Market Research in Practice

An Introduction to Gaining Greater Market Insight

Paul Hague

• Publisher: Kogan Page
• Year: 2021
• ISBN:
  9781398602830
• Edition: 4
• Topic: Business
• Subtopic: Ricerche di marketing
• Index: Business

Learn the fundamentals of market research with this bestselling guide that delivers an overview of the whole process, from planning a project and executing it, what tools to use, through to analysis and presenting the findings. Market Research in Practice provides a practical and robust introduction to the subject, providing a clear step-by-step guide to managing market research and how to effectively to obtain the most reliable results. Written by an industry expert with over 35 years' practical experience in running a successful market research agency, tips and advice are included throughout to ground the concepts in business reality. This text also benefits from real-world examples from companies including Adidas, Marks & Spencer, Grohe and General Motors. Now in its fourth edition, Market Research in Practice is now fully updated to capture the latest changes and developments in the field and explores new tools of qualitative research using online methods as well as expanding further on online surveys such as SurveyMonkey. Accompanied by a range of templates, surveys and resources for lecturers, this is an invaluable guide for students of research methods, researchers, marketers and users of market research.

part One

Planning a market research study

01

Introduction

Who needs market research?

You are walking through a farmers’ market where the stalls are full of plump produce. The stallholders have their wares positioned so that they are displayed to best advantage. Some are shouting to catch your attention. There are price tickets clearly displaying the cost of each item. It is busy and very noisy. Business is brisk and sellers and buyers seem to be in perfect harmony – each understands the other. It is highly unlikely that any of the stallholders have ever read a market research textbook, designed a questionnaire or carried out a survey; but they certainly do carry out market research.

Customers comment on the produce and the stallholders listen and respond, adjusting the next day’s or week’s stock. Each looks at the others’ prices and knows instantly if they are out of line. And if they are, a quick adjustment is made. The stallholders watch and listen to each other to see how effective they are at catching the attention of the crowd, and if someone has a good idea, others quickly copy it. The stallholders’ antennae are constantly monitoring the market because if they were not, they would soon be out of business.

You are whisked off now to the offices of a global company in Philadelphia. The company has plants in 30 different countries and it employs 30,000 people. It sells through 300 distributors who in turn sell to hundreds of thousands of customers. How does the boss of this company stay in tune with its market?

First, he or she has internal sources. Managers of each territory make their reports. The functional heads compile data on sales, finance and production. And whenever time allows, the boss does his/her own tour. But the position is no way as clear as it is to the stallholder. There are conflicting views from staff. Cultural differences around the world blur the understanding. Customers are distanced by distributors and there are few opportunities for them to express their opinion. What is more, unlike the stallholder who can quickly make adjustments to changing conditions, it takes an army of people weeks and months to make changes in the global company. The cost of a wrong decision is a fall in sales and profitability, resulting in the loss of thousands of jobs and millions of dollars off the share price. This company cannot rely on its antennae to tell it what is going on, it needs a process.

New roles for market research

Market researchers have a tool kit made up of desk research, telephone interviews, face-to-face interviews, self-completion questionnaires (mainly online), focus groups and observation. They employ special techniques for selecting samples and analysing the data. Much of this book is devoted to these subjects, explaining how each works and how to do your own market research. However, it is equally important to understand what market research is for – why it is carried out. It is helpful, therefore, before we get into the tool kit, to consider the role of market research in decision making as this provides a context for the later discussions of methods and techniques.

We should begin this contextual understanding by reflecting on how young is the subject of formal market research, and how and why it started.

It is said that the first recorded straw polls (incidentally, the term comes from farmers throwing a handful of straw into the air to check where the wind was coming from) took place in the early 1820s when newspapers in the United States carried out simple street surveys to see how the political winds were blowing. By the early 1900s a fledgling market research industry had started there, focusing on advertising testing in one form or another. In those early days there was concern that direct questioning would produce dishonest answers and so some of the first commercial market research relied heavily on observation. The number of baked bean tins was counted on the shelves of supermarkets at the beginning and end of a period, and account was taken of the movement of the inventory. The audit was born. Famous market research companies such as Nielsen and Attwood in the United States and Audits of Great Britain (AGB) emerged. For the first time, managers had objective, accurate data on their sales, the size of the market, trends and their competitors’ shares.

In the 1950s and 1960s business competition intensified and market researchers, building on the experience of social researchers, used sample surveys with questionnaires to obtain attitudinal data. The market research interview was accepted as the main vehicle for collecting information, and survey companies blossomed. For the first time, managers had objective and systematically collected data to help them understand what people were doing with or thinking about their products.

In the 1970s and 1980s attitudinal research moved to a different level and surveys were developed to track customer satisfaction.

In the last few years computing power has become cheaper and more powerful and the emphasis has turned to ‘squeezing’ data for more insights, using modelling such as factor and cluster analysis for segmentation, conjoint analysis for pricing decisions, data fusion to fill in gaps of missing data and geomapping to find the best locations for retailing or distribution.

Market researchers have broadened their skills beyond data collection and analysis. In a world that is overloaded with data, researchers have become experts in converting the data into easily understood diagrams and frameworks. The nature of research has changed and so have researchers. Today market researchers spend less time writing up their findings in lengthy prose and more time turning the data into visuals which can readily be shared within the client company. Researchers are no longer nerds and number jocks but sophisticated consultants who can advise on marketing strategy.

The effect of regional culture on the use of 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 does not merit a huge spend on fact finding. Maybe action is required today and there is no time for formalized research even though it would be welcome. There is nothing wrong with intuition and ‘common sense’ and these are naturally 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. Companies operating in large and international markets that are changing apace cannot rely on anecdotal and intuitive approaches to decision making. The purpose of market research is to reduce business risk.

It is perhaps surprising that major investments and strategic decisions are still made without adequate information. The reasons for this may include some professional failures on the part of market research practitioners such as an inability or unwillingness to be involved in decision making, as well as differences in corporate cultures. In the United States and northwest Europe, market research is almost standard practice as an aid to making large decisions. However in southern Europe, much of Asia and the developing world, market research is used less and there is more reliance on hunch and intuition. This is partly historical in that market research is less established and still finding its feet in these regions. It may also be because of cultural diffidence and suspicion about a methodology that people believe may not be a reliable means of getting to the heart of the matter.

The use of market research in business models and frameworks

Market research should have a purpose. Market research helps us understand the needs, behaviour and attitudes of customers, potential customers, suppliers, members of an organization, employees, voters etc. The data we collect to give us this understanding should not arise from a random collection of questions. The research should be designed to solve a business problem. This requires a framework. When the problem has been identified and a hypothesis developed, the framework can be selected. Now the questions that need to be asked will become evident. When the survey is finished, data can be dropped into the framework to provide an actionable plan. The fact that the survey links to a framework will give the client more confidence in the findings and the suggested direction for the business. The research will be grounded in an established business model.

Business frameworks are a sort of map; they provide a plan of where we are now and where we can go. Just as we would never attempt to walk up a mountain without a map, we shouldn’t address a business problem without a framework. There are hundreds of business models and frameworks that help us make sense of data. Our interest in this book is in those frameworks that drive business strategies. There are frameworks for overall strategy, famous ones being SWOT (strengths, weaknesses, opportunities, threats) and PEST (political, economical, social and technological). There are frameworks to find a competitive advantage such as Porter’s generic strategies and USP (unique selling proposition). There are frameworks to devise specific marketing strategies such as the 4Ps (product, price, place and...