"Knowledge is power."
Is a phrase commonly attributed to Sir Francis Bacon and which is as axiomatic in business as it is in politics. Knowledge of your market, of your customers, of your competitors and of your own business empowers you to make informed decisions that can increase your market share and boost your bottom line.
Like all forms of power, knowledge is easy to leverage but difficult to obtain. A whole market research industry has grown up explicitly for the purpose of providing businesses with knowledge of their markets. The expertise of a market research company can not only be used for gathering large quantities of data but also to interpret that data into a proposed course of action.
What is Market Research?
Market research is used to study what people and companies want, need, or believe and how they behave. This study takes the form of asking questions and observing and measuring behaviour.
Asking questions can be done in a number of ways: face to face interviews in peoples’ homes or in the street, telephone interviews using fixed or mobile telephones, internet surveys using a questionnaire sent to people’s email addresses or via links on web sites and postal surveys or interviewing groups of people in person or via the web.
Observing behaviour can mean observing traffic flows, measuring audience levels, the number of hits on web sites and the content of social media sites such as Facebook and Twitter.
Because it would be far too expensive to interview everybody in a particular population group that is of interest, market research makes use of sampling theory. This is a mathematical concept that basically shows you can be quite confident in obtaining the information you require by studying a relatively small number of people - providing this sample of people is selected in an unbiased or random way.
However, not all market research requires a statistically reliable number of respondents. There are broadly 2 types of research, quantified research which requires reasonable sample sizes to show the proportion of people who hold certain views or behave in a certain way and qualitative research which is designed to study how and why in an unstructured, descriptive rather than quantified way.
For quantified research a typical sample size might be 1000 adults which would allow you to study maybe 10 different population groups each of which would have a sample size of 100. Examples of these groups might be different age ranges or different regions of the country.
For qualitative research you may use 4 separate groups of 8 people (focus groups). A group would be run by a 'moderator' who would control the discussion.
When hiring a company to conduct market research for you it’s important to consider carefully what you want to achieve from the project. Your ultimate objective will determine what you want to find out, which in turn will determine the best way to go about gathering the appropriate data.
Market Research Methods
Once you know what data you want to collect, you need to decide the best way of obtaining it. A market research agency can help here by providing the benefit of their expertise and experience. Common techniques for data gathering include:
- Telephone Surveys
Conducting surveys over the phone. Useful for gathering large amounts of quantitative data to which you can apply statistical analysis. This method has the benefit of increased customer engagement and returning results fast. The major drawback is that some people don’t like unsolicited calls.
- Online Surveys
Soliciting users of particular websites to fill in surveys or emailing the surveys to a database can simultaneously target large numbers of potential respondents. Offering an incentive (e.g. entry to a prize draw) usually increases response rates though how much attention respondents will pay to their answers is questionable.
- Postal Surveys
Useful and cost effective when response time is not an issue. Again, incentives boost response rates.
- Focus groups
Selecting individuals to give feedback in person or as part of a group guided by a ‘moderator’ from a market research company. This method is used to obtain qualitative data like how consumers ‘feel’ about a particular brand or product. Clients can sit in or watch a live or recorded video feed to gain first hand insights.
- Face to Face
Interviewing members of the public in person on the street, door-to-door or in stores. Falling out of favour due to the relative ease of online surveys but still useful for local brands or ones which do most of their business on the high street.
- Social Media
Web interviewing can utilise sites such as Facebook and Twitter and search engines such as Google and Yahoo. As well as asking questions, a large amount of data can be collected by studying behaviour on these sites.
So as well as the bias which particular methods can introduce to your results, time, response rates and nature of information required (whether quantitative or qualitative) are factors in determining which method of market research is most appropriate. For large projects where a large amount of different types of data are required, or where different data is required from different groups, you may wish to employ a mixture of different methods.
Factors to Consider when Conducting Research
If you’re going to be basing important business decisions on the findings of your market research it’s critical that the information you receive is accurate and unbiased. There are several factors which can affect the veracity of your conclusions:
Sample and Response
It’s important to choose your sample group or focus group participants carefully. If you’re looking for broad trends or attitudes you need as varied a group of respondents as possible. At the same time there’s no point in surveying people who fall outside the scope of your research. If you’re surveying customers this is made easier but you should still endeavour to hear from as many different types as possible. With quantitative research you also need to consider whether you’ve collected enough responses to make spotted trends statistically significant – could the ‘patterns’ be a fluke of this particular survey.
Questionnaire and Facilitation
Questions in a survey should be constructed in such a way as to eradicate ambiguity or misinterpretation of respondents’ answers (unless this is your intention e.g. for publicity purposes). For example an answer of ‘No’ to the question ‘Do you dislike the branding because of its colour?’ could mean that the respondent doesn’t dislike the branding at all, or just doesn’t like the colour. Similarly facilitators of focus groups shouldn’t lead participants into giving the ‘right’ answers but create the right conditions for opinions to emerge spontaneously.
Aside from the question of whether you’ve gathered enough data to make analysis meaningful you should also be careful not to come at the data with any preconceived notions. This can lead you to simply pick and choose the data which supports your hypothesis rather than analysing it objectively.
Choosing a Market Research Company
When choosing a company to conduct research for you there are more considerations than just cost. Careful questioning of the company about how they avoid the pitfalls mentioned above can help you determine how well they know their own business. You should also find out whether they perform data gathering themselves or farm it out to third parties as this could lower the quality of the data returned. Another important consideration is the experience the company has in your industry or related industries. This is particularly important for conducting customer satisfaction surveys or industry/competitor analysis.
As always, ask to see samples of previous work and check references and feedback from previous clients.
Once you’ve found the right company you should work together to devise the right research method, sample group, question sets etc, making the most of the market research agency’s expertise.
Taking the time to find the right company is worthwhile: only a well planned and executed market research project can furnish you with the high quality data required for effective business planning.
Approved Index can help you find a Market Research Agency.