How to: Solid Market Research in a Nutshell

During the analysis, planning, implementation, and evaluation of marketing activities, information is required. Necessary data can be obtained in various ways, one of which is research. Conducting research is associated with many difficulties, so the approach must be qualified.

When Research is Needed

First and foremost, when introducing a new product into production – to study demand, design packaging, determine future pricing, product promotion methods, existing and prospective distribution channels. Research helps gather necessary information for exploring new markets, customers, and consumers, identifying customer needs, and understanding how consumers perceive new products or their features – new shape or flavor. Research is effective in studying competitors, suppliers, and distributors, new markets and concepts, marketing judgments, and motivations.

Audience needs research is very useful when it seems that a product has become outdated and lost its market attractiveness. An example may be a series of studies conducted for a company that produces condensed milk. Many people know it from childhood as a treat. However, now there is a huge variety of imported and Russian dairy desserts on our market, and Soviet condensed milk has lost its competitiveness. The manufacturer realized that something needed to be changed. As a result of several different studies, an attractive modern image of condensed milk appeared, a new brand – a variety of modern condensed milks with their own names, taste, and new packaging. Interestingly, as soon as one company implemented this change, competitors also began to improve their products. That’s why sociologists say that marketers are advocates of the consumer.

Ideally, research should be conducted in relation to all key marketing components: product, price, distribution channels, and promotion methods. Currently, there is great interest in the market for marketing research in analyzing market capacity and segments. Much less are manufacturers ordering research related to advertising (analysis of advertising campaign effectiveness, development of advertising concepts, testing of advertising materials). Research on product and service positioning, product and packaging testing, and pricing analysis and recommendations are even less in demand (manufacturers prefer to do these studies themselves). There is a growing interest in media analysis in the overall mass of marketing products.

The Role of Research in Market Strategy Planning is immense because it is one of the effective tools in obtaining marketing information. Of course, theoretically, one could assume that a genius personality, for example, Henry Ford, without conducting marketing research at all, but only thanks to his powerful potential, intuition, and market vision, could create a super-product that would bring colossal profits. However, specialists are convinced that even with such a gift, accurate information is necessary at all stages of the product life cycle – from the idea of its creation to the moment it leaves the market – to determine the marketing strategy.

Types of Marketing Research

Marketing research allows obtaining primary information, i.e., information that has never been discovered before. In methods of obtaining relevant information, two approaches can be distinguished: quantitative and qualitative.

The main task of quantitative research is to obtain a numerical assessment of the market’s condition or respondents’ reactions to the product. Quantitative surveys are recommended to be conducted:

• When changing the product, its application method, packaging, price;
• To compare the relative effectiveness of several completed advertising projects;
• For testing consumer perception of new products;
• To track consumer perception of brand product characteristics.

For example, a well-known company that distributes two types of expensive German cigarettes in Russia – regular and light – decided to start selling the same brand of medium-light cigarettes in our country. Research showed that the target audience would not change, as due to the high price of the product, consumers of this brand have long been established. Simply put, part of the audience from the class of smokers of regular and light cigarettes will switch to the new medium-light taste. Thus, the company realized that it makes no sense for it to start selling this new type of cigarettes in Russia, as there will be practically no increase in profit due to audience expansion.

Qualitative research is conducted to identify consumer reactions and behaviors and is more closely related to answering the question “why?”. This approach helps determine which motives and incentives influence buyers when making purchasing decisions and in the process of forming attitudes toward brands, trademarks, product image, or enterprise. Most surveys of this type are conducted through focus groups or in-depth interviews, with preference given to studying:

• Brand awareness;
• Consumer behavior and attitude;
• Market segmentation;
• Quality of advertising on all parameters;
• Prices;
• Assortment.

Currently, in our country, entrepreneurs are most interested in conducting quantitative research rather than qualitative ones. Comprehensive research is ordered by just over 10% of enterprises. However, specialists are convinced that the data obtained using the described two approaches complement each other successfully and contribute to building a clearer picture of the market.

Before Ordering Research

The most important thing is to know exactly what goals you are pursuing and what you want to achieve. It is necessary to correctly set the task for researchers, formulate a request: the results of the research depend directly on this. You need to know what problems exist, what the research is planned to be used for, and the deadlines for its completion. This information will need to be provided to the companies to which you will send a preliminary research request. At the same time, keep an approximate budget in mind (it is not worth revealing all your capabilities to everyone at the selection stage).

Who Will Conduct It

Everything depends on the goals and objectives. Probably, a small company is able to conduct a modest study or a small survey on its own if it does not depend on it for making important marketing decisions. Sociologists and marketers say that it is always more profitable for a firm to commission research to specialists than to maintain a research department. A more stable position, as a rule, is in those companies whose management understands the importance of information and research work, so in any case, it is better to conduct research on your own than not to conduct it at all. But when it comes to the question of who to entrust this responsible process to, it is worth spending money on working with professionals.

Undoubtedly, own marketers always know the market better and have a clearer understanding of internal tasks than invited specialists. But immersion in the material often does not allow company employees to take a wider look at the research area, to look at the market and the product from the outside, with an unbiased view, to see possible alternatives and objectively assess both the research process and its results. There is a risk of getting not a real picture, but the result that is needed or convenient. However, the engaged research agency is not personally interested in the results of the work, it always has more resources, rich experience of work with other companies, often in the same market areas, there are developed technologies.

In order to make the right choice, it is necessary, first of all, to have a clear idea of ​​who works in the research market and what these companies are capable of.

At the decision-making stage, three main factors must be taken into account: the reputation of the company; the degree of knowledge of the market and the nuances of interest to you, for this, you can ask the company to provide recommendations or reports on similar research conducted; as well as the methodologies used.

In addition, it is necessary to find out if the company has agreements prohibiting research for companies with similar businesses.

It is very important to be sure that the research firm you have chosen does not use existing developments, in other words, does not sell the results of research conducted for other customers. Make sure that in the research firm that does not directly conduct such business, there is a worked out mechanism for identifying cases of unauthorized sale of packages of existing data.

From the point of view of choosing an executor, it is very important when sociologists are able to help formulate both the goals and objectives of the research, and popularize to the customer the information about the tools they use.

After you have preliminarily selected 5-7 companies, you need to send them a prepared request. It is worth bearing in mind from the outset that some companies may not respond to your letter. Those who respond are likely to send you a response or an offer immediately, where they will describe which methods will be used in the research, when the work will be completed, and for how much money. It is worth choosing offers from 2-3 companies and starting negotiations.

Research Process

Before sending marketers “into the field”, it is necessary to reach an understanding with them. The person responsible for marketing in the company is better aware of what information is needed to make a decision, while a sociologist better understands the research process. Ideally, your representative, who has training in the theory of marketing research and can communicate effectively with sociologists, should work closely with the researchers. Otherwise, you may receive incorrect information, draw erroneous conclusions, or pay too much money. The client and the contractor must literally sit side by side and determine what each understands by a particular term or process. Both sides must have exactly the same understanding of the task, what happens during the research, and what will be obtained as a result.

The first stage of the research is the formulation of existing problems and goals, which is the basis of the entire research. This is often one of the most difficult tasks. You may understand that something is wrong in your activities but not know exactly what. At this stage, sociologists can participate in defining the research goals. Thoroughly defining the problem will help avoid unnecessary material costs and save time.

Once the problem is identified, the research goals need to be established:

• Exploratory research – gathering preliminary information to identify problems or find new consumers, clients;
• Descriptive research – determining the market potential of the product, demographic characteristics, and views of the population, or existing and potential distribution channels;
• Causal research – testing hypotheses about causal relationships, for example, whether a price change can increase sales volume.

For example, one of the most well-known Russian beer manufacturers regularly conducts the following marketing research:

• Sales volume analysis;
• Analysis of competitor prices;
• Problem-oriented research (development of new varieties, price tests);
• Wholesaler surveys;
• Image, regional studies, retail audit.

Perhaps one of the most important parts of the research is defining the sample or target group of the study. The sample is a part of the audience selected to represent the opinion of the entire audience. When compiling the sample, it is necessary to understand:

• Who to survey (gender, age, social status, education, etc.). This is not always obvious. For example, if the product is regular tea, the target audience will mainly consist of women, but if the tea is expensive, not for everyday use, then the decision to purchase it will likely be made by a man, based on this, the target group should be formed.
• How many people need to be surveyed. A large sample gives more reliable results. If the sample is correctly selected, reliable results can be obtained even if its size is less than 1% of the target group.
• According to which criterion respondents should be included in the sample.

Defining the required group is very difficult, but it is necessary to do it as carefully as possible because if there is an error and people from the wrong target group are surveyed, money will be spent in vain. Pay special attention to this process and take maximum part in defining the research sample.

Here is an approximate process of forming a sample:

• Determination of the required data;
• Determination of the target audience;
• Determination of the type and form of research;
• Calculation of sample size;
• Determination of the method of obtaining the sample;
• Analysis of possible inaccuracies.

The second stage in the research process is the development of an effective information gathering concept. For this, a research project is prepared, which specifies the sources of information and who will collect it. After that, a research plan is developed, methods of data collection are determined, and tools are selected.

Surveys are best suited for collecting descriptive information, and data collected by survey method are subjective in nature. Surveys can take various forms:

• Panel studies (a stable sample regularly provides information in the form of completed forms);
• Focus groups (a carefully planned discussion aimed at collecting opinions on a specific topic in an informal setting);
• In-depth interviews (a list of several dozen questions for a detailed study of people’s opinions on various issues);
• Methods of relationship measurement (degree of respondent’s relationship to the object on a certain scale);
• Measurement scales of purchasing relationships (used to identify purchase intentions).

Experiments – help collect causal information. Usually, this method is used when preparing to launch a new product or a major campaign: it allows you to check if it is presented clearly, if it is aimed at the right target audience. For example, if it is planned to launch a new brand of yogurt and it is necessary to compare its quality with the quality of already existing similar products, representatives of the target audience are invited to taste the samples, after which the participants of the experiment evaluate each yogurt. Thus, the competitiveness of the new product and consumer preferences are determined.

Data Collection

Collecting primary data through observation of relevant individuals, events, and situations involves studying objects from the outside, in other words – it’s the registration of events or facts that have occurred. This method is good for obtaining primary information about partners, suppliers, competitors, exhibitions, and can be used in the process of studying advertising platforms, such as billboards on roads.

As research tools, a questionnaire (which needs to be tested for the correctness of the questions) or mechanical devices can be chosen. Different techniques are used for research; for example, there are devices that allow determining the emotional reaction of the subject while watching an advertising video: the participant of the experiment moves a special lever up and down, thus expressing their positive or negative feelings. The machine records the data in the form of a sinusoid, after which the results of several experiments are overlaid on each other, and the researchers obtain the average result of the emotional perception of individual fragments of the video.

After the preliminary preparation is done, during which you will identify the problems and goals, sociologists should provide you with a written research plan. It is best if the plan describes the methods that are planned to be used in the research process; the company representative should also review the questionnaire and the nature of the experiments. In addition to clearly defining the problems, goals, sources of secondary or methods of primary data collection, and the target audience of the study, the plan should contain information on how the obtained results will help in making important decisions for the company. Here, the deadlines for the research and the cost of the work should also be indicated, as well as the form of the report.

The third stage of the research is the actual data collection: the plan is developed in detail, data collection and documentation are carried out. You need to be aware of the research process, and you have every right to intervene in the research at any stage, for example, to control how interviewers work on the streets or observe a focus group through a mirror or as part of the group as a “planted” participant. Marketers say that if you personally participate in the research even as an observer, the amount of information that the company will receive as a result will be more complete. As part of research for advertising agencies, a creative director often attends group discussions; they observe the discussion and jot down ideas that come to mind. Of course, they will have a video recording of the conversation, but the impression from observing the live process will already be unavailable.

At the fourth stage, the obtained information is analyzed, checked for reliability, processed, and the results are interpreted.

The final stage is the preparation of the report and presentation of the results.

When concluding a contract with a client for conducting research, the company “Kachalov and Colleagues” goes through the following stages:

1. Discussion of terminology – clarification of a mutual understanding of terms by both parties.
2. The boundaries and standards of future research are agreed upon.
3. The research methodology is fixed.
4. Information about what the client needs and in what form they would like to receive the research results is recorded.
5. The price of the research and financial indicators are discussed.

How to Work with Research Results

The format of the report can vary – it could be a summary of figures, a simple analysis, an analysis with some recommendations, or a presentation with a detailed personal narrative and brainstorming. Since in most cases research results can be interpreted differently, to get the best interpretation, it’s best if a representative of the company and a sociologist conduct the analysis together.

Interpretation is a very important stage of the marketing process. At this stage, the work of the sociologist and your representative continues: it’s necessary to spend maximum time to ensure that the data is transmitted in full, and that both sides understand what information is obtained at the output.

The main problems that arise when receiving a report are:

1. Misunderstanding by the client of what they need from the research.
2. Misunderstanding of what was done during the research.
3. Non-acceptance of the results.

The most important thing in perceiving the obtained data is their complete acceptance; it’s important to be open-minded to see the whole picture, even if it’s not pleasant. Unfortunately, it’s not uncommon for research results to not meet expectations. An example is a study of an advertising video by a very large company. The idea of the video was interesting; however, the research showed that the target audience did not react to the advertisement. Moreover, the advertised product evoked a range of negative emotions among the target audience. In this case, the company disagreed with the unfavorable analysis of the sociologists and still aired the video. Unfortunately, we don’t know how successful this (anti)advertisement was for the company, but it can be assumed that it was not as successful as desired.

If during the preparation and conduct of the research you have chosen the right executor, formulated the questions correctly, outlined the goals successfully, interacted effectively with sociologists, and the methods used inspire confidence, if you are confident that there could not have been a significant error and you have reason to trust this agency, but you still don’t trust the results, as an option – you can order another study from a different company. But it’s best not to ignore the received information.

The Costs

Research expenses can account for up to 15% of the profit. According to statistics, manufacturers of consumer goods spend more on research than companies producing industrial goods:

1. The manager’s attitude towards marketing research.
2. Potential losses to the enterprise if the venture fails.
3. Company strategy.
4. The extent of the enterprise’s participation in national and international relations.

Materials from interviews with the director of the research company “Valideta” S.R. Khaykin and the marketing director of the company “Nayada” G.G. Shcherbakov were used in creating the article. The article also includes data from the book by B.E. Tokarev “Methods of Collection and Use of Marketing Information”.

Originally written for Director-Info