10.1 The Marketing Research Process
The word research refers to the process of looking for answers to problems. In the context of marketing, these problems are typically related to changes in consumer and competitor behaviour. The basic steps used to conduct marketing research are shown below. Next, we discuss each step.
Steps in the Market Research Process
Step 1: Define the Problem (or Opportunity)
There’s a saying in marketing research that a problem half defined is a problem half solved. Defining the “problem” of the research sounds simple. They are problems insofar as they cause you headaches, but are they really the problem? Or are they the symptoms of something bigger? Businesses look at symptoms and try to drill down to the potential causes. The key is to look at all potential causes to narrow the study’s parameters to the information you need to make a good decision about how to fix your business if revenues have dropped or whether or not to expand it if your revenues have exploded.
The next task for the researcher is to write the research objective. The research objective is the goal(s) the research is supposed to accomplish. Many marketing research efforts are doomed from the start because the problem was improperly defined. Coke’s ill-fated decision to change the formula of Coca-Cola in 1985 is a case in point: Pepsi had been creeping up on Coke in terms of market share over the years as well as running a successful promotional campaign called the “Pepsi Challenge,” in which consumers were encouraged to do a blind taste test to see if they agreed that Pepsi was better. Coke spent four years researching “the problem.” Indeed, people seemed to like the taste of Pepsi better in blind taste tests. Thus, the formula for Coke was changed. But the outcry among the public was so great that the new formula didn’t last long—a matter of months—before the old formula was reinstated. Some marketing experts believe Coke incorrectly defined the problem as “How can we beat Pepsi in taste tests?” instead of “How can we gain market share against Pepsi?” (Burns & Bush, 2010)
Step 2: Design the Research
The next step in the marketing research process is a research design. The research design is your “plan of attack.” It outlines what data you will gather and from whom, how and when you will collect the data, and how you will analyze it once it’s been obtained. Let’s look at the data you’re going to gather first.
There are two basic types of data you can gather. The first is primary data. Primary data is information you collect yourself, using hands-on tools such as interviews or surveys, specifically for your research project. Secondary data is already collected by someone else or data you have already collected for another purpose. Primary data is more time-consuming, work-intensive, and expensive than secondary data.
Consequently, you should always try to collect secondary data first to solve your research problem. A great deal of research on a wide variety of topics already exists. If this research contains the answer to your question, you do no need to replicate it. Why reinvent the wheel?
Sources of Secondary Data
Your company’s internal records are a source of secondary data. So are any data you collect as part of your marketing intelligence-gathering efforts. You can also purchase syndicated research. Syndicated research is primary data that marketing research firms collect on a regular basis and sell to other companies. J.D. Power & Associates is a provider of syndicated research. The company conducts independent, unbiased surveys of customer satisfaction, product quality, and buyer behaviour for various industries. The company is best known for its research in the automobile sector. One of the best-known sellers of syndicated research is the Nielsen Company, which produces the Nielsen ratings. The Nielsen ratings measure the size of television, radio, and newspaper audiences in various markets. You have probably read or heard about TV shows that get the highest (Nielsen) ratings. (Arbitron does the same thing for radio ratings.) Nielsen, along with its main competitor, Information Resources, Inc. (IRI), also sells business scanner-based research. Scanner-based research is information collected by scanners at checkout stands in stores. Each week, Nielsen and IRI collect information on the millions of purchases made at stores. The companies then compile the information and sell it to firms in various industries that subscribe to their services. The Nielsen Company has also recently teamed up with Facebook to collect marketing research information. Via Facebook, users will see surveys in some of the spaces in which they used to see online ads (Rappeport & Gelles, 2009).
A marketing research aggregator is a marketing research company that doesn’t conduct its own research and sell it. Instead, it buys research reports from other marketing research companies and then sells the reports in their entirety or in pieces to other firms.
Your local library is a good place to gather free secondary data. It has searchable databases as well as handbooks, dictionaries, and books, some of which you can access online. Government agencies also collect and report information on demographics, economic and employment data, health information, and balance-of-trade statistics, among a lot of other information. The U.S. Census Bureau collects census data every ten years to gather information about who lives where. Basic demographic information about sex, age, race, and types of housing in which people live in each U.S. state, metropolitan area, and rural area is gathered so that population shifts can be tracked for various purposes, including determining the number of legislators each state should have in the U.S. House of Representatives. For the U.S. government, this is primary data. For marketing managers, it is an important source of secondary data.
“Examples of Primary Data Sources versus Secondary Data Sources” shows some examples of primary versus secondary data sources.
| Primary Data Sources | Secondary Data Sources |
|---|---|
| Interviews | Census data |
| Surveys | Web sites |
| Publications | |
| Trade associations | |
| Syndicated research and market aggregators |
Gauging the Quality of Secondary Data
When you are gathering secondary information, it’s always good to be a little skeptical of it. Sometimes, studies are commissioned to produce the result a client wants to hear—or wants the public to hear. For example, throughout the twentieth century, numerous studies found that smoking was good for people’s health. The problem was the studies were commissioned by the tobacco industry. Web research can also pose certain hazards. Many biased sites try to fool people into believing that they are providing good data. Often, the data is favourable to the products they are trying to sell. Beware of product reviews as well. Unscrupulous sellers sometimes get online and create bogus ratings for products. See below for questions you can ask to help gauge the credibility of secondary information.
Gauging the Credibility of Secondary Data: Questions to Ask
- Who gathered this information?
- For what purpose?
- What does the person or organization that gathered the information have to gain by doing so?
- Was the information gathered and reported in a systematic manner?
- Is the source of the information accepted as an authority by other experts in the field?
- Does the article provide objective evidence to support the position presented?
Step 3: Design the Data-Collection Forms
If the behaviour of buyers is being formally observed, and a number of different researchers are conducting observations, the data obviously need to be recorded on a standardized data-collection form that’s either paper or electronic. Otherwise, the data collected will not be comparable. The items on the form could include a shopper’s sex; his or her approximate age; whether the person seemed hurried, moderately hurried, or unhurried; and whether or not he or she read the label on products, used coupons, and so forth.
The same is true when it comes to surveying people with questionnaires. Surveying people is one of the most commonly used techniques to collect quantitative data. Surveys are popular because they can be easily administered to large numbers of people fairly quickly. However, to produce the best results, the questionnaire for the survey needs to be carefully designed.
Questionnaire Design
Most questionnaires follow a similar format: They begin with an introduction describing what the study is for, followed by instructions for completing the questionnaire and, if necessary, returning it to the market researcher. The first few questions that appear on the questionnaire are usually a basic, warm-up type of questions the respondent can readily answer, such as the respondent’s age, level of education, place of residence, and so forth. The warm-up questions are then followed by a logical progression of more detailed, in-depth questions that get to the heart of the question being researched. Lastly, the questionnaire wraps up with a statement that thanks the respondent for participating in the survey and information and explains when and how they will be paid for participating.
How the questions themselves are worded is extremely important. It’s human nature for respondents to want to provide the “correct” answers to the person administering the survey so as to seem agreeable. Therefore, there is always a hazard that people will try to tell you what you want to hear on a survey. Consequently, care needs to be taken that the survey questions are written in an unbiased, neutral way. In other words, they shouldn’t lead a person taking the questionnaire to answer a question one way or another by virtue of the way you have worded it. The following is an example of a leading question: “Don’t you agree that teachers should be paid more?” The questions also need to be unambiguous. Many people don’t like to answer questions about their income levels. Asking them to specify income ranges rather than divulge their actual incomes can help.
Other research questions “do nots” include using jargon and acronyms that could confuse people. “How often do you IM?” is an example. Also, don’t muddy the waters by asking two questions in the same question, something researchers refer to as a double-barreled question. “Do you think parents should spend more time with their children and/or their teachers?” is an example of a double-barreled question.
Open-ended questions, or questions that ask respondents to elaborate, can be included. However, they are harder to tabulate than closed-ended questions, or questions that limit a respondent’s answers. Multiple-choice and yes-and-no questions are examples of closed-ended questions.
Testing the Questionnaire
You have probably heard the phrase “garbage in, garbage out.” If the questions are bad, the information gathered will be bad, too. One way to make sure you don’t end up with garbage is to test the questionnaire before sending it out to find out if there are any problems with it. Is there enough space for people to elaborate on open-ended questions? Is the font readable? To test the questionnaire, marketing research professionals first administer it to a number of respondents face to face. This gives the respondents a chance to ask the researcher about questions or instructions that are unclear or don’t make sense to them. The researcher then administers the questionnaire to a small subset of respondents in the actual way the survey is going to be disseminated, whether it’s delivered via phone, in person, by mail, or online.
Getting people to participate and complete questionnaires can be difficult. If the questionnaire is too long or hard to read, many people won’t complete it. So, by all means, eliminate any questions that aren’t necessary. Of course, including some sort of monetary incentive for completing the survey can increase the number of completed questionnaires a market researcher will receive.
Step 4: Specify the Sample
Once you have created your questionnaire or other marketing study, how do you figure out who should participate in it? Obviously, you can’t survey or observe all potential buyers in the marketplace. Instead, you must choose a sample. A sample is a subset of potential buyers that are representative of your entire target market or population being studied. Sometimes, market researchers refer to the population as the universe to reflect the fact that it includes the entire target market, whether it consists of a million people, a hundred thousand, a few hundred, or a dozen. “All unmarried people over the age of eighteen who purchased Dirt Devil steam cleaners in the United States during 2011” is an example of a population that has been defined.
Obviously, the population has to be defined correctly. Otherwise, you will be studying the wrong group of people. Not defining the population correctly can result in flawed research or sampling error. A sampling error is any type of marketing research mistake that results because a sample was utilized. One criticism of Internet surveys is that the people who take these surveys don’t really represent the overall population. On average, Internet survey takers tend to be more educated and tech-savvy. Consequently, if they solely constitute your population, even if you screen them for certain criteria, the data you collect could end up being skewed.
The next step is to put together the sampling frame, which is the list from which the sample is drawn. The sampling frame can be put together using a directory, customer list, or membership roster (Wrenn et al., 2007). Keep in mind that the sampling frame won’t perfectly match the population. Some people will be included on the list who shouldn’t be. Other people who should be included will be inadvertently omitted. It’s no different than if you were to conduct a survey of, say, 25 percent of your friends, using friends’ names you have in your cell phone. Most of your friends’ names are likely to be programmed into your phone, but not all of them. As a result, a certain degree of sampling error always occurs.
There are two main categories of samples in terms of how they are drawn: probability samples and nonprobability samples. A probability sample is one in which each would-be participant has a known and equal chance of being selected. The chance is known because the total number of people in the sampling frame is known. For example, if every other person from the sampling frame were chosen, each person would have a 50 percent chance of being selected.
A nonprobability sample is any type of sample that’s not drawn in a systematic way. So the chances of each would-be participant being selected can’t be known. A convenience sample is one type of nonprobability sample. It is a sample a researcher draws because it’s readily available and convenient to do so. Surveying people on the street as they pass by is an example of a convenience sample. The question is, are these people representative of the target market?
For example, suppose a grocery store needed to quickly conduct some research on shoppers to get ready for an upcoming promotion. Now suppose that the researcher assigned to the project showed up between the hours of 10 a.m. and 12 p.m. on a weekday and surveyed as many shoppers as possible. The problem is that the shoppers wouldn’t be representative of the store’s entire target market. What about commuters who stop at the store before and after work? Their views wouldn’t be represented. Neither would people who work the night shift or shop at odd hours. As a result, there would be a lot of room for sampling error in this study. For this reason, studies that use nonprobability samples aren’t considered as accurate as studies that use probability samples. Nonprobability samples are more often used in exploratory research.
Lastly, the size of the sample has an effect on the amount of sampling error. Larger samples generally produce more accurate results. The larger your sample is, the more data you will have, which will give you a more complete picture of what you’re studying. However, the more people surveyed or studied, the more costly the research becomes.
Statistics can be used to determine a sample’s optimal size. If you take a marketing research or statistics class, you will learn more about how to determine the optimal size.
Of course, if you hire a marketing research company, much of this work will be taken care of for you. Many marketing research companies, like ResearchNow, maintain panels of prescreened people they draw upon for samples. In addition, the marketing research firm will be responsible for collecting the data or contracting with a company that specializes in data collection. Data collection is discussed next.
Step 5: Collect the Data
As we have explained, primary marketing research data can be gathered in a number of ways. Surveys, taking physical measurements, and observing people are just three of the ways we discussed. If you’re observing customers as part of gathering the data, keep in mind that if shoppers are aware of the fact, it can have an effect on their behaviour. For example, if a customer shopping for feminine hygiene products in a supermarket aisle realizes she is being watched, she could become embarrassed and leave the aisle, which would adversely affect your data. To get around problems such as these, some companies set up cameras or two-way mirrors to observe customers. Organizations also hire mystery shoppers to work around the problem. A mystery shopper is someone who is paid to shop at a firm’s establishment or one of its competitors to observe the level of service, cleanliness of the facility, and so forth, and report his or her findings to the firm.
Watch this video to get an idea of how mystery shopping works.
Video: “Make Extra Money as a Mystery Shopper” by KSSAyisha [2:40] is licensed under the Standard Youtube License. Captions and transcript are available on YouTube.
Survey data can be collected in many different ways and combinations of ways. The following are the basic methods used:
- Face-to-face (can be computer-aided)
- Telephone (can be computer-aided or completely automated)
- Mail and hand delivery
- E-mail and the Web
Face-To-Face
A face-to-face survey is, of course, administered by a person. The surveys are conducted in public places such as in shopping malls, on the street, or in people’s homes if they have agreed to it. In years past, it was common for researchers in the United States to knock on people’s doors to gather survey data. However, randomly collected door-to-door interviews are less common today, partly because people are afraid of crime and are reluctant to give information to strangers (McDaniel & Gates, 1998).
Nonetheless, “beating the streets” is still a legitimate way for questionnaire data to be collected. When the U.S. Census Bureau collects data on the nation’s population, it hand delivers questionnaires to rural households that do not have street names and house number addresses. Census Bureau workers personally survey the homeless to collect information about their numbers. Face-to-face surveys are also commonly used in third-world countries to collect information from people who cannot read or lack phones and computers.
A plus of face-to-face surveys is that they allow researchers to ask lengthier, more complex questions because the people being surveyed can see and read the questionnaires. The same is true when a computer is utilized. For example, the researcher might ask the respondent to look at a list of ten retail stores and rank the stores from best to worst. The same question wouldn’t work so well over the telephone because the person couldn’t see the list. The question would have to be rewritten. Another drawback with telephone surveys is that even though federal and state “do not call” laws generally don’t prohibit companies from gathering survey information over the phone, people often screen such calls using answering machines and caller ID.
Probably the biggest drawback of both surveys conducted face-to-face and administered over the phone by a person is that they are labour-intensive and, therefore, costly. Mailing out questionnaires is costly, too, and the response rates can be rather low. Think about why that might be so: if you receive a questionnaire in the mail, it is easy to throw it in the trash; it’s harder to tell a market researcher who approaches you on the street that you don’t want to be interviewed.
By Telephone or Over the Net
By contrast, gathering survey data collected by a computer, either over the telephone or on the Internet, can be very cost-effective and in some cases free. Like a face-to-face survey, an Internet survey can enable you to show buyers different visuals such as ads, pictures, and videos of products and their packaging. Web surveys are also fast, which is a major plus. Whereas face-to-face and mailed surveys often take weeks to collect, you can conduct a Web survey in a matter of days or even hours. And, of course, because the information is electronically gathered it can be automatically tabulated. You can also potentially reach a broader geographic group than you could if you had to personally interview people.
Another plus for Web and computer surveys (and electronic phone surveys) is that there is less room for human error because the surveys are administered electronically. For instance, there’s no risk that the interviewer will ask a question wrong or use a tone of voice that could mislead the respondents. Respondents are also likely to feel more comfortable inputting the information into a computer if a question is sensitive than they would divulging the information to another person face-to-face or over the phone. Given all of these advantages, it’s not surprising that the Internet is quickly becoming the top way to collect primary data. However, like mail surveys, surveys sent to people over the Internet are easy to ignore.
Considerations for Interviewers
Before the data collection process begins, the surveyors and observers need to be trained to look for the same things, ask questions the same way, and so forth. If they are using rankings or rating scales, they need to be “on the same page,” so to speak, as to what constitutes a high ranking or a low ranking. As an analogy, you have probably had some teachers grade your college papers harder than others. The goal of training is to avoid a wide disparity between how different observers and interviewers record the data.
For example, if an observation form asks the observers to describe whether a shopper’s behaviour is hurried, moderately hurried, or unhurried, they should be given an idea of what defines each rating. Does it depend on how much time the person spends in the store or in the individual aisles? How fast do they walk? In other words, the criteria and ratings need to be spelled out.
Step 6: Analyze the Data
Step 6 involves analyzing the data to ensure it’s as accurate as possible. If the research is collected by hand using a pen and pencil, it’s entered into a computer. Or respondents might have already entered the information directly into a computer. For example, when Toyota goes to an event such as a car show, the automaker’s marketing personnel ask would-be buyers to complete questionnaires directly on computers. Companies are also beginning to experiment with software that can be used to collect data using mobile phones.
Once all the data is collected, the researchers begin the data cleaning, which is the process of removing data that have accidentally been duplicated (entered twice into the computer) or correcting data that have obviously been recorded wrong. A program such as Microsoft Excel or a statistical program such as Predictive Analytics Software (PASW, which was formerly known as SPSS) is then used to tabulate or calculate the basic results of the research, such as the total number of participants and how collectively they answered various questions. The programs can also be used to calculate averages, such as the average age of respondents, their average satisfaction, and so forth. The same can done for percentages and other values you learned about, or will learn about, in a statistics course, such as the standard deviation, mean, and median for each question.
The information generated by the programs can be used to draw conclusions, such as what all customers might like or not like about an offering based on what the sample group liked or did not like. The information can also be used to spot differences among groups of people. For example, the research might show that people in one area of the country like the product better than people in another area. Trends to predict what might happen in the future can also be spotted.
If there are any open-ended questions respondents have elaborated upon—for example, “Explain why you like the current brand you use better than any other brand”—the answers to each are pasted together, one on top of another so that researchers can compare and summarize the information. As we have explained, qualitative information such as this can give you a fuller picture of the results of the research.
Part of analyzing the data is to see if it seems sound. Does the way in which the research was conducted seem sound? Was the sample size large enough? Are the conclusions that become apparent from it reasonable?
The two most commonly used criteria used to test the soundness of a study are (1) validity and (2) reliability. A study is valid if it actually tested what it was designed to test. For example, did the experiment you ran in Second Life test what it was designed to test? Did it reflect what could really happen in the real world? If not, the research isn’t valid. If you were to repeat the study and get the same results (or nearly the same results), the research is said to be reliable. If you get a drastically different result if you repeat the study, it’s not reliable. The data collected, or at least some of it, can also be compared to, or reconciled with, similar data from other sources either gathered by your firm or by another organization to see if the information seems on target.
Stage 7: Write the Research Report and Present Its Findings
If you end up becoming a marketing professional and conducting a research study after you graduate, hopefully, you will do a great job putting the study together. You will have defined the problem correctly, chosen the right sample, collected the data accurately, analyzed it, and your findings will be sound. At that point, you will be required to write the research report and perhaps present it to an audience of decision makers. You will do so via a written report and, in some cases, a slide or PowerPoint presentation based on your written report.
Elements of a Research Report
The six basic elements of a research report are as follows:
- Title Page – The title page explains what the report is about, when it was conducted and by whom, and who requested it.
- Table of Contents – The table of contents outlines the major parts of the report, as well as any graphs and charts and the page numbers on which they can be found.
- Executive Summary – The executive summary summarizes all the details in the report quickly. Many people who receive the report—both executives and nonexecutives—won’t have time to read the entire report. Instead, they will rely on the executive summary to quickly get an idea of the study’s results and what to do about those results.
- Methodology and Limitations – The methodology section of the report explains the technical details of how the research was designed and conducted. The section explains, for example, how the data was collected and by whom, the size of the sample, how it was chosen, and whom or what it consisted of (e.g., the number of women versus men or children versus adults). It also includes information about the statistical techniques used to analyze the data.
- Every study has errors—sampling errors, interviewer errors, and so forth. The methodology section should explain these details so decision-makers can consider their overall impact. The margin of error is the overall tendency of the study to be off-kilter—that is, how far it could have gone wrong in either direction. Remember how newscasters present the presidential polls before an election? They always say, “This candidate is ahead 48 to 44 percent, plus or minus 2 percent.” That “plus or minus” is the margin of error. The larger the margin of error is, the less likely the results of the study are accurate. The margin of error needs to be included in the methodology section.
- Finding – The findings section is a longer, fleshed-out version of the executive summary that goes into more detail about the statistics uncovered by the research that bolsters the study’s findings. If you have related research or secondary data on hand that backs up the findings, it can be included to help show the study did what it was designed to do.
- Recommendations – The recommendations section should outline the course of action you think should be taken based on the research findings and the project’s purpose. For example, if you conducted a global market research study to identify new locations for stores, make a recommendation for the locations (Mersdorf, 2009).
As we have said, these are the basic sections of a marketing research report. However, additional sections can be added as needed. For example, you might need to add a section on the competition and each firm’s market share. If you’re trying to decide on different supply chain options, you will need to include a section on that topic.
As you write the research report, keep your audience in mind. Don’t use technical jargon that decision makers and other people reading the report won’t understand. Explain if technical terms must be used. Also, proofread the document to ferret out any grammatical errors and typos, and ask a couple of other people to proofread behind you to catch any mistakes you might have missed. If your research report is riddled with errors, its credibility will be undermined, even if the findings and recommendations you make are extremely accurate.
Many research reports are presented via PowerPoint. If you’re asked to create a slideshow presentation from the report, don’t try to include every detail in the report on the slides. The information will be too long and tedious for people attending the presentation to read through. And if they do go to the trouble of reading all the information, they probably won’t be listening to the speaker who is making the presentation.
Instead of including all the information from the study in the slides, boil each section of the report down to key points and add some “talking points” only the presenter will see. After or during the presentation, you can give the attendees the longer, paper version of the report so they can read the details at a convenient time if they choose to.
Key Takeaways
- Step 1 in the marketing research process is to define the problem. Businesses take a look at what they believe are symptoms and try to drill down to the potential causes so as to precisely define the problem. The next task for the researcher is to put into writing the research objective, or goal, the research is supposed to accomplish.
- Step 2 in the process is to design the research. The research design is the “plan of attack.” It outlines what data you are going to gather, from whom, how, and when, and how you’re going to analyze it once it has been obtained.
- Step 3 is to design the data-collection forms, which need to be standardized so the information gathered on each is comparable. Surveys are a popular way to gather data because they can be easily administered to large numbers of people fairly quickly. However, to produce the best results, survey questionnaires need to be carefully designed and pretested before they are used.
- Step 4 is drawing the sample or a subset of potential buyers who are representative of your entire target market. If the sample is not correctly selected, the research will be flawed.
- Step 5 is to actually collect the data, whether it’s collected by a person face-to-face, over the phone, or with the help of computers or the Internet. The data-collection process is often different in foreign countries.
- Step 6 is to analyze the data collected for any obvious errors, tabulate the data, and then draw conclusions from it based on the results. The last step in the process, Step 7, is writing the research report and presenting the findings to decision-makers.
“10.2 Steps in the Marketing Research Process” from Principles of Marketing by [Author removed at the request of original publisher] is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.—modifications: Step 1 was edited for brevity; the MarketResearch.com example, Coke/Pepsi videos, Types of Research, Collecting International Marketing Research Data, learning objective, exercises, and questions were removed.
