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Market Research Methods

An Overview of Market Research Methods

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Overviews

There are several ways to categorize the various market research methods.  The vast majority of techniques fit into one of six categories: (1) secondary research, (2) surveys, (3) focus groups, (4) interviews, (5) observation, or (6) experiments/field trials.

Market Research Methods

Market Research Methods: An Overview

The most basic classification of market research is  primary and secondary research .    Secondary research happens to be the first of six market research methods.  The other five are all different flavors of primary research.

Secondary Market Research
Secondary research is simply the act of seeking out existing research and data.  Secondary data could be US Census data, Twitter comments, journals, and much more.  The best thing about secondary research is that is it often free and it usually can be done quickly.  Your job as a secondary researcher is to find existing data that can be applied to your specific project.  It is possible that you might not be able to find secondary data that is suitable for your research needs.  If that’s the case, you’ll need to conduct your own primary research…and that’s were we’ll find the other five market research methods.

Primary Market Research Method #1 – Surveys
Surveys are perhaps the most widely known and utilized method when it comes to market research.  Surveys come in a wide variety of shapes and sizes, from that little “feedback card” on the table at your favorite restaurant to those never-ending web surveys that make you want to punch your computer.

Surveys make a lot of sense when the following conditions are true:

-You want to measure something objectively (or quantitatively ).

-You have something specific to measure.  In other words, you are beyond the exploratory portion of your research and you now want to test more specific questions.

-You have a relatively large sample to query.

-You have the resources (time and money) to conduct a survey.

Conversely, surveys are not a great research tool when:

-You are still exploring your topic.  In this case, you don’t know the right (specific) questions to ask in a survey.  Instead, you might conduct a focus group to get a better understanding of the topic.  Here is an example: Let’s say you want to make and sell a better mousetrap.  Instead of using a survey to ask people what color they prefer, you might want to hold a focus group with people who have mice problems and ask them open-ended questions about what they value in mouse control devices.  You might hear things like “doesn’t kill mouse,” “easy to set,” “small size,” “price,” “disposable,” etc.  Now that you have explored the topic and discovered these attributes, you can then measure their relative importance with survey devices.

-You don’t have the luxury of time and/or money to run a survey.

-Your available audience is too small (for now, let’s define “too small” very simply as less than 30 people.  If you are curious why I picked the number 30, here is my rationale ).

Surveys can be used effectively for satisfaction research (customers or employee), measuring attitudes, pricing research, fact gathering (e.g. the census), and much much more.  You’ll find surveys administered in all sorts of ways, including snail mail form, web forms, face-to-face (that guy at the mall with the clipboard), over the phone (the guy who calls during dinner), on the sidebar of a blog, and even on mobile devices via text message or otherwise.  Surveys can be self-administered (the respondent reads and answers questions alone) or they can be administered by a person who records your answers.

I could go on and on about surveys, but I’ll save it for now since this is an overview.  You can read more about survey design best practices (e.g. customer satisfaction survey question ideas ), incentive strategies, new market research methods , and more.

 

survey research technique

Survey

 

Primary Market Research Method #2 – Focus Groups
Focus groups involve getting a group of people together in a room (usually physically, although technology is making virtual, or online focus groups more feasible).  These people fit a target demographic (e.g. “mothers under 40 with an income over $50k”, “college males who play 8 or more hours of video games a week”, etc.) depending on the product or service in question.  Participants are almost always compensated in some way, whether it be a money, coupons, free products, etc.  A moderator will guide the discussion, with a goal of getting participants to discuss the topic among themselves, bouncing thoughts off of one another in a natural group setting.  Professional focus group rooms will have a one-way mirror on one wall, with a team of observers on the other side.  The company or group that commissioned the study can sit-in on the meeting, along with members of the research team who can take notes without disrupting the participants.

Focus groups are excellent for exploratory, qualitative research .  In the “new mouse trap” example, a focus group can reveal all sorts of important mouse trap attributes that might not have been considered otherwise.  Focus groups are great tools to use prior to a survey, because it will inform your survey questions to be more specific and targeted.  Focus groups can also be beneficial after a survey, as a way to dive very deep into a topic that came up in the survey.  For example, an employee satisfaction survey may reveal “cafetaria food” to be a big issue.  A follow up focus group with a handful of employees will allow the employer to understand that issue much better (What is the problem with the food?  Is it the taste, price, healthiness, temperature, something else?).

focus group research

Focus Group

 

Primary Market Research Method #3 – Interviews
Like focus groups, individual interviews are a qualitative market research method.  To simplify things, think of individual interviews as focus groups with only one participant and one moderator (interviewer).  There is a wide spectrum of interviewing formats, depending on the goal of the interview.  Interviews can be free flowing conversations that are loosely constrained to a general topic of interest, or they might be highly structured, with very specific questions and/or activities (e.g. projective techniques such as word association, fill in the blank, etc.) for the subject.

Like focus groups, interviews are useful for exploratory research.  Use this market research method when you are interested in digging into a specific issue very deeply, searching for customer problems, understanding psychological motivations and underlying perceptions, etc.

Interview - market research method

Interview

 

Primary Market Research Method #4 – Experiments and Field Trials
Experiments and field trials involve scientific testing, where specific variables and hypotheses can be tested.  These tests can be conducted in controlled environments or out in the field (natural settings).  This form of market research is always quantitative in nature.   Experiments and field trials can be a hairy topic with lots of jargon, but here’s a simple example that demonstrates an effective online experiment: In his first presidential campaign, Obama used “A/B testing” to optimize his campaign donation page.  Some website visitors would see one image and others (at random) would see a different image.  The webpage team was able to measure which image was resulting in more donations, and they could quickly decide to use the more favorable image for all users.  By employing this simple market research experiment on which website images performed better, Obama was able to maximize contributions in a major way.  Another example might be a cereal company making two different packaging styles and delivering each one to limited test market stores where their individual sales can be measured.

 

A B Testing - market research methods

A/B Testing in Action

Primary Market Research Method #5 – Observation
Observational research can come in a different shapes and sizes.  In general, there are two categories: strict observation with no interaction with the subject at all, or observation with some level of intervention/interaction between the researcher and subject.  The greatest benefit of this technique is that researchers can measure actual behavior, as opposed to user-reported behavior.  That’s a big deal, because people will often report one thing on a survey, but behave in another way when the rubber hits the road.  Observational research is a direct reflection of “real life,” so these insights are often very reliable and useful.

There are many examples of observational research.  Here are a few:

Usability testing – Watching a subject use a prototype device is one form of observational research.  Again, this can be done with or without intervention.

Eye Tracking – Let’s say you have come up with a website.  You might ask people to navigate your website, and you will use eye tracking technology to create a “heat map” of where their eyes go on the website.  This information can be used to re-design and optimize the page elements.

Contextual Inquiry – This is a hybrid form of research that involves interviewing subjects as the researcher watches them work or play in their natural environment.

In-Home Observation – Watching a family member go through the morning routine in their home might turn up useful insights into pain-points that need solving.

In-Store Observation – Simply watching shoppers in action is another form of observational research.  What do shoppers notice? How do they go through a store? etc.

Mystery Shoppers – This involves hiring a regular person to go into a store and pretend to be an everyday shopper.  They will then report on aspects of their experience, such as store cleanliness, politeness of staff, etc.  In the case, the mystery shopper is the researcher and the store is the subject being observed.

observational research techniques

Eye Tracking Heat Map: An Example of Observational Research

 

summary of market research methods

Summary of Market Research Methods

 

There you have it.  Now you are armed with a basic understanding of the various traditional market research methods!  If you think I am missing any of the core methods, leave a note in the comments.

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Understanding the Types of Marketing Research

Understanding the Types of Marketing Research
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Data drives marketing. Understanding consumer engagement, customer retention, and growth optimization through accurate, insightful marketing research drives business. Although much has changed in the move to online enterprise, marketing research is still conducted in the physical and digital world. To understand the impact of marketing data on organizational tactics, it helps to explore the research methods employed to gather this information. There are two fundamental types of marketing research: primary and secondary. While closely related in practice and used for myriad similar qualitative and quantitative purposes, the origin of primary and secondary data is vastly different. The divergence between these two types of marketing research mainly arises from source data.

In primary marketing research, data is gathered from original studies performed by the organization (or an entity hired by the organization). Conducting primary research to test a new concept or gather customer insight is common. Studies typically include focus groups, in-person or phone interviews, and surveys.

Primary Research: Collecting New, Specific Information

Primary marketing research, also known as field research, is the firsthand gathering of new data from primary sources for a specific purpose related to the business conducting the analysis. Large corporations may have their in-house marketing department design and conduct primary research in the field to gather primary source data. However, the majority of primary marketing research is contracted out to third-party marketing agencies that conduct surveys, focus groups, and interviews on the company’s behalf.

Primary marketing research compared to secondary research involves new analysis, designed by a business for specific reasons, and is gathered directly from original data sources. Primary marketing research provides a much higher degree of control over the nature and amount of data collected, often resulting in keen insight companies can use to make smart business decisions. The best primary research results come from a well-defined research plan and can be of immense value, but are also very time-consuming to collect and come with a much higher price point than secondary research.

Primary Marketing Research Methods

Focus Groups

Focus groups, conducted correctly, produce a vast amount of valuable, qualitative primary source data from a specified target audience. Focus groups involve meeting with groups of rigorously selected individuals (most often 5 to 10) in person or virtually to learn their feelings or attitudes toward a specific topic such as a new product or an advertising concept. Trained facilitators guide participants through discussions that are carefully crafted to elicit honest, natural opinions and perspectives. The business or hired marketing research organization conducting the focus group must first establish a target audience for the research and then choose participants who are representative of several segments of this market. The goal is usually to produce a group of representative individuals within this target audience.

Properly conducted focus groups provide rich qualitative primary source data that is unlikely or impossible to collect from surveys or individual interviews that can be used to improve products, enhance services, or guide future initiatives. In a focus group, selected participants are asked specifically designed questions in an open, interactive group setting that often provides greater insight than a one-on-one interview. Face-to-face focus groups are often conducted at focus group facilities with rooms that have one-way glass, allowing company decision-makers to view the focus group discussion without disrupting the participants. This provides the observers additional insight into the responses.

Focus groups are an invaluable primary research tool for marketers and business leaders. These open forum conversations can generate novel ideas, resulting in sophisticated insight into consumer opinion and mentality. In recent years, online focus groups have become prominent with the development of interactive video conferencing technology. Respondents can remotely apply for participation, undergo screening, and participate at a prearranged time via video conference. Conducting focus groups online is more cost effective than in person because the need for a physical testing location is eliminated and time and travel expenses for the participants and facilitator are reduced.

Interviews

As a method of primary marketing research, interviews can take on a wide variety of forms, but most are simple one-on-one discussions to elicit qualitative source data from the individual rather than a group. Interviews can take place in person, over the phone, or over the Internet. Interviews provide a mix of qualitative and quantitative data from customers depending on the way the questions are crafted.

Surveys

Surveys are often conducted online, over the phone, or in person and can be used to further investigate the findings of focus groups or individual interview observations. Qualitative findings drawn by the researchers as a result of focus groups or interviews can be tested for accuracy with a much larger sample size within the target market through surveys. To develop well-crafted marketing strategies and business initiatives, the organization must understand if its ideas and determinations are valid across a large segment of its customer base, and surveys are an effective way to accomplish this.

User Groups

Distinct from the in-person focus group for market research, a user group is typically used to gather user experience (UX) data to provide insights for certain web designs. Additionally, user groups tend to be composed of individuals who share similar interest, goals, or concerns rather than a group of people from a larger, more diverse demographic. Furthermore, unlike moderated focus groups, these user groups often meet regularly to discuss their experiences with a particular software or product while researchers take note of their concerns or praise.

Test Markets

A test market is a group of individuals used in primary marketing research to represent a larger target audience. A test market can be understood as a customer microcosm, a manageable sample size for extrapolating reliable consumer data to a larger target group or mass market. This extrapolation is typically feasible because of certain characteristics shared by the test market and larger target audience. However, lack of exposure to mainstream media consumption can also be a driving factor in test market research. An audience that hasn’t been exposed to any particular biases that may have been created by advertising campaigns will provide impartial feedback that can be used to gauge a clearer understanding of consumer response in the mass market.

Secondary Research: Extrapolating Insight from Existing Data

As previously discussed, business entities will conduct primary marketing research to gather specific, highly targeted information. However, secondary research can provide valuable insight much faster at a dramatically lower cost since it is pulled from pre-existing data. Companies can extrapolate data for their own business from research entities collecting industry data.

Sources of Secondary Marketing Research

Competitor Benchmarks

Competitor benchmarks are arguably the most valuable, practical, and widely used source of secondary marketing research data in the world today. At its core, benchmarking measures specific growth metrics or key performance indicators and compares them to other businesses in the industry. Benchmarking is fundamentally a core principle of business.

The process of establishing competitor benchmarks involves measuring similar performance criteria against the success of similar-sized businesses within the same industry, which can be conducted in myriad ways. Businesses can purchase professionally amalgamated financial benchmarking data as their source of information, then compare metrics such as operating costs, sales, and profit margins against a determined industry standard. Fiscal benchmarks can be determined without formally buying any data whatsoever, as many of these figures are public knowledge. A business can examine the finances of similar companies in their field through publications issued by industry association organizations. Competitor benchmarks are very useful, allowing companies to identify ways to reduce cost, increase efficiency, and improve allocation of operational resources.

Sales Data

Since internal sales data is often easily accessible to researchers, it provides an important self-evaluation tool for the organization and market research. Not only can sales data help you assess profitability of an organization’s product or services, but it can also help to segment customers, discover trends, and compare competitive sales data when available. Because sales numbers are already accessible and relevant, it can provide useful data for any future marketing endeavor.

Government Publications and Statistics

There are countless legal publications, government-created data sources, and statistics published by the state that can serve as useful secondary data for business. The United States census can provide precise national demographic data. Patents are filed with the government every day and can act as previews of industry trends and future innovation. Additionally, statistics from organizations like Data.gov, the World Bank, and the Pew Research Center can provide valuable secondary data.

Commercial Data

Internal sales numbers are self-generated, and government publications are publicly accessible, but organizations can also purchase commercial data from established market research corporations like industry leaders Mintel and IBISWorld. These organizations specialize in generating accurate data for secondary market research purposes and offer a wide variety of insight for private use. Commonly known as “ intelligence solutions ,” these data can include precise market demographics, tactical insights related to B2B operations, and industry-specific data that can be used to guide upcoming initiatives.

Secondary marketing research involves organizations using existing source data and can be a great starting point. Businesses often opt for an exploration of less expensive secondary data to form new ideas before exploring primary marketing research options. Organizations commonly choose to utilize primary research methods only after conducting their own secondary research. This means a business can determine what exists before embarking on its exploration into the perspective of customers while working to ensure optimal profits and sustainability.

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Sources

http://blog.clientheartbeat.com/competitive-benchmarking-101/http://blog.clientheartbeat.com/competitive-benchmarking-101/

http://smallbusiness.chron.com/types-marketing-research-examples-21474.html

http://businesscasestudies.co.uk/barclays/discovering-customer-needs-through-research/types-of-market-research.html#axzz4CGGlh3Cw

http://www.worldbank.org/

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