Market Research 101

So, the plans for 2016 are all set. Budget allocations, product launches, promotional plans, campaign schedules and sales targets. But before you get that new logo or increase your content marketing spend, don’t you want to know if you’re shooting in the right direction? While agencies and their clients alike rely on time-tested hunches, sometimes a reality check is needed.

Market research provides the data and validation for your hunches, from assessing the market landscape to testing advertising effectiveness. Research spending is on the rise and marketers shouldn’t ignore its importance. In 2014, the top 50 research companies in the U.S. accounted for $9.8 billion of revenue, a number which has continued to grow as the economy bounces back. This post is a primer on research methods and considerations that will give you some initial footing into research design.

Research 101

Market research is a broad term for a wide variety of methods for data collection and analysis. It can include things like focus groups, surveys, interviews, online diaries, in-home observation, or reviewing national comparative data. While primary research gathers data directly from the first source producing it (speaking to a customer directly), secondary research uses existing data to further findings, like analyzing a database or statistics from a census.

Research can enable efforts in areas like branding, product development, customer satisfaction, or promotion testing. Data is collected, compiled, and analyzed for patterns, outliers, indicators, trends, and other valuable information defined at the outset of research planning. Analysis can range from a simple cross-tabulation (comparing the relationship between two factors) to an adaptive conjoint analysis with a weighted sample (don’t try this at home).

Depending on the research needs, quantitative or qualitative methods can be used, but a more critical starting point is defining the underlying business need it will address. In this post, I’ll profile how to assess a need, review methods, ask a research question, and assign the appropriate tools to a specific case.

How to Get Started: Assess Your Need

The need for research can be departmental, limited to marketing, or a larger organizational need. Different situations could kick-start your company’s consideration that, maybe, you need to conduct some research:

• You’re not sure what baseline you’re comparing your data against
• A change is coming – merger, acquisition, rebranding, new product release or new competitor entry
• There’s a worrisome shift: sales drop-off, high turnover, or low performance
• A difference in opinion among decision makers needs a mediation by data

Research is a tool that can be shaped to answer the distinct, specific needs of situations like these. After confirming the business need, transform it into a question like, “How is our product going to best appeal to this market?” or “Why are we seeing sales shifts in some geographies?” Time to find the best methods for finding the data.

For example, a disaster recovery client of Element Three’s had the query, “what’s our current place in the software industry?” Recent changes in the C-suite and a fresh acquisition meant these answers were desperately needed to forge a strong path going forward. Their need was identified: a market assessment and customer perception study. The next step is to find the audience and start gathering data…

What Method to Use: Quantitative vs. Qualitative

How do you go in search of that data? Quantitative research deals with specific, numeric data like satisfaction ratings on a survey or analytics from a customer transaction database. Qualitative, on the other hand, deals with the more human aspects of research: how do customers arrive at purchase decisions? What are their associations with your brand? How well does it match their needs?

These questions are answered through methods like online focus groups or one-on-one interviews, where participants are probed in detail on topics to reveal what drivers, perceptions, and dispositions exist beneath the surface. According to the Greenbook Research Industry Trends Report, 68% of industry research professionals report using a blend of quantitative and qualitative methods in their work – making it obvious that getting the right answers to a research question is all about picking the right blend of methods.

How To Ask A Research Question: Step-by-Step Application

Let’s look at a sample research project about promotion testing, starting with this initial question: “What is the impact of our advertising?”

These questions are not far behind, providing a more thorough depiction of the business need:

1.     Does recall vary between existing customers and the general market?
2.     What attributes of the advertising are most attractive?
3.     Where else does this audience spend their time?
4.     How does this break down by age, income, geography, gender, etc.?
5.     What do they actually consider important when choosing this product or service?
6.     What other impressions and associations do they have of our brand?
7.     Does the advertising align with our brand?
8.     Has any of this changed over time?

See how to address these questions via various methodologies:

#1-4: A quantitative survey can be distributed, for example, to 800 general market consumers who match your typical customer (i.e. male heads of household, ages 35-50, income $45k+, Indianapolis metro area). This size would yield data precision within a ±3.5% range at the 95% confidence level. Oversampling can occur by including current customers from a database. A basic survey will cover topics like awareness and recall of advertising, favorability, and likelihood to purchase. This quantitative stage provides insights at scale, but qualitative primary research gets the “insights story” from the other side…

#5-7: Qualitative methodology could include 10 one-on-one interviews with researchers and 2 online focus groups. Participants are guided to reveal their in-depth impressions of the advertising and the overall brand. Researchers understand their relationship with the product, usage, and buying behaviors. Speaking with one person gives a comprehensive view of a case, while a focus group gives a comprehensive range of opinions by topic.

#8: A study that uses previous data to show trends is called a tracking study. Establish a baseline, and future data provides comparisons of results, opportunities, and shifts over time. Implementing tracking research provides a long-range, data-driven central mission for marketing efforts and strategic planning. If you know what trends have come before, the future becomes easier to foresee.

Research is a grounding, objective, and empowering portion of your marketing efforts. By aligning it with business needs, picking the right blend of methodologies, and continuing to measure the company’s efforts, you can be known as the decision maker with the data to back it up. We also created this handy infographic as you think through whether you need market research.