Marketing research helps you understand your competitive position, reduce risks, spot opportunities, and take better decisions. It is more than 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. It allows you to make marketing decisions based on the best, most up-to-date information available.
This briefing covers:
- Using different research methods.
- Sources of information.
- In-house and commissioned research.
- Budgeting for marketing research.
Five areas provide key market intelligence.
1.1 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 groups of people to whom similar sales messages will appeal.
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 by your competitors' products or services offers you an opportunity.
- You need to know how customers view your customer service.
1.2 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 how your goods compare with competitors.
- 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.
1.3 Promotion research looks at what impact your marketing spend is having.
- How effective is each campaign?
- How do you use your sales force?
- How effective are the various elements of your marketing mix, such as e-media and traditional advertising, point-of-sale materials, mailshots, search engine optimisation and website?
- Does your company's image (brand) help - or does it work against you?
1.4 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 whether your product's positioning is right for its price point.
- Full and up-to-date data on competitors' prices is important.
- Check, preferably before you try them, the effects of discounts or loyalty schemes.
1.5 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?
- Which media and third parties serve the same market segments as you?
- Are the transport methods you use cost-effective and appropriate to the size, weight and fragility of your product?
Be clear what decisions you want to make before you undertake research so that you don't end up with nice-to-know information rather than crucial data you can act upon.
You need to know what you want from the research before you can decide on the depth, methods and justifiable budget.
2.1 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.
Exploratory research will often tell you why a product or service is not working, or why one product sells better than another.
2.2 Invest in detailed research when you need to put flesh on the bone.
- You will want concrete, detailed data to inform your planning decisions.
2.3 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.
3.1 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 but beware of personal bias.
- 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.
3.2 There is a wealth of external sources to investigate, especially online. 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, business magazines and the business pages of national newspapers.
- Universities and research organisations can often provide specialised technical data.
- 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 not 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 more expensive and difficult to organise than desk research.
4.1 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.
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.
Make survey questions open-ended, so they cannot be answered by yes or no.
4.2 Use observation to reveal what people do, rather than what they say or think they do.
4.3 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.
5.1 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.
5.2 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.
Talking to customers and 'keeping your ear to the ground' are familiar low-key forms of qualitative research.
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.
6.1 You must be clear what data you require.
6.2 You will need certain technical skills.
- For example, in designing questionnaires and running focus group discussions about new products or advertising.
- Be aware of how Data Protection and other legislation impacts on research.
If you and your employees do not have relevant experience, it may be a false economy to complete the research in-house.
6.3 You must give the individuals doing the research enough time to do it properly.
6.4 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 film 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 £50 - £75.
- Input and analysis time and skill and may need to be out-sourced.
Small businesses often cannot use agencies, because most agencies will not work on projects where the budget is less than £3,000.
7.1 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?
7.2 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?
You search online for market research providers and recognised freelance research practitioners in The Research Buyer's Guide. Alternatively, download an order form from the website (£80 plus p&p for printed copies)
The Chartered Institute of Marketing (01628 427 120) also offers a list of accredited agencies.
7.3 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?
7.4 Consider whether you should be using a freelance researcher.
- A freelance may be the affordable option, especially for qualitative work.