Market research: the inside view - brought to you by NatWest

Monday, 20 January 2020

Jane Frost CBE, CEO of the Market Research Society (MRS), explains why research is essential for successful businesses.

What do we mean by market research?

“Market research (MR) encompasses any activity enabling you to discover more about behaviours, motivations and views of customers or influencers. From data collection through existing channels to commissioned surveys, observational techniques, such as focus groups and ethnography, to neuroscience and behavioural economics, MR gathers data about individuals and companies. This is then analysed to provide insight.

“Organisations of all sizes can use it to understand their customers better, allocate resources and inform decision-making. It helps identify demand for goods or services, gauge customer satisfaction and willingness to pay, shape customer retention strategies and – ultimately – increase profits and deliver bottom-line growth.”

How has MR changed over the last decade?

“Digital technology has had a profound impact. Google allows us to browse large amounts of data from a range of sources with a single click – anyone can conduct their own desk-based research. Although Google Search may not provide a truly competitive insight, as everyone is doing it.

“Social media provides another low-cost way of establishing what matters to your target market. But be mindful that people who are particularly expressive online represent a relatively small sample – the majority remains silent. Plus, the demographic profile of Instagrammers can be very different from Facebook or Twitter users and some groups hardly use social media at all.

“There is a wealth of free resource. The census is accessible online and its detailed, segmented information is an excellent place to start learning about audiences. Royal Mail’s MarketReach database is useful if you’re thinking of using direct mail.”

What are the current MR trends?

“Big data has created perhaps the biggest recent buzz. Using algorithms to evaluate large, complex data sets in rapid time provides insight into correlations and enables potentially faster, more accurate decision-making.

“However, it’s important to distinguish between algorithms, which distil big data, and artificial intelligence software that learns and develops to interpret it.

“It is often wrongly assumed these technologies remove human bias and are therefore more reliable. However, they were created by humans and are based on their assumptions about customers, so there’s always a risk that bias is embedded at the development stage and subsequent results can be biased without us realising. Some recent experiments have become sexist or racist so, as with all methods, carefully consider language used in questions and acknowledge any assumptions before getting started.

“There are things big data can’t tell us – from emotions and body language to social cues – so there is increasing demand for ethnographic research methods. Data gathered through feedback buttons can rate customer service out of five, but can’t show you the eye-roll or raised eyebrow when, say, food arrives late in a restaurant. Ethnography interprets what data alone cannot and, if done correctly, can lead to much deeper understanding.”

How will research change in the next decade?

“There’s likely to be a decline in paper survey-based questionnaires. Many commentators have suggested the end is nigh for panels, although it’s likely these will remain popular because they are versatile and can be rapidly deployed for any subject area or question.

“It will also be interesting to see how far we will need random sampling to ensure we’re listening to everyone and not cutting people out of the conversation. Behavioural economics, using psychology to better understand cognitive, emotional and social factors in decision-making, will play a big role.”

What are businesses’ most common MR misconceptions?

“Many assume MR is complicated and only for big businesses with enormous budgets. SMEs can be put off by jargon and perceived expense but, even with tight budgets, they often have the most to gain.”

When should companies do their research in-house, and when should they consider an agency?

“Before anything else, analyse the data you already have. What do you already know about your existing or potential customers? Chances are you already have data from interactions with them – organise it appropriately before adding more to the mix. But ensure any data is General Data Protection Regulation (GDPR) compliant.

“It’s vital to ask the right questions of your data to avoid bias. Often, smaller businesses are more passionate about their service or product and should be mindful this doesn’t affect their interpretation.

“If you don’t have the resources, time or experience to carry out a market research project, think about outsourcing to a qualified consultancy. These come in all shapes, sizes and budgets – from the biggest international businesses to highly experienced one-person bands.”

What is your key advice to companies considering MR?

“The more time you invest, the more you’ll get out of it – and brace yourself for the feedback, positive or less flattering!”

How do companies choose the right agency for them?

“Most importantly, ensure a researcher understands you and your market. Are you prepared to be honest? A good consultancy will tell you if your plan is doable or not. One of the most common mistakes is not investing time to find the right researcher.”

For more information, and to access a free Research Buyers Guide, visit MRS.