Market Research & Market Intelligence

Elsewhere you have read that Market Research, in order to be effective, must be systematic. It is best to follow a process, a template. There are many to choose from but whichever one you use they will/should cover the following broad areas (8 steps):

1. Define the problem and research objectives and prepare a research proposal
2. Choose the Research Design
3. Planning on how to collect the information
4. Sample size
5. Fieldwork
6. Analyse the information
7. Present the findings
8. Make the decision

1. Define the problem and research objectives and prepare a research proposal

Why are you undertaking the research activity, what is the problem that you are trying to solve? Spending time at this stage (and spend as much time as you can) is always time well spent. If you do not define the exact nature of the problem for which you are undertaking your research it is very likely that the information gathered, no matter how well you do it, will result in you getting information for the wrong problem!

Think of it this way. You look at the business and your sales are down on last year. You decide that some research is required. What will you research? You jump to the conclusion that sales are down because the sales team are not as good as they need to be. So, you fire 50% of the sales team. However, had you waited just a little longer and spent more time dealing with the true nature of the problem you may well have discovered that the reason sales are down is that customers think that your products are not really that good at all. So, you have managed to get rid of the one thing that might have saved the company…. excellent sales people. All this because you rushed into a decision without the facts.

Measure twice-cut once!

The main components of a Research Proposal

A good research proposal will contain the following sections.

Background: a broad overview of the current situation, an outline of the problem being faced, the current situation of the company, why is this research activity being engaged in, details of the product.

Research Objectives: a clear statement of research objectives and aims. The research question behind the objectives is discussed. The research should be expressed as a hypothesis.

Required Information: what qualitative and/or quantitative information is required. The decision implications of possible findings are also discussed and examined. The research parameters are discussed with management and agreed upon…what products, markets, topics etc.

Research Methods:

The choice here will be a function of:

1. the nature of the specific problem at hand,
2. time and resources available,
3. size and nature of target groups,
4. nature of the decision.

You will then decide on the research technique to use in the light of the accuracy and objectivity being sought. The planned secondary and primary research is also outlined.

Terms of reference: you should set out clearly what is going to be undertaken-the time frame, when the findings will be reported to management and how this will be achieved. The key assumptions will also be stated.

Schedule and costs: all costs associated will be set out as well as any important assumptions.

Presentation of report/findings: this will be created with the recipient clearly in mind. Recommendations, conclusions are presented in the form of a written and/or oral report.

2. Choose a Research Design

This is the overall blueprint, guideline that you will use. One way to classify the design is according to three terms: exploratory, descriptive or causal.

Exploratory research: Your aim is to explore the general nature of the problem. You are not seeking to reach conclusions at this stage, but rather to you are “putting your toe in the water” you are trying out possible avenues.

Descriptive research:  here you might be looking at associations with 2 or more variables: how sales are impacted by your communication efforts, price and quality et cetera. You might also be looking at a possible correlation or link between brand loyalty and sales. It is often highly structured data that is obtained.

Causal research: here you are trying to establish a “cause and effect” relationship between two or more variables.

3. Planning on how to collect the data

You must establish how, where, and when, you are going to collect the data. You must choose a data collection method, and a data collection instrument, keeping in mind the nature of the defined problem and the chosen research design as in 1 & 2 above.

You can collect data from secondary and primary sources.

4. Sample size

Remember that whatever you do, the sample size is important. The people you talk to, the places you visit – must represent your target audience. The data collected by you must be reflective of the problem which you are trying to find a solution to. Deciding on the sample size is critical.

5. Fieldwork, gathering the information

Here is where you decide who is going to collect the information in a professional timely manner. Data gathering is time-consuming and requires a team of interviewers. This must be taken into account, both because of costs, as well as because of the time it takes to gather the data.

6. Analyse the information

This is where the true value of all your hard work shines through. You must be prepared to analyse the collected information in an objective manner. Often it is best that you get a professional to do this as your own perception of the company might influence the findings.

7. Present the findings

Again, the findings are to be presented in an objective professional manner. If the news is not good, you must acknowledge this.

8. Make the decision

This is the purpose of the research process. A decision could also mean that your idea is not viable or worth exploring further.

UNIT 3 – Methods of Market Research

When it comes to actually undertaking your market research there are two broad methods at your disposal-Primary and Secondary.

Primary data is data that you gather for the specific purposes of solving your defined problem. It is highly focused upon your needs and can be very expensive. Secondary data is data that has already been gathered for some other purpose. When you start your research activity you will normally engage in gathering secondary data initially, and then if you still do not have sufficient data to solve the problem as defined, you will move on to primary data collection.

Secondary Market Research

Secondary research (sometimes called desk research) tends to be the first step in market research and can sometimes be perceived as ‘good enough’.

Secondary research tends to rely on published data and the quality of this can vary, depending which part of the world you’re trying to obtain information from. Remember, this data has been collected against a specific brief that you will not be aware of. Importantly, it may not have had your product or information in mind when developed so if fitness for purpose is not clear, use it as a guide only. In Europe, for example, the quality tends to be higher than in African and Asian markets where the information tends to be harder to collect.

Good sources of secondary information:

• Publications: The Economist, The Wall Street Journal, Forbes, Fortune, Business Week, McKinsy Report, Financial Times
• Trade Shows & Associations
• Sales People
• Suppliers & Industry Experts
• Customers

Primary Market Research

Primary, or field research, is specific to your company’s needs. Rather than scouring through general information, this is research specifically tailored to you, where you can establish exact information about the marketing of your product in the chosen market.

Unless you know what you’re doing it’s important not to go it alone, however, and conduct research either jointly with an agent or distributor, or appoint an external agency.

Primary data research can be a very time consuming and expensive exercise, so it needs to be well scoped and planned based on agreed objectives. Based on the objectives and the depth or breadth of the information required, the research will seek quantitative (data with objective and measurable properties) or qualitative (data with subjective properties, not of a measurable value) data, sometimes both.

Primary market research is a great way to gather information about your business’ product or service idea. You might conduct market research to determine things like the size of your target market or the demand for your great product idea. Primary market research is tailored to your small business’ specific needs and can be customized to suit. There are four ways primary market research can be conducted – all with their own benefits for your product or service idea.

The four types of primary market research:

1. Observation– Just as it sounds, observation market research involves watching your potential customers and their behaviours in action. This means – without interacting – watching customers buying products or services similar to yours, listening to what they say as they shop, noticing what they buy and how much they paid. This type of market research works best if your business caters to customers, not to other businesses.
2. Focus Groups– Focus group market research means assembling a small group of eight to 12 potential customers to gather information and opinions about your product or service. These groups are led by an objective discussion moderator. Focus groups are a great way to get feedback on a product or service idea directly from several potential customers.
3. Interview– Interviews are like focus groups, but there is only one participant speaking to one researcher, who leads the discussion. Interviews are well-suited for product or service ideas that could be too personal or private for group discussion, like personal hygiene products or financial services.
4. Survey/Questionnaire – This method of market research involves getting feedback from potential customers through a structured, multi-question survey. Market research surveys or questionnaires can be done over the phone, through mail/email or in person. You may need to conduct several surveys to several groups in order to get feedback from all possible types of customers. One note about surveys – if you don’t have the resources to conduct a large amount of them, small sample groups are okay – but be cautious of making major business decisions based on this small amount of feedback.

The Questionnaire

A questionnaire is a structured technique for data collection that consists of a series of questions, written or verbal, that a respondent answers.

Researchers can collect quantitative primary data for descriptive research through surveys or observation.  A questionnaire is a written list of questions, the answers to which are recorded by respondents. Respondents read the questions, interpret the meaning and write down their answers. It is very important that the questions are clear and easy to understand as there will be nobody present for clarification. A questionnaire should not be long or complicated. More pages with a clear and user-friendly layout are better than fewer pages which are cramped. It should have a simple and attractive appearance. A questionnaire should be written in such a way that it minimises demands imposed on the respondents. They should feel encouraged to participate in the questionnaire as uncompleted responses have limited usefulness. It is best that the researcher try to lower / eliminate fatigue and boredom on the part of the respondent.  There are a number of different types of questionnaires including mail, e-mail or internet questionnaires, personal questionnaires and telephone questionnaires.

Steps Taken to Maximise Response Rate

Abundant evidence suggests that the conduct of survey-based research is becoming increasingly difficult. Response rates to all forms of data collection have steadily declined over the past few decades.

One of the disadvantages is that there may be a low response rate. Web survey response rates are fairly low, which threatens the efficiency of web surveys. To use questionnaires and surveys to gather information effectively, it is critical to increase response rate without compromising the lost cost advantage. Questionnaires will be administered via email therefore it is essential to take any steps required to increase response rate:

• The researcher must ensure that the questionnaire is not too long, but they must also ensure that they get all the information needed.
• The researcher is advised to pre-notify respondents. Pre-notification works because it underscores the legitimacy of the questionnaire or survey. The better you know the respondent the more chance of them responding.
• Create a survey that asks the right questions to meet the objectives, thus providing end data that is useful.
• Create questions that are short and concise.
• Pilot test the survey on a few respondents before sending it out.
• Do not send unsolicited emails.
• Plan timing and delivery of survey. Avoid busy periods and allow respondents enough time to complete.

Questionnaire Design

1. Specify the information needed
2. Specify the type of interviewing method
3. Determine the content of individual questions
4. Design the questions to overcome the respondents’ inability and unwillingness to answer
5. Decide on the question structure
6. Determine the question wording
7. Arrange the questions in proper order
8. Choose the form and layout
9. Reproduce the questionnaire
10. Pre-test the questionnaire

Quantitative Market Research

The Quantitative Market Research deals with the hard facts and statistical data rather than the opinions, feelings, and attitudes of the individuals. Here, the data are quantified to draw inferences about the customer’s behaviour, attitude and preferences in numerical terms that can be easily interpreted and compared with other data facts.

Quantitative market research is often used to determine what proportion of the population possesses certain characteristics, attitudes, behaviours, knowledge and then its significance level is checked using the statistical analysis method. Quantitative research is based on large samples and addresses questions such as:

• How often customer buys the product?
• What proportion of the population makes job searches online?
• How many customers will buy a product if a certain promotional strategy is introduced?
• How many customers rated the ambiance of the restaurant as ‘outstanding’.

Thus, the researcher can use either of the quantitative methods depending on the research objective and the kind of data generated which can be used for statistically analysing the results.

Qualitative Market Research

Qualitative research aims to obtain more detailed information than quantitative research

Qualitative research is usually undertaken using in-depth interviews or discussion groups (focus groups) among a relatively small number of people. Its purpose is to provide exploratory, explanatory and diagnostic information – the how and the why – in-depth. It needs to be conducted by experts, preferably face-to-face, although telephone and online methodologies are also used.

Qualitative studies explore people’s views and feelings in greater depth. They offer valuable insights to people’s behaviour and motivations (without claiming the statistical validity of a large-scale sample survey). They provide in-depth information on people’s attitudes and reasons why they think or behave as they do.

Qualitative research typically involves a series of group discussions or individual in-depth interviews, or both. It is often used to identify issues to be addressed in quantitative research.

Because of its exploratory and diagnostic nature, qualitative research results should never be generalised, the sample is not selected in the proper fashion, nor are sample sizes robust enough to be statistically representative of a whole target population.

The issues of reliability and validity

In order for you to have confidence in your research findings, that is to say in order for you to be able to rely upon these findings to assist you in making the right decisions based upon the information that you get from your research activity you need to consider the issues of reliability and validity.

Validity refers to the ability of your research to measure what it was supposed to measure and that it is free from bias. This is a somewhat complicated and specialised area of market research and for now it is enough for you to know that collecting the information must be undertaken very carefully. Avoid asking the questions, for example, that lead the respondent in a certain direction…that is to say, “getting the responses that you want, rather than the ones that you need”.

Reliability in data collection is best explained by saying, that if someone else were to undertake the research that you had just done, using the same methods, they would arrive with broadly similar results.

The greater the levels of reliability and validity that your data has the more confidence you and others will have in them and the more confidence you will have that the decisions made based upon them will be good or the correct ones.

UNIT 4 – Market Research for Export

When contemplating export activity and market research you need to have a basic understanding of all aspects of the country that may affect the desirability and success of exporting, such as politics, economics, culture, history, scientific technology, climate, and language. Based on this basic understanding about the target market, an assessment of the competitors, prices, customers and distribution structures should be made.

If, upon completing scientific research, results show that the product does not have any advantages over current competitors’ products, or that product diversification is too slender to assure a high possibility of success, the exporter will have to reassess whether or not the export is viable in its current state. If the export is not assessed to be viable in the target market, changes will need to be made to the plan.

One of the easiest ways to gain a basic understanding of a country’s import and export situation is to look at statistical analyses of exports and imports. By analysing the records of exports and imports at a country level, one can gain knowledge as to when items were exported and which countries they were exported to. Once the proper import countries have been determined, an exporter might be able to make lists of buyers of specific items, which can become the first procession for successful product marketing.

Here are a few suggestions to help you prepare for that export market experience