Mar 4, 2018 1:36:37 PM
Marketing research is subject to a large number myths and misconceptions, due in part because it gets the reputation of being one of the costliest processes in business. Marketers and business managers often choose to forgo their market research projects because of the illusion that there is too little room in the budget to justify it. There are two problems with this line of thinking about marketing research:
- Streamlined marketing research is actually more cost-effective than many parts of the process of doing business. Although research efforts can be costly, the return-on-investment (ROI) is high because good research returns valuable data to be used in the future.
- Market research doesn't have to be costly at all. It's true that while some studies by design carry a high price tag, certain field studies and other research methods do not cost a company much more than not carrying out the research would.
With these facts in mind, we seek to explore the following questions: What is marketing research actually, and how do we conduct it?
What is Marketing Research?
The Cornell University Management Library defines the two types of market research as primary research, information found using acting survey or study techniques, and secondary research, that which is learned by compiling information from different sources.
When conducting marketing research for business purposes, we're typically concerned with active, primary information that we can learn about our target audience, not anyone else's. That's why when you hear the phrase "marketing research", it's usually referring to active studies that are undertaken to learn about a key factor of the audience of a given product or business.
At its core, marketing research is practically no different than scientific research, similar to the kind of inquiries you probably carried out in school science classes. There are four key phases of the market research process:
- Phase I: Identifying the research question/determining the problem being studied
- Phase II: Selecting the research method best used for the problem at hand
- Phase III: Executing the research method based on the design
- Phase IV: Analyzing, communicating and applying the results to the problem at hand
Phase I: Determining the Problem
Many marketers consider the point of defining the problem or focus of the research as the single most important step in the entire process, and it's not difficult to see why. The logic is clear: if you don't have the correct focus when you begin your research, you won't get the desired effects, even if the rest of the process is sound. It doesn't mean a thing if you get great data about something that doesn't need to be solved.
Thus, accurately determining the problem and its root causes is key. According to the University of Minnesota's Principle's of Marketing, a simple example is a tutoring business. Given a student who has taken the time and put in the effort to grow a tutoring operation on a college campus, if their customer base suddenly grows or falls rapidly, these are both problems in the context of market research. (There is a prevailing misconception that marketing research is only carried out to solve negative problems, but the research question can also be about trying to understand the causes for an increase in business—it allows a business to get the bigger picture).
The "problem" here is used synonymously with "question" because most research teams start by observing a factor and coming up with questions about it. In the tutoring example, you, the tutor, would realize your business is increasing or decreasing, so you would pose questions that start your research, such as: Has there been a significant change in students on campus? Has there been a spike or fall in referrals from professors for tutoring services? Has the college invested in better textbooks or a school-run tutoring service of their own?
This example shows that not only is determining the problem vitally important to the research process (and a business's marketing budget) but also that small external factors can make a big impact on a business, which is why it's important to figure out what those factors are and react to them.
Phase II: Selecting the Research Design
After the problem is identified, market research moves onto finding the best way to find the cause and understanding why the central focus of the research is the way it is. Great, efficient market research takes a significant amount of planning, which is why Phase II of the process is nearly as important as defining the problem: if you determine the problem correctly, but don't design research that brings the causes to light, the rest of the research process will be a waste of your precious marketing budget.
Carrying out a research study follows the basic steps of the scientific method, according to Qualtrics:
- Identify the problem
- Form a hypothesis
- Make predictions based on the hypothesis
- Devise a way to test the hypothesis
- Conduct the test
- Analyze the results
The key to designing research is making the key decision of what type of research you plan on carrying out. According to Pepperdine University's School of Business and Management, the following are the most popular and generally, the most effective ways to execute primary research:
- Focus Groups: When a business wants to register public reaction to a new product or change in the way they operate, a focus group is a great way to start. Involving a single, moderated conversation about the product or even about the company as a whole, a focus group (ideally) consists of a representative sample of the target audience.
- Interviews: Phone interviews are often used to gauge public opinion around election times, for example. When candidates need to get an idea of their favorability with potential voters in a short period of time, phone and in-person interviews are effective.
- Surveys: Online and phone surveys are popular when gauging user experience with a product, service or hospitality interaction (hotels commonly use surveys).
- User Groups: User groups differ from focus groups in that while focus groups are comprised of potential customers discussing a product, user groups typically meet regularly to discuss products that they use or have used.
- Test Markets: When a company is developing a new product and they want to see how it will play with a real audience, they release it in controlled areas or a certain number of stores, preferably in an area representative of their target audience. For example, Columbus, Ohio has historically been the preferred test market for fast food chains and other restaurants due to the fact that its population resembles that of the U.S. as a whole.
Secondary research is simpler to obtain since marketers typically need only read other studies and published literature to draw insights about their circumstances. For example, in the tutor business example from before, this probably wouldn't need a primary research method to solve, rather simply researching changes in the status quo to determine the factors at play.
This is also the phase in which marketers try to foresee potential issues and bias with their methods. If you're using a focus or user group for your research, how can you guarantee a representative sample of your target audience? Is the questionnaire for your survey or interview effective in drawing out the insights that your research needs? Pre-testing survey questions and reviewing sampling methods are important steps in the process towards reducing inefficiencies in marketing research.
Phase III: Executing the Research Design
Executing the research design formulated in the third stage of the process should be simple and straightforward if you've taken the time to design your research with due respect to potential issues with your methods. According to UMN's Principles of Marketing, this stage of the process is focused on data—collecting it, analyzing and beginning to prepare it for consumption.
The first issue at hand is ensuring that you follow through on your sample. If you're viewing a focus group or user group, you need to ensure that you're hearing from more than one or two group members, as this would mean that your results wouldn't be representative of the group itself, much less the larger target audience.
If you're using surveys or questionnaires, it's important to ascertain where the responses are coming from. These methods are particularly susceptible to statistical biases. For example: if you're using a calling center to collect data over the phone, and your target audience is, say, professionals and businesspeople, then calling homes during weekdays wouldn't produce a representative sample. Ideally, however, the potential for bias like this one would be ironed out of the research design before data is collected.
Once you're sure that the data you've collected is adequate to produce insights about the research problem, you can start to analyze the trends and interpret the data in the context of your unique circumstances.
Phase IV: Communicating the Research
Once the process of designing and executing marketing research is complete, presenting the results, knowledge, and insight gained is crucial to enacting change in response the problem, if any is needed. The act of presenting research is an underrated part of the process of conducting market studies. You can develop the insights to prompt a change, but if you can't communicate a study's findings to decision makers, it's unlikely that any change will be made.
According to the Balance, market research presentations should be focused on and directed towards the audience and should be softer than the buzzword-heavy practice of designing and conducting the research itself.
The first step of an effective marketing research presentation is taking a step back to view the results in the context of the bigger picture:
- Can the problem be solved?
If the initial research problem is a negative one, everything boils down to this. If you determine that the problem can be solved based on the findings of the research, what steps need to be taken? Are they feasible, given your budget and other factors? These are the practical results of a technical process. In a presentation setting, you have to tie everything together, from the start (the problem) to the finish (possible causes and potential solutions).
Returning to the prevailing belief that most market research isn't affordable, conducting research often comes down to real results and ROI that makes this crucial business process worth such a large share of the budget.
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