Some important retailers in the food and clothing sectors have been referred to as ‘manufacturers without factories’. They so dominate their suppliers that they can dictate many trading conditions, from payment terms to production methods. If most of a supplier’s output goes to one retailer, the latter’s bargaining power is even greater. If, however, the supplier is one of only a very small number of sources of a particular service or product, that supplier has a stronger bargaining position with their customer.
Porter argued that organisations' competitive positions depended in part on the relative bargaining power of their suppliers and their customers.
Suppliers are powerful if some or all of the following apply:
Customers are powerful if some or all of the following apply:
The threat of substitute products or services The final force discussed by Porter is the threat of something new replacing the need for the services or products provided in a particular industry or sector. The replacement of mechanical dispensing machines with electronic ones is an instance of this, although sometimes whole industries can virtually disappear.
Porter argued that as well as technological developments, there is a greater likelihood of substitute products or services when existing ones are generally perceived to be too costly or lacking in quality; this can apply in public as well as commercial sectors.
We arrived at the model of Porter's forces by extending the scope of market research to include the environment beyond your organisation, and more specifically the near, or competitive, environment populated by organisations whose actions your organisation influences and whose actions influence it.
Our aim here is not to move on to the strategic level of what an organisation should do to position itself in its competitive environment; rather it is to help you to be more aware of what to look out for in the near environment, and offer you a framework for thinking about your organisation's relationship with its competitors, suppliers, collaborators and customers.
An organisation may be one of a few similar service providers or product manufacturers — there are not many passenger jet manufacturers in the world, let alone in one country.
Another may be one of thousands of comparable organisations — small shops or schools, for instance — which may or may not have strong local competition from other shops or schools.
You should think of the competitive environment as comprising the other organisations whose actions influence yours, and which your organisation influences by its actions. Thus it includes organisations that supply you with services and materials, professional groups that are strongly represented in your organisation, organisations that you collaborate with to provide services or products, and other organisations that provide similar services.
Porter’s five forces
Porter’s work on the economic structures of various industries has affected the way many organisations seek to understand and influence their competitive environments. Although developed as a rational model for calculating the profitability of firms in different industries, it offers most organisations some useful ideas and frameworks for considering their position in those environments.
The intensity of competition (industry structure)
Porter suggests that there are varying degrees of intensity in competition in different industries, depending on the following main factors:
The threat of new entrants to the market
Porter argues that the more intense the competition is, the easier it is for new players to enter a market. By new entrants, we mean organisations that may not have been previously thought of as competitors, but which come into and start competing in a market. A market can become attractive to new entrants because of the perceived profitability of the industry or an organisation's need to find new markets.
Examples are the entry of supermarkets into the financial services industry, and the large number of different organisations which now issue credit cards. New entrants to a market are often faced with barriers to entry, such as:
Economies of scale. Lower unit costs should result from producing at a higher level of output — it is cheaper to produce a unit of something when it is one of many such units you are producing. This can act as a high 'entry tax' on potential entrants into a market. Allied to this is the 'learning curve' effect — the more you do something, the better you get at finding the short cuts. Thus a new entrant will have to go through the time and expense of learning from its own mistakes.
Absolute cost barriers. These are costs which a new entrant has to bear, such as those for patents and secret processes, and gaining the same access to raw materials, subsidies or contracts that other companies may have.
Government policy. Licensing requirements, safety and environmental regulations, planning permissions and so on all add to the costs of entry and operation. When European governments auctioned new mobile phone network licences in 1999/2000 only the wealthiest could afford to bid the huge sums required to win them — a high entry barrier.
Differentiation. Because of the real or imagined differences between products, new entrants may have to spend substantial amounts to try to overcome the loyalties of existing buyers to particular brands.
Switching costs. These are incurred by a buyer when switching from one supplier to another. Examples of switching costs for organisations changing suppliers are the retraining of employees, new ancillary equipment and the redesign of products. The introduction of a new computer system from a new supplier could involve both capital expenditure and retraining, despite the high level of compatibility that is usually claimed for most systems.
Access to distribution channels. It may be particularly difficult for new entrants to gain access to a market when its wholesale and retail channels are very limited. Supermarkets may not wish to stock a new brand of washing powder if they already stock many others. When the Korean car manufacturer Daewoo wished to enter the European market, it had to set up a new network of dealers to gain access to customers. This is very expensive, and only very well-financed organisations can afford to take this route.
The world has only until 2030 to stem catastrophic climate change - but can companies be part of the solution? And, if so, how?
A report published by the UN Intergovernmental Panel on Climate Change said that “rapid, far-reaching and unprecedented changes in all aspects of society” are needed to avoid disastrous levels of global warming.
Whilst often seen as culprits, businesses can actually set a positive example.
What is ISO 14001:2015?
ISO 14001 enables companies to put in place an effective environmental management system, and is designed to address the balance between a company’s environmental impacts while maintaining profitability.
Environmental issues are growing in prominence; energy efficiency, environmental compliance, environmental impact, and carbon footprint are widely discussed. In implementing an environmental management system, companies can effectively control these issues, and ensure that they are fully compliant with environmental legislation.
They also join in the fight against climate change. Being ISO 14001 certified proves to stakeholders, customers, suppliers etc. that you are environmentally credible.
So what’s the link between ISO 14001 and climate change?
One of the major challenges that face us all is that of mitigating and adapting to climate change. Internationally, work has progressed from the formation of United Nations Convention on Climate Change (UNFCCC) to the Paris Agreement which came into force on 4 November 2016.
Under the Paris Agreement countries agree to hold the global temperature increase due to increase in greenhouse gas (GHG) emissions, to below 2 °C, aiming at 1.5 °C. This commitment is realised through a commitment at national level to reduce national GHG emissions. Additionally, countries agreed to support action to adapt to the consequences of climate change.
For users of ISO 14001 the question is ‘How does ISO 14001 help organisation to mitigate and adapt to climate change? The diagram below shows the link between key clauses in ISO 14001:2015 and climate change mitigation and adaption. It shows that users of ISO 14001 CAN address climate change challenges through their management system:
ISO 14001 deals with the need to adapt to any change in environmental conditions and hence include matters such as the need to adapt to other environmental consequences which are not due to climate change, for example loss of ecosystem services and biodiversity.
Additionally ISO 14007 and ISO 14008 help companies provide a ‘value’ and ‘determine the costs’ for the GHG they emit and to ‘determine the cost benefit’ in their company for any action they take to adapt to climate change.
So UN Sustainable Development Goals - can ISO standards help? Yes!
Eight out 17 UN SDGs directly link to the focus of ISO 14001, such as those related to clean water and sanitation; affordable and clean energy; decent work and economic growth; industry, innovation and infrastructure; responsible consumption and production; climate action; life below water; and life on land.
The UN SDGs cover both mitigation of environmental impacts and adaptation to changes in the environment – both topics are covered by ISO 14001.
Four out of 17 UN SDGs – while relating to human and social issues – are areas where ISO 14001 by, among others, reducing harmful emissions reduces the impact on human health as exemplified by the goal on zero hunger and no poverty.
Which UN SDGs and targets may be considered by a company using ISO 14001 will depend on many and diverse factors such as what the organisation does, its resources and its overall business aims.
How does ISO 14001:2015 support achievement of UN SDGs?
ISO 14001 in relation to environmental matters cover issues such as:
Protecting the environment
commit to proactive initiatives to protect the environment from harm and degradation;
protect the environment can include prevention of pollution, sustainable resource use, climate change mitigation and adaptation, protection of biodiversity and ecosystems, etc.
continual improvement focus on improving environmental performance
extend its control and influence to the environmental impacts associated with product use and end-of-life treatment or disposal
Strategic Environmental Management
increased focus on environmental management within your company’s strategic planning processes and understanding your context focus:
If you run a business and care about climate change and - more importantly - want to do something about it, then getting and effectively operating ISO 14001 is definitely for you! Just get in touch with us to find out more, either by ringing us on 029 2196 1066 or by email at: firstname.lastname@example.org
This article starts by exploring the meaning of ‘the wider environment’: the internal environment, the near (or competitive) environment and the far environment.
The competitive environment
The competitive, or near, environment is partly to do with the contests for market share between, for instance, a couple of banks or ice cream manufacturers. However, the term means more than that; many organisations compete for staff, for reputation, for funding or for suppliers, as well as for customers. A charity and a community service might compete for funds to run a drug rehabilitation service; schools and colleges might compete for students; campaigning organisations might compete for government and media attention.
We can envisage competitors in a number of ways beyond companies competing for your customers:
An organisation may be one of a few similar service providers or product manufacturers — there are not many passenger jet manufacturers in the world, let alone in one country. Another may be one of thousands of comparable organisations — small shops or schools, for instance — which may or may not have strong local competition from other shops or schools.
You should think of the competitive environment as comprising the other organisations whose actions influence yours, and which your organisation in by its actions. Thus it includes organisations that supply you with services and materials, professional groups that are strongly represented in your organisation, organisations that you collaborate with to provide services or products, and other organisations that provide similar services.
It is dangerous to think that market research is all about formal techniques and their co-ordination. For all levels of management, much market research is very informal. The listening analogy we developed in previous blog articles applies to formal focus groups, observations and questionnaires and to informal discussions, keeping your eyes and ears open and the informal questioning of customers.
As we said at the end of the last article, market research by walking around is shorthand for making the effort to keep yourself informed of all the different aspects of the service you provide, particularly its interface with your customers and their needs.
In practice, most managers will engage with, or be connected with, a variety of methods of formal and informal research. These can be: organisation-wide and service-specific; measuring current performance data and exploring future needs; quantitative and qualitative; formal and less formal; specialist-dependent research and tasks involving front-line staff.
All managers need to be in a ‘market research’ mode at all times, even if the intensity and range of what they do to listen to their customers will inevitably vary over time.
The process of listening to your customers is central to providing services they value. Over the past few articles we have distinguished between data and information and then looked at secondary and primary data. We have considered the main qualitative and quantitative methods of generating information and the manager’s role in market research.
You should now be able to identify the gaps in your knowledge about your customers, and what they value, that could be filled by market research. You should be able to assess which methods would be appropriate to generate the required information and to participate in the research and any briefing of specialists undertaking it. You should also be able to understand and assess the information that such specialists might generate.
- Market research is about listening to customers in order to provide what they value.
- Data, once gathered, is processed into information which influences decision making.
- Data can be: secondary, i.e. already existing primary, which is generated for specific requirements.
- Secondary data can be internal to your organisation, for instance data from performance and turnover records.
- It can also be external to your organisation:
- government agencies
- syndicated services
- the media.
- Primary data can be obtained:
- by buying 'space' in syndicated research programmes
- from the actions of panels of customers
- by commissioning specialist market research companies.
- Qualitative market research methods are used to explore the attitudes and behaviour of customers; quantitative methods apply numerical values to measure aspects of customers’ behaviour and attitudes.
- Qualitative methods include:
- focus groups: moderated small representative groups of customers
- in-depth interviews: one-to-one probing of motivations, attitudes and needs
- observation of actual customer behaviour.
- The principal quantitative method is the survey of statistically significant samples of customers.
- Surveys conducted by post, phone, in person and over the Internet each have their advantages and disadvantages.
- The questions in a survey must be clear if customers are to complete it, and if an analysis of its findings is to be useful.
- Questionnaires can feature open and closed questions; response scales are commonly used to capture differences. Managers’ engagement with market research can feature:
- the use of the control loop to manage its application
- informal listening and observing while walking around
- the use of a variety of methods at different times.
Experiments are used with a small number of consumers to compare different approaches to one element of the marketing mix, perhaps to determine which of two advertisements is more memorable.
Another use for experimentation in market research is in test marketing. Test marketing allows an experimental introduction of a change in the marketing mix to occur in a small part of the market to see how the modification works.
Test marketing is used, for example, to see if a new product will sell to the targeted market segment. The piloting of new services or products, or of government programmes, in selected geographical areas is a form of experimentation.
Comparison is the basis of much experimental research, and may be achieved by a number of approaches.
Before and after. The most usual approach is to test the 'subject' before they are exposed to what is being tested, and again after exposure to it.
The performance of what is being tested is judged by the change in the 'measurements' taken of the subject, often in terms of their attitude to it. For example, an organisation might decide to introduce a new training programme for its sales force designed to increase their productivity.
The productivity of the sales force would be measured before the training course, and again after the course to discover if it had made any difference.
Split runs. Different stimuli (services, products, programmes, advertisements, etc.) are applied to separate but statistically equivalent groups, and the results compared across them.
If the aim were to increase the productivity of the sales force, the organisation could try two different training programmes. It could divide its sales force into three groups: one which received no additional training, one which received training programme A, and one which received training programme B. The organisation could then measure any change in productivity in the three groups following the training.
Difference. In some tests the objective is simply to see if the subject can tell the difference between the stimuli — often products — being presented. A subject might be presented with two brands of coffee and asked to say if they can tell one from the other, and which they prefer. Sometimes 'triads' are presented, where two products are the same and one is different. The subject will then be asked to distinguish between them.
In practice, organisations and managers use a variety of methods of market research simultaneously.
First, you need to be clear about what you are trying to achieve by using market research — what is the value you aim to add to your customers' experience? What performance objective of your team, section, project or organisation will the information contribute to?
Second, you need to plan: what information do you need, and when, from whom and how will you get it? Can you convert your objectives into a clear set of research questions and a formal research plan? What are the alternative ways of ascertaining what information you need and their benefits and costs? Are you going to gather a limited amount of data from a variety of sources using several techniques? How are you going to co-ordinate the whole process?
As the research progresses, you need to review whether it is generating the information you need. What adjustments need to be made to the research methods you have chosen, or what additional ones are needed? It should now be an ongoing process of data gathering and information assessment. This should lead to decisions by you and others, based on the information, about the products and services you provide to customers, their value and how you provide them.
Remember that market research is conducted to support decision makers during all stages of the decision-making process. You need to have cost-effectiveness in mind at all times when engaging in market research.
If market research is about supporting decisions, then the long-term benefit of the information it provides must outweigh the cost of gathering the information. Market research by walking around It is dangerous to think that market research is all about formal techniques and their co-ordination.
For all levels of management, much market research is very informal. The listening analogy we developed at the start of this session applies to formal focus groups, observations and questionnaires and to informal discussions, keeping your eyes and ears open and the informal questioning of customers.
Market research by walking around is shorthand for making the effort to keep yourself informed of all the different aspects of the service you provide, particularly its interface with your customers and their needs.
To ensure that questions asked are valid and meaningful, it is sound practice to test a questionnaire on a number of respondents, so that potential problems can be solved before the cost of a full survey is incurred.
If a computer is being used for analysis, this also needs to be part of the test, so that it is known whether the questions asked will yield the clarity of information required. Clear questions are amply rewarded by clear results. Next we will look at the two main types of question used in surveys.
Survey question types
Open questions. The respondent answers in their own words. The questions are asked in the same way each time, but there is no preconceived set of expected answers. However, to be statistically useful the answers then have to be categorised in a meaningful way. This imposes extra costs, and requires that the person analysing the results understands what cryptic comments by respondents mean.
A simple open question is ‘Why did you buy Brand A?’ The respondent can give any answer they like, such as ‘Because it was the only one available’ or ‘I have tried all alternatives and found this to be the one that suits me best.’
Projective techniques such as the three below can generate answers which are more consistent in style for analysis purposes:
Sentence completion. “When I chose Brand A, the most important thought on my mind was ... (complete the sentence)”.
Word association tests. The interviewer reads a word to the respondent, and asks them to say the first thing that comes to mind. Word association tests are used to select brand names, slogans and advertising campaigns.
Third-person techniques. Rather than asking someone about themselves, questions are asked about, for instance, ‘most people’. For example, a researcher might ask, ‘Why don't most people get as much exercise as they should?’ This is useful if they want to avoid embarrassing a respondent, or if a respondent might not want to answer a question.
Most questionnaires are based on closed questions, in which the respondent is asked to choose between a number of answers. Alternatively, the interviewer is asked to assign the respondent's answer to an apparently open question to one of a number of answers which have been decided in advance.
Answers to closed questions are easier to analyse and less ambiguous. However, the respondents are precluded from giving an answer outside these parameters, unless an ‘other’ response category is included. Typical approaches to closed questioning are:
Numbers. Questions are in the form ‘How frequently do you give donations to Organisation A?’ or ‘How much did you pay for Brand X?’ These are dependent on the accuracy of respondents' memories, unless the ‘process’ being investigated is very regular or easily remembered.
Yes / No statements. The respondent is simply asked to agree or disagree: for example, ‘I have donated money to the International Red Cross (Yes/No).’
Multiple choice questions. The basic question is expanded so that the respondent chooses an answer (or sometimes more) from various alternatives. For instance: ‘Which of these organisations have you ever supported, by becoming a member or by giving money?’
Often interviewers simply ask questions such as 'Which organisations have you ever supported?' and code the answer on a preprinted list. This is a ‘spontaneous’ or ‘free-form’ answer.
Semantic differential scale. The respondent is asked to choose their position on a scale between two contrasting words (or a range of words or numbers representing different viewpoints). For example: Excellent; Good; Adequate; Poor; Inadequate.
Some scales deliberately omit a middle answer, so that the respondents have to choose which side of the scale they are on. Sometimes a question may combine numbers and phrases: ‘In the last year, have you contacted the Citizens Advice Bureau —five or more times; between two and four times; once; not at all?’
This week we focus on using quantitative research methods in your quality management system.
Quantitative research methods
Qualitative research can often lead to quantitative research, which puts figures on issues identified. Sometimes the boundary is blurred. When the Labour Party, for instance, commissioned more than 30 focus groups before the UK's 1997 general election, this was a form of quasi-quantification of a qualitative method - the sheer weight of numbers of focus groups was felt to lend some statistical significance to the results.
Many researchers would dispute that this was possible. In general, though, it is common to quantify the trends shown by qualitative research by more conventional quantitative methods.
In a survey, a large, and thus statistically significant, sample of the population of interest is asked questions which relate to the issues at hand. Four important means of conducting surveys are by post, by telephone, in person and over online.
By post. Postal surveys are the most frequently used form of survey. They are easy to use and cheap compared with personal and telephone interviewing, so can be used in situations where other methods are not practicable.
Large overall samples can be used, allowing the investigation of small market segments within acceptable statistical levels. Genuinely random samples may be identified, for example from electoral lists.
However, the questions which can be asked are necessarily simpler and the questionnaire is shorter than in personal interviewing. Postal surveys are supposedly less reliable, particularly because the non-response rate — those not returning the questionnaire — is often so high that their statistical validity may be questioned; the majority of the sample the non-respondents, might behave differently from those who have responded.
Good research design and explanations of why a survey is being conducted can encourage recipients to reply. Some postal surveys promise to make a charitable donation for every questionnaire returned, and this can motivate people to respond. Or respondents can be offered some form of reward in return for their completed questionnaires.
Some postal surveys are followed up by telephone calls to a sample of those not completing the questionnaire, to see if their responses are different from those of the people who have replied.
By telephone. Telephone surveys can give very quick results and are often used for opinion polls if time is critical. They are also relatively cheap. In countries where telephone ownership is limited' it may be difficult to establish representative samples. Sampling can be complicated by the growth of mobile networks, the fragmentation of directory listings and the use of messaging and answering systems.
Interviews can last only a short time and the types of question are limited, partly because an interviewer cannot check visually that a question has been understood. Personal interviewing. This is the traditional face-to-face approach to consumer market research, and it is still the most versatile.
The interviewer is in control of the interview, and can take account of interviewees' body language as well as their words. It is expensive, however, and depends on the reliability and skills of the interviewer.
Reputable agencies try to exert the necessary control over their personnel, usually by having a field manager conduct follow-ups of a sub-sample.
Online. People who use particular services on the Internet or who visit certain sites can be asked questions which reveal their preferences, experiences and behaviour. Response and analysis times can be fast. The method can be effective for targeting specific groups of Internet-using consumers, but these may not be genuinely representative consumer populations.
Surveys need to be highly user-friendly, with few questions and perhaps incentives for completion. Good questionnaire design is crucial to successful survey research. Questionnaires must be carefully and skilfully developed.
In the first instance they must be comprehensive. If a question is omitted it will obviously not be answered, and it may be impossible to ask the respondents later. Second, the questions need to be in a language that the respondents understand, so that the answers will be clear and unambiguous.
Many words used by researchers and their clients, even those used in their everyday language, may be strange to the respondents they are testing, particularly if these include people less educated than the questionnaire designers.
For instance, words such as 'incentive', 'quota' and 'marginal' may not be properly understood by everybody. In addition, if the form of questioning is too complex or too vague it may elicit confused answers. For example, a question that asks respondents how often they take flights in a year and gives possible responses as 'very frequently', ‘frequently', 'quite often', 'not very often' and 'never' may seem easy to answer, but respondents' interpretations of the terms may differ.
One respondent might consider five times a year to be frequently, while another thinks 25 times a year is frequently. The resulting analysis would not be helpful.
Finally, questionnaires should not include leading questions, that is, questions leading to answers preconceived by the researcher or the client. An example of this type of question might be 'Do you think it is right to impose a 5 per cent tax on fuel bills?' The choice of words in this question — the use of 'right' and 'impose' — is clearly prompting the answer 'No' from the respondent.
This is an obvious example; some questions are subtler, and often the person setting them will not recognise that they have asked a leading question. The most basic fault of much research is that, as a result of bad design, it produces the answers that the researcher expects or wants to hear. The questions must be neutral, to encourage the respondents to reply truthfully.
This week we continue to look at Using qualitative and quantitative research in your quality management system.
This technique is a one-to-one discussion between a skilled interviewer and a single respondent. It is difficult to be prescriptive here, as it is quite possible for interviews to investigate a narrow topic in depth, or a broad topic in less depth.
Quite often an interview will be timed to last for about an hour, but it could go on longer if the respondent is interested and willing. In-depth interviews are useful when probing motivations, attitudes and needs.
They are advantageous when the subject matter is sensitive, confidential or embarrassing, when social norms may be in question, or when a detailed understanding of a person's behaviour is needed. They are most often used with professional consumers, such as industrial buyers.
The method is particularly valuable when it is important to get at subtle, idiosyncratic differences and shades of meaning. It has been found to generate more and higher-quality ideas than many other methods. In-depth interviews are more expensive on a per person basis than focus groups.
The interviewer must be highly skilled, and even then may experience difficulty if more than four or five hours a day are spent interviewing. Another problem is that the large amount of disparate data generated can lead to difficulties in analysis.
This is because the researcher has to find a way to make sense of a number of interviews which may have covered slightly different areas, in different ways, depending on what the respondent wanted to say.
To overcome this problem, some interviews will use a checklist of questions to ensure that they cover basically the same areas each time, although this can lose some of the depth and original ideas and thoughts which respondents might have. As with many aspects of research, a balance has to be struck.
The premise which underlies observational techniques is that the best way to find out what people do is to watch them doing it in natural settings. Observation does not rely on self-report, or on co-operation from consumers. It may also be the only way to gather information about behaviour in situations in which consumers are not themselves aware of their own behaviour.
Observation can be either with or without the knowledge (and consent) of the observed, and may be direct or indirect. For example, you could watch how people go about making a purchase, or look at the results of their having made the purchase. You could record only certain predefined aspects, or everything that happens.
Underhill (1999) uses the technique of observation extensively in the USA to help retailers make decisions about where to stock merchandise and how to design their stores. For example, a major jeans manufacturer wanted to know how its product was sold in department stores, so in one weekend Underhill's company observed what was happening in four stores. It tracked a total of 815 shoppers and observed many more, using both video and time-lapse cameras.
By the time the study was complete, it had analysed the percentages of customers who used the various paths into the jeans section of the store. Once that had been worked out, it was clear that many of the signs were badly positioned.
Some customers were interviewed to reveal how their attitudes and opinions correlated with their behaviour, for example to see if young shoppers with good education levels, who said they depended on brand names when choosing jeans, read the price tags as well.
The study was much broader than described here, but you can see the power of observation from this example. You can also see that this observation study generated both qualitative and quantitative data, which were analysed together to gain even greater insight into what was happening.
Observation on its own cannot reveal the feelings, attitudes and beliefs that underlie consumers' behaviour. Further, many situations are not easy to observe in a systematic way — it would be unwise to try to observe the use of toothpaste in a truly natural setting!
Both the primary and the secondary data we have discussed previously have to b be generated in the first place. Research methods can generally be divided into qualitative methods and quantitative methods.
In simple terms, qualitative market research methods are used to explore the attitudes and behaviours of customers; quantitative methods apply numerical values to measure aspects of customer behaviours and attitudes.
Qualitative methods are of most use when you want to discover those attitudes, beliefs and behaviours which people would have difficulty expressing in precise terms. Qualitative data is generally more impressionistic than quantitative data, and so its usefulness very much depends on the skill of the researcher in gathering, analysing and reporting it.
If the hotel garden conversation we considered earlier had been recorded, it would have been a good example of the collection of qualitative data. Quantitative methods, on the other hand, begin with the premise that aspects of human behaviour, attitudes and the like can be measured. It is also assumed that the numerical values associated with a respondent's answers can be analysed using statistical tools.
Some quantitative methods assume that people can, and will, respond honestly and accurately to questions in the form of a questionnaire, an interview or a test. Quantitative techniques may be very expensive if a large number of people have to participate in order to provide sufficient statistical significance.
If the hotel in our example provided a short questionnaire to a sample of its customers over a specified period, in which customers were required to rate their satisfaction with various aspects of the hotel's service, that would be quantitative research.
Some researchers like to think of qualitative studies as a preparation for quantitative studies. In this case, the results of the qualitative research are used to help identify exactly what should be measured by the quantitative research. However, both types of research can be useful in their own right. In general, qualitative techniques involve the gathering and analysis of non-numerical data.
Focus groups are especially useful in developing new, or modifying existing, services or products. They are used in most industries and sectors. Small groups of individuals (5 to 12 paid members) are chosen to represent the characteristics of customers In a particular market segment. Their discussion is led by a moderator, often a psychologist or trained specialist, and is usually recorded on video or audio tape.
Its main points are drawn out by the moderator from a transcript of the discussion, and this serves as the basis for the report to the managers who make the subsequent decisions.
Focus groups can be constituted quickly, and they are normally relatively inexpensive. Multiple focus groups, each representing a single important market segment, cost more.
Group members can give deep, rich, subtle and well-developed opinions about the topic of the research, enhanced by the debate which occurs between them. Another advantage of focus groups is that the decision maker can either watch the group through a one-way mirror as it meets, or replay the group session later on tape. This helps the decision maker to stay in touch with consumers in a way which might not otherwise be possible.
Focus groups can be run in a more informal manner to help get a feel for an issue or a problem. In this case, a good facilitator and a notebook may be all that is required.
The major disadvantages of focus groups are that highly skilled, and therefore expensive, moderators may be required to run them; good sampling is difficult to arrange; moderators may introduce bias into the process; and group dynamics are very likely to enter into the process, thus leading the group to express views that the individuals would not express on their own. As with all qualitative techniques, focus groups do not produce statistically significant results.
Next week we will look at the role of in-depth interviews in qualitative research methods...
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