FREQUENTLY ASKED QUESTIONS
IN MARKET RESEARCH
Why should I commission market research?
Managers are always making decisions based on their experience, the facts known to them internally and their intuition. Perhaps the way forward is obvious, or the size of the decision doesn’t merit a huge spend on fact finding. Maybe action is required today and there is no time for formalised research even though it would be welcome.
There is nothing wrong with intuition and "common" sense and it is a natural part of decision making in business. However, where the decisions require large financial resources and where the costs of failure are high, there is a need for decision making based on robust and reliable data. The purpose of market research is to reduce business risk whether you are looking to enter a new market, build your position in a market, create a new brand, find out how satisfied customers or employees are, target markets more efficiently, develop a new product, or test the effectiveness of an advertising campaign.
Market research is therefore the systematic collection, analysis and interpretation of information relevant to marketing decisions. Common information requirements met through market research are listed below although this is by no means exhaustive and can of course be classified in different ways.
Information That Can Be Obtained Through Market Research
Market Size and Structure
The value of the market in currency value and units sold each year.
The historical trends in size of the market.
The key consuming segments of the market.
The competition and their shares.
The route to market.
Use Of & Attitude To Products
Awareness of suppliers.
Attitudes to suppliers.
Attitudes to products.
Volume and frequency of purchases.
Ratings of customers (and sometimes potential customers) to show what they think is important in influencing their buying decision and how satisfied they are with their supplier on each issue.
Key messages for campaigns.
Effectiveness of adverts and promotions.
Awareness of brands.
Values attached to brands.
The influence of brands in the purchasing decision.
Price values attached to features of the offer.
Likelihood of purchasing different products.
Attitudes to products.
Opportunities for segmentation based on demographics, behavior or needs.
Methods Used To Assess Market Size & Structure
Published market research reports.
Market surveys aimed at calculating consumption and brands purchased.
Methods Used To Assess Use & Attitudes
Quantitative surveys carried out by telephone, mail/internet, face-to-face interviews.
Methods Used To Assess Customer Satisfaction
Quantitative surveys carried out by telephone, mail/internet, face-to-face interviews.
Methods Used To Assess Promotion Effectiveness
Pre and post quantitative surveys.
Methods Used To Assess Brand Impact
Methods Used To Assess Pricing Effectiveness
Market research in test markets.
Trade-off analysis using conjoint techniques.
Methods Used To Assess Products
Methods Used To Assess Segmentation
Quantitative surveys with factor and cluster analysis.
What is the difference between consumer and business-to-business research?
The most fundamental division of markets is between those involving members of the general public and people buying or specifying on behalf of another organization such as a business.
In consumer markets, the number of potential buyers of a product is often a significant proportion of a total population running into millions. Techniques used to research these markets include quantitative methods based on rigorous sampling as well as qualitative techniques that explore complex consumer perceptions and motivations. Consumer markets can be further sub-divided between fmcgs (fast moving consumer goods – food and similar frequent purchases) and other markets – media, travel and leisure, financial, consumer durables etc.
Business-to-business market research employs the same techniques but in different ways. Many business-to-business markets are characterized by a much smaller population to survey, many times measured in hundreds or thousands rather than the consumer millions. What is more, the business-to-business markets are frequently very variable, made up of companies in different industries and with huge differences in size. A researcher may be looking at the market for office equipment and face a sample that could include General Motors and a 'mom and pop organization' providing some form of services to the local community.
Within the businesses there are often complex groups involved in influencing the buying decision (the DMU or decision making unit). The obvious groups, such as procurement, place the orders but technical and production departments may set a specification and financial departments impose budgets.
In these complex business-to-business markets with smaller and more varied populations and with tangled decision making units, we need different research methods. Sample sizes are smaller in number and the researcher may be leaning as much on judgment and interpretation as on the rigor of the method.
What is the difference between quantitative and qualitative research?
Quantitative research is concerned with measurement of a market and includes the calculation of market size, the size of market segments, brand shares, purchase frequencies, awareness measures of brands, distribution levels etc. Such quantitative data is required to some level of accuracy (though not in all cases to very high levels) and the methods used must be capable of achieving this.
Qualitative information is rather harder to define but the emphasis is on 'understanding' rather than simple measurement – Advert A is recalled better than Advert B (quantitative information), but how does A work as an advert and why is it more effective than B? Much qualitative research is concerned with empathizing with the customer and establishing the meanings he or she attaches to products, brands and other marketing objects. Another focus is motivation. For example, why does one product rather than another meet customer needs and what are these needs that are being met? Qualitative research is conducted amongst a sample but in this case usually a small one since there is no attempt to extrapolate to the total population. In the case of attitudes to brands, for example, qualitative research may determine that there is a specific view held about the brand whereas quantitative research would tell us what proportion holds that view.
Quantitative and qualitative research is often complementary and in a research design both may feature. The qualitative element frequently takes place at the front end of the study exploring values that need measuring in the subsequent quantitative phase. The “qual” research may offer a diagnostic understanding of what is wrong, while the “quant” research provides hard data across different respondent groups that can lead to specific recommendations with measures that can be used as controls to determine the effectiveness of actions.
What is a focus group?
The focus group is a research technique used to collect data through group interaction on a topic. Essentially, it is a group experience comprising a small number of carefully selected people who are recruited to discuss a subject based on the commonality of their experience.
Focus groups are used to identify and explore behavior, attitudes and processes. They are best used to throw light on the “why?”, “what?” and “how?” questions.
They can be used in three ways in the research design:
Stand alone method: where the focus groups are the sole data collection method and they serve as the principal source of data.
Supplementary to a survey: where they are used to enhance alternative means of data collection. Typically this would be as a precursor to a quantitative stage – determining the issues to be covered in the structured interviewing and giving insights into the problems or opportunities that are being researched.
As part of a multi method design: where studies use several sources of data collection and no one method determines the use of the others.
When focus groups are used as the sole source of data, the objectives will be explorative and diagnostic (what is the problem, how can we solve it, how will the market react?). When it is important to also get a fix on the number of people that think or behave one way or the other, a multi method design will be required with a quantitative stage to follow.
Group discussions are especially useful for researching new products, testing new concepts or determining "what would happen if…". They work because delegates can digest the points raised by other members and, as they consider the implications of issues raised, further ideas may be sparked off which would remain untapped in a personal interview.
Typical applications for focus groups are:
To unravel complex processes from the basics e.g. a complicated buying process
To identify customer needs i.e. where there is a complex interaction of factors influencing motives
To identify how products are used
To test new products i.e. where something needs showing to people
To explore a concept, perhaps with stimulus aids so that people can visualize what it would look like
To explore and identify issues of satisfaction (or dissatisfaction) for customers, staff or suppliers
To explore perceptions of brand and service elements associated with the brand
What is a depth interview?
A depth interview is a loosely structured interview that allows freedom for both the interviewer and the interviewee to explore additional points and change direction if necessary. Depth interviews are a qualitative data collection method which offer the opportunity to collect rich, descriptive data about people’s behaviors, attitudes and perceptions, and unfolding complex processes. They can be used as a stand alone research method or as part of a multi method design, depending on the needs of the research.
Depth interviews are normally carried out face to face so that rapport can be created with respondents and body language can be used to add a high level of understanding to the answers. However, the telephone can be used to carry out depth interviews by a skilled researcher with little loss of data and at a tenth of the cost.
The style of the interview will depend on the interviewer. Successful depth interviewers listen rather than talk, have a clear line of questioning and use body language as a cue to building a rapport. The interview is more of a guided conversation than a staccato question and answer session.
The interview is conducted using a discussion guide (as in focus groups) which facilitates the flushing out of the respondent’s views through open ended questioning. As with focus groups, projective techniques can be incorporated into the interview.
How do you choose your sample in business-to-business markets?
Business-to-business research is concerned with populations not of individuals but organisations, often in defined sectors by industry etc. Surprisingly there is no universal sample frame, or even comprehensive ones for most sectors, which is anywhere complete. Directories such as Kompass and Dun & Bradstreet (available in various forms including on-line, CD-Rom, and hard copy) for example, although widely used, miss out many smaller businesses and include names of businesses that are in unrelated fields. Also, where research is of a sector, the definition of the sector relevant to the research objectives may not match the classifications used in sample frames.
This may suggest that reliable sampling is not possible in business-to-business research but this is to overstate the problem. In practice samples are taken from directories and often built from several sources. Whilst not completely free from bias, these samples are good enough for most purposes. There are also other issues important in business-to-business research apart from sample frame limitations and particularly those relating to the fact that the companies in the population are not of equal size. Take for example the chemical industry. At one level there could be a small company employing one or two people and mixing chemicals with a bucket and a stick, through to the DuPonts, the BASFs and the Dows. In most business-to-business markets the distribution of companies fits the 80:20 or Pareto rule; that is 20% of the units account for 80% of the market being studied. The domination of most business markets by a small number of large companies means that it is crucial they are included in the sample. In fact, the researcher may seek (so far as co-operation levels allow) to carry out a census of the largest companies, and a sample of the rest.
This singling out of specific companies to interview is judgmental, although there will be some guiding principles such as the number of employees, the output of chemicals, turnover and the like.
Not only does the business-to-business researcher have to contend with wide differences of size of company, there are also complications caused by the intricate nature of the decision making unit (DMU). Whereas decisions in most households are made by the partners and the children (or even by just one person), in businesses there are inputs from purchasing, technical, production, and possibly finance and marketing. These inputs change over time. At the point where a product is being specified or evaluated for the first time, the technical team is likely to have a strong voice. Once the product is in the routine re-ordering stage, the purchasing and production people have more influence. So who do you select to interview? In theory you may set out to build up a picture across the board by selecting people from each group. However, since many business-to-business samples are small (200 interviews is quite a respectable size), the sub-cells of respondents in a particular job responsibility end up being too small to analyse them separately. For these reasons the business-to-business researchers may compromise and decide to concentrate the interviews on just one group such as the key decision maker (thankfully there is usually one person who holds most sway in the decision).
Which data collection method should I choose?
Face-to-Face Interviewing -
Personal interviews are still commonplace for collecting primary information for good reasons:
Better explanations. In a face-to-face interview, respondents have more time to consider their answers and the interviewer can gain a deeper understanding of the validity of a response. Sometimes interviewers need to show advertisements, logos, headlines or samples and this is plainly suited to personal situations.
Depth. It is easier to maintain the interest of respondents for a longer period of time in face-to-face interviews. Being face to face with respondents gives the interviewer more control and refusals to answer questions are less likely than over the telephone. Concern about confidentiality can be more readily satisfied than with an `anonymous' person at the end of a phone.
Greater accuracy. In a face-to-face interview respondents can look up information and products can be examined. If the interview is at a business, files of information can be referred to, or phone calls made to colleagues to confirm a point. The interviewer may be able to make a visual check to ensure that the answers are correct.
Product placements. Product placements can be sent through the post but it is usually better for them to be delivered by hand by the interviewer. Face-to-face contact with respondents permits a more thorough briefing on how to use the product. Pre-test questions can be asked, and arrangements can be made for the follow-up.
Against the advantages of face-to-face interviewing, there are a number of disadvantages:
Organisation. Face-to-face interviews are difficult to organize. If the interviews are country-wide, a national field force is required. The subject may be complex and demand a personal briefing, which is expensive to arrange when interviewers are scattered geographically.
Control. Monitoring and controlling face-to-face interviews is more difficult than with telephone interviews. Face-to-face interviews need to have a supervisor in attendance for part of the time and check-backs, by visit or post, must be organized. For the most part, however, the interviewer is working in isolation and the quality of the work has a considerable dependency on the conscientiousness of the individual.
Cost. The cost of face-to-face interviews is considerably higher than the cost of carrying out telephone interviews.
Time. Face-to-face interviews are time consuming because of the travel time between respondents. The prior commitments of the field force and the delays caused by questionnaires being mailed out and returned, normally mean that at least a two-week period is necessary for organizing a face-to-face interviewing project. A month is more reasonable. A program of business-to-business interviews may have less personal interviews than a consumer study but they too take an inordinate amount of time to organize as the researchers struggle to set up interviews in the diaries of busy managers.
Telephone Interviews -
The greatest advantages of the telephone against face-to-face interviewing is its speed and low cost. These are most evident in business-to-business market research.
In favorable circumstances, perhaps five to six 20-minute interviews with managers in industry can be completed in a day over the telephone. In the same time only 1 or 2 interviews can be achieved face-to-face.
The telephone is also quicker and cheaper than face-to-face interviews since there is no time wasted in travel between interview points.
The telephone has a number of strong arguments in favor, particularly with cost and speed. However, there are sometimes good reasons for not using telephone interviews. Visuals are sometimes difficult to use and if respondents need to consider a number of pre-determined factors in order to test their views it is often hard for the respondents to hold more than five or six factors in their mind.
Furthermore, the lack of personal contact prohibits the interviewer assessing respondents and obtaining an extra feel for what is behind the reply.
Despite these limitations, the advantages of the telephone in data collection are considerable and the method is likely to continue to make inroads against face-to-face interviews.
Self-Completion Interviews -
The factor that influences the response rate of a postal survey more than anything else is the interest that respondents have in the subject. A postal or e-survey of customers is likely to achieve a higher response than one of non-customers because there is an interest in and a relationship between customers and the sponsor of the study.
Response rates of 30% and higher from a single mailing are quite common when the survey is on behalf of a company with some apparent authority such as British Gas or a major national water company. In contrast, respondents receiving a questionnaire through the post enquiring about the type of pen they use would most probably yield a low response (less than 5 per cent is likely), because the subject is not compelling.
This fundamental point means that researchers should avoid using postal surveys except when respondents are highly motivated to answer.
Self-completion surveys depend on suitable databases containing the correct names and postal or e-mail addresses of respondents. If lists are out-of-date, contain inaccuracies in spelling of the names and addresses, or are made up of unsuitable respondents, the questionnaires will fall on stony ground and the response rates will be low.
Online Surveys -
Web surveys, or e-mail surveys as they are sometimes known, first found their place in research by replacing the slower and more expensive methodology of self-completion postal surveys. Now, with technological advancements, they have become the preferred data collection method for many customer satisfaction and staff satisfaction surveys, as well as product and service feedback and conference evaluations within many business-to-business markets.
There are many different reasons for conducting online surveys including cost savings, time savings and improved data accuracy levels through automatic routing.
Today, most e-surveys are completed by invitation and this would typically be through an e-mailed invitation. Therefore, if you are thinking about carrying out an e-survey you first need to check the following details:
Do you have a quality list of respondents with accurate e-mail addresses?
Does the target audience use computers and the Internet in their day-to-day working environment?
Are you looking for answers to concise questions that lend themselves to being within a structured questionnaire format that can be completed in less than 10 minutes?
If you have answered yes to all the above then an online e-survey may be the right technique for collecting your data.
What is CATI?
CATI stands for Computer Assisted Telephone Interviewing. In the same way that computers are replacing the clip board and questionnaire in face-to-face fieldwork, so too they are taking over in telephone interviews. Interviews carried out by telephone can be guided by a questionnaire displayed on the screen of a computer. The interviewer records answers via the keyboard, entering numbers which correspond with the pre-coded responses displayed on the screen.
CATI interviewing offers considerable advantages:
The interviewer is left free to concentrate on the interview itself as the routing instructions are taken care of
Data is entered directly and the subsequent transactions of data processing are eliminated. Costs and punching errors are reduced
The whole process is speeded up because data is entered as it is obtained
At intervals during the survey, the researcher can interrogate the computer to examine the results
An analysis of results can be obtained immediately after the last interview has been completed.
There are some disadvantages to CATI interviewing. A conventional questionnaire can be knocked up in no time and without the help of someone who knows their way around the technical nuances of a CATI system. Getting a questionnaire set up and running, fault free, on a CATI system takes time. Coping with open ended responses presents some problems on CATI because, although the systems can accommodate open ended comment, capturing them requires interviewers to have good typing skills. If a respondent makes changes to an earlier answer when part way through the interview, it is more difficult to return and make alterations than is the case with paper questionnaires. In general, CATI is best suited to structured interviews carried out in large numbers, especially repeated surveys where all the possible answers have been worked out and can be listed as pre-coded responses.