Saturday, February 21, 2009

5 Steps to Great Market Research

The use of market research has made a significant shift during the past 20 years. In the past, smaller companies generally did not make significant use of market research and let the big companies spend the big dollars to uncover marketplace trends, consumer opinions and behaviors.

However, today nearly every organization has a plethora of market research available to them because of social media technologies and the Web. This means there really is no excuse if your organization is not becoming more aware of its industry, market, and served communities.

To begin with, it is worthwhile to note there is a difference between marketing research and market research. Although they are closely related, marketing research is typically referred to as the design, collection and analysis, and reporting of data and findings relevant to a specific marketing situation facing a company. In other words, marketing research is more about the process than the findings.

On the other hand, market research is research into a particular market, segment or audience-type. It is generally considered to be a component of marketing research. I bring this difference up not because you need to worry about it in how you do your own work, but if you utilize the services of a research firm this will help you speak their language.

There are five basic steps in developing a marketing research project. For sure you can just hit the Web and start looking for information. But without some kind of objective in mind, or idea of how you might use the information you find, that searching around is likely to be less effective in the long run. The five steps are: 1) defining the problem or objective, 2) developing the research plan, 3) collecting the information, 4) analyzing the information, and 5) presenting the findings.

Begin with the End in Mind
There is an old adage that says, “A problem well defined is half solved.” This first step is critical to having a successful and relevant marketing research project. It begins with the end in mind and asks “What do we need to know?” “What could we do with the information we get?” “What if we find out something we didn’t expect?” “Why do we need this information?”

Other questions that need to be asked include is the research objective a long-term or a short-term issue? Is it specific enough to be tested or does it wallow in generality? Is the project exploratory in nature (gathering preliminary data and making suggestions for new ideas), or descriptive (trying to ascertain a quantitative finding), or even causal (an attempt to test a cause-and-effect)?

Whatever the motive or type of objective generated, a clear definition as to the research objective or problem is essential. Articulated clearly, it serves as a true-north keeping your research focused and relevant. Without this clearly defined objective, any research you do will be riddled with unnecessary waste and unclear results.

So, for the first step, take a look in your organization. What customer or industry information do you need to operate your business more effectively that you don’t have? What new product or service could you launch if you just had a bit more information about viability and acceptance?

Map Your Strategy
Before implementing any research project, it is vitally important to map out a research plan that is tied to a budget. Research can get very expensive as the different types of research activities vary in associated costs. Additionally, mapping out a research plan is imperative to identify and articulate how the research will be used to improve or develop bottom-line profitability.

If the research can only be articulated as an expense and doesn’t demonstrate a route to increased efficiency or effectiveness, then go back to step one and rethink your objective. This is a major “A-ha” check point to ensure you’re on the right track.

After a budget has been prepared, you’re now ready to begin looking at what types of information you need. There are two types of data sources available: primary and secondary. Primary data is usually gathered for a specific purpose or for a specific project. It is first-generation data generated to answer a specific research question. Secondary data is data that were collected for another purpose and already exists somewhere else.

There are lots of sources of secondary data available to you. They include internal sources (your database), government publications (statistical abstracts, Census, Industrial Outlook), periodicals and books (encyclopedia of associations and trade magazines), and commercial data (MRCA Information Services, Nielsen Company Reports). Many sources of information are available on the Web. Just be sure to vet the information to ensure its accuracy.

Primary data can be collected in a variety of ways. Observational research, focus-groups, surveys and experiments are just a few. These methods utilize two main instruments to gather information: questionnaires or mechanical devices.

Once the research approach and instruments have been decided upon, the next step is to develop a sampling plan. This plan asks three questions: Who is to be surveyed (sampling unit), how many people should be surveyed (sample size), and how should the respondents be chosen (sampling procedure).

Collecting the Data
The data collection phase of marketing research is generally the most expensive part of the process. This usually involves some type of third-party vendor or firm, or extensive in-house staff hours to conduct the research. Whether the collection efforts are in-house or outsourced, it is important to make sure that the integrity of the data collected is high. The removal of interviewer bias and the standardization of the collection process is paramount.

Data collection methods vary greatly and technology is playing a huge role in its development. Today, choices range from professional interviewers who sit in booths and have computers that randomly dial numbers. When a call is answered, that person’s information pops onto the screen and the interviewer asks the questions and types in responses. Other forms of collection include kiosks in malls, or family-based behavior monitors that record television watching habits and their correlation to buying behavior.

Analyze Your Analysis
However you choose to gather your research information, the tricky part then becomes how you analyze it. Depending on how many variables you have in your research project, the complexity of analysis will vary. There are a variety of statistical tools, models and optimization routines that any research firm worth their salt will know and use for you. This analysis should provide you with an answer to your original question/issue, or be able to generate further questions for study or clarification.

The trick in analyzing the information is not to get carried away with looking at the data in every possible way. Look for your answer. See if there are any relevant connections to other data and move on. Don’t get caught in paralysis by analysis.

Getting the Answer
After the information is analyzed, the last step in the marketing research process is to present the findings. Whether presenting to a board of directors or to yourself, it is important to write up a report outlining your findings. Document your efforts and processes for future reference. You’ll be glad you did! Of course, findings can suffer from a variety of errors. If so, this findings report is the basis for your next research project.

Hopefully this article has helped you consider your own company’s research needs and outline how you might begin your own marketing research project. For recommendations on good research firms in your area, contact your local chapter of the American Marketing Association. They can give you some suggestions.

-- David Kinard, PCM


Messi said...

I came to your blog just when I was surfing on this topic. I am happy that I found your blog and information I wanted.

Ahmed Al Sayed said...

Great Article and simple.

Ali said...

Ali S. Karrar
Realy it is good information how to start up a market research project,I got the idea about how to analyes the market data.

Mike said...

Awesome explanation of the five steps for the marketing research approach. I found your article after I read the whole chapter, but your article pretty much sums it all up, so I just wanted to thank you for such a great article. I am also a blogger who loves to share good information for my viewers, so my hat is off to you for such a great post.

Thanks and keep up the good work