that comes from

your staff. Often this is a poorly tapped source of information. Collecting and disseminating such

information falls into the realms of customer knowledge management and making better use of

this customer knowledge can help businesses focus far more on what the customer wants and

says.

Internet applications

With the Internet playing an ever increasing role in reaching customers and sharing information

about customers, particularly as companies want to understand their customers better and develop

new ways of partnering with customers using the range of interaction tools.


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More particularly, the Internet is providing a key route for information, comment and feedback

from customers to the supplier and between customers about the supplier.

Focus areasOur focus on Internet Applications is on helping share information over the web, whether it is

through websites aimed at customers, or using the Internet to build knowledge and information

within your business. We develop:

y Web applications

y Market knowledge databases

y On-line communities such as social networking groups

y IT Tools for marketing

In addition we can provide IT tools to support your marketing, for instance GIS, project

management, competitive intelligence gathering or data analysis tools. See some examples of

what we can do.

WebsitesA website is practically a prerequisite for even the smallest businesses. Customers will look to

your site so they can find out more about your company and check you out before they buy. The

quality of your website must reflect the quality of your business and it must offer more than just

the text in your brochure, and it must be kept up-to-date and relevant. We can provide

professional websites that show your business in the best light online, but with a range of tools

that make it easy for you to keep information up-to-date. Alternatively we have DIY one-click

website solutions that provide fast, easy, low-cost feature-rich sites (seeNotanant)

Web-applicationsWith the drive towards second generation Internet web-sites (Web 2.0), it is becoming more

important that sites are functional, interactive and not just informational. We develop a range of

practical, easy-to-use, distributed web-applications for managing on-line services, from

information publishing, to private shared address books, to distributed information systems to

subscription based services.

Our web-applications are designed with the Internet in mind and are not merely copies of

internal systems. They are standards based and are often available both as PC-based and WAP-

based systems without the need for modifying the data.

Our flagship web-application is Notanant which can be used to manage any form of website with

members.


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Customer and market knowledge databasesTo support the use of information and analysis as a marketing tool, there is a need to build

databases to hold information, so that they can be analysed easily and allow for information to

be shared and sorted, for instance to support customer knowledge activities.

We develop bespoke market knowledge databases for the collection and dissemination of

customer and competitor knowledge. Typically these are web-based systems based around a

browser interface and industry standard applications. This allows us to collect and disseminate

information through a wide variety of devices allowing for access and use outside the office

environment. A demonstration will be available shortly from this site.

One specialist design is self-maintaining databases. For these type of databases, customers have

access to and can manage and update their own information. This has the benefit of reducing the

chances of data entry error, whilst allowing customers to tell you information from their

perspective.

On-line communities and web-sitesWeb-site development and e-commerce need to be in place as another arm of your channels of

distribution. The most effective web-sites are those that provide customers with a space to

communicate and share information among themselves and with your employees.

These on-line communities can be an extension of your loyalty programmes or customer

feedback programmes, or they can just be autonomous in their own right. Some companies

worry that by providing a forum for customers to talk to each, problems will be highlighted. But

the evidence suggests that open and honest communication is the single most effective way of

generating loyalty, particularly if you are taking steps to fix problems.

We have in-house skills in all the major web-technologies and can help you generate your own

on-line community. FieldShare was entirely developed in-house including the database and

discussion forum elements.

IT tools for marketingIn addition to bespoke software development (for example ourQuestionnaire Wizard), we are

also able to configure and supply specialist tools for marketing project management and

automated competitive intelligence gathering. In addition we can advise on the selection of data

analysis tools for the statistical analysis of market research and database data and can provide

training if necessary.

One example are Geographic Information Systems (GIS) is simply a mechanism for plotting

database information on maps. Much existing business-to-business information contains

geographic components and it can be incredibly useful to look at customers and orders by


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geography both to help with sales management and to provide key analysis to support marketing

through seminars for instance.

For instance, if you knew that nearly half of corporate businesses have their headquarters in

London and the South East, this would help you focus your marketing to look at solutions local to

this area.

Market strategies

Developing a clear and profitable strategy relies on balancing your company's competencies and

abilities against the market opportunities into the future.

We offer a strategic development process that starts with strategic analysis and takes you through

to implementation. Our marketing effectiveness studies look at how your marketing expenditure

can be optimised to maximise your marketing ROI.

Strategic analysisMany marketing plans happen by hunch, but there is a better way.Strategic analysis forms the

groundwork for the development of market strategies and involves looking at your customers

and markets, your competitors and your competencies to identify the areas of opportunity and

threat based on what your customers really value and what you can cost effectively deliver.

Marketing effectivenessIncreasingly financial analysts are looking at how to get the best from marketing budgets and

marketing is now no longer just the preserve of the marketing department but impacts on

operations through TQM and customer satisfaction, on IT through customer databases, on sales

through CRM and sales management and on finance through customer profitability analysis. With

so many people now involved in marketing and so many ways to market, marketing

effectiveness is a major question.

Brand developmentBrands are no longer just products, a brand may be the company itself and how people think

about the company brand affects them as employees as well as customers. Developing

and understanding brands is a core part of company management.


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Focus areasIf you have specific areas of marketing that you want help developing, we have experience in

y Technology markets

y Business markets

y Brand development

y Market segmentation

Basics of Market Research

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