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...
Last week we looked at the role of external data in quality management systems. This week we look at the role of primary data.
Gathering primary data can be complex, often requiring special skills or knowledge. Many organisations contract specialist research agencies to carry it out for them. However, it is often important for front-line managers to be consulted about the questions to be asked and about the use to which the information obtained is to be put.
The aim of this section, therefore, is to help you to appraise the market research produced by others. We look first at three main sources of primary data before turning to the detail of the quantitative and qualitative methods of generating it.
Syndicated research Some market research companies have ongoing research programmes, the results of which they sell to a number of clients. Some of them can be standard research, such as the A.C. Nielsen store audits, which provide information on retail purchases by consumers in a number of countries, or the TGI (Target Group Index) of the BMRB (British Market Research Bureau), which has followed the fortunes of some 5,000 brands in the UK for more than 20 years.
Syndicated research has the advantage of shared cost, but its value depends on the standards of quality and rigour various companies have. Some syndicated research can be ad hoc: a research company, perhaps specialising in an industrial field, sees a topic which it believes will be of interest, conducts the research and sells the results ‘off the shelf’.
Some research organisations with ongoing programmes, especially those conducting opinion polls (for instance Gallup) will sell ‘space’ — or more accurately interviewer time — on the back of their surveys. Clients can ask for one or two simple questions to be added at the end of the main 'omnibus' survey of a large sample.
One approach to researching customers is to track the purchasing behaviour of a carefully selected panel of individuals. The data from these individuals' behaviour — as opposed to their opinions — reveals important information about repeat purchasing and brand switching, which is almost impossible to obtain with other methods.
Panels are used to generate television viewing numbers. These numbers are important to the television channels, but perhaps more importantly to the advertisers who pay for space on these channels. Households are selected so that a panel adequately represents the entire population.
For example, there should be the same percentage of single households and households with one child, two children and so on in the panel as there is in the population as a whole.
Each panel household is given a device to record its members' presence in the room when the television is on. Each member of the household has a button to press, or a number to key in to register that they are in the room. In many cases the channel being watched is automatically recorded.
This system claims to record what people watch, rather than what they say they watch, although it does not record their concentration on the programme (or more importantly the advertisements) while they are in the room.
This is the staple diet of the market research industry. A specialist custom research company is commissioned by a client to undertake a specific piece of research. The research company then accepts responsibility for all aspects of the research. There are companies which cover, or claim to cover, all types of market research. On the other hand, many companies specialise in particular fields.
For example, there is usually a distinction between those which specialise in consumer and in industrial fields. Equally, there are clear distinctions between those involved in retail audits and those conducting questionnaire surveys on individual consumers, and between those running focus groups and those carrying out in-depth psychological interviews. These will be discussed in a later section.
‘Desk research’ is based on data gathered elsewhere and made available. Sometimes it may generate all the information that is required, particularly in the initial stages of collecting information.
There are six general sources of desk research. These are:
Computerised databases. A computer database can be a source of information on a wide variety of topics. The problem is not the scarcity of information but the amount and reliability of it. Finding exactly what you want from the vast amount of data available takes time and skill in working with search engines.
Associations. Almost every business, service or charity belongs to some sort of trade association which, as part of its normal activities, keeps records which may be of use in market research. For example, the Charity Commission with which UK charities have to be registered provides consolidated information about donations. Information from associations is often available to non-members for a modest charge. Trade unions may also provide useful secondary data.
Government agencies. Government agencies — local, national and international — produce demographic data, sales data, employment data, import and export data, and special reports on industries and markets. For example, the Office for National Statistics website contains a useful index of statistical bulletins to help you find topics of interest, and other governments offer similar indexes, as do some international agencies.
Syndicated services. Information on almost every conceivable topic is produced for sale by market research services. Again, a wide variety of sources are available, but a good starting place in the UK is the Market Research Society’s Knowledge Centre, which is available online. Once more, the equivalent societies in other countries are a good starting-point for your search.
Libraries. Librarians are trained in the retrieval of specific information and can help you to find what you need, on paper or electronically. Many libraries offer inter-library loan services.
The media. The general news media, daily newspapers, television and trade press are rich sources of information. Reading is an effective way of keeping abreast of developments in business and management in general, and in your sector in particular. There are media covering most industries, professions and sectors from advertising and aromatherapy through to zip-fasteners and zoology, all of which can yield useful information to managers working in relevant organisations.
Secondary data is typically used to enrich the context in which market research takes place. You need to know who produced the data, why, how and when. This knowledge will help you to estimate the relevance of the data for your decision.
For example, if you want to rely on government information to help you analyse foreign markets, you need to be aware that the statistics about different countries may have been gathered with a different purpose in mind.
Further, they may not have been collected using methodologies that are consistent from country to country, nor may they all have been collected at the same time. All these factors could have an effect on the validity and comparability of the data.
An example of this is the way data on inflation is analysed in different countries. In the UK the inflation rate is calculated excluding the price of cigarettes; in Ireland the rate includes the price of cigarettes. Thus, an increase in government duty at budget time in Ireland can radically alter the headline rate of inflation.
Next week we'll look at the role of Primary Data...
The data that organisations gather falls into two main categories. ‘Primary data’ is collected specifically to aid in making a decision, whereas ‘secondary data’ has already been gathered elsewhere for another purpose.
Obtaining secondary data is often called ‘desk’ research and is likely to be easier than obtaining primary data. Primary data collection is what most people envisage when they think of market research.
We first consider secondary data, because that is where companies should start - in case the data they need already exists.
There are two general sources of secondary data. The first is internal data, for example from your organisation's own records, that is routinely collected. External data, on the other hand, is data collected by other organisations, either for their own use or for sale. An example of this might be the international trade or employment statistics collected by governments.
Most organisations have some data on performance. Many will also have information on ‘turnover’ - whether the latter is money generated from sales, the number of patients seen, visitor figures, the number of new or repeat customers, or other measures which encapsulate what an organisation does.
Performance. Most organisations in most sectors have to keep data on performance for accountability purposes. Normally (and increasingly) the data is computerised. At the least, this data enables statutory accounts of financial performance to be drawn up.
Regulatory regimes, public performance audits and quality assurance systems also require performance data to be kept.
How readily and quickly available performance data is to different managers varies, but it is an important source of data for market research purposes. However, when data is collected primarily for use by other departments of an organisation, it may not be sufficiently specific or relevant for market research purposes.
Accounting systems are driven by accounting requirements, and in particular by accounting periods, and will often give an unbalanced picture until year-end procedures are completed.
Performance figures may be available about individual customers or clients. This can pose the problem of ‘information overload’. There will be so much information, most of it redundant, that in effect it will be useless as a management tool.
More information is not necessarily better information, if it cannot be used. The Pareto Principle, which states that just 20 per cent of causes can provide 80 per cent of effects, is important here: a small amount of data about major customers or about segments of customers can yield the significant information.
Organisations keep all sorts of data, either on paper or in their computer systems, ,that can be used as market research information: details of product returns or complaints; staff timesheets or diaries; telephone call logs. There may also be data not held systematically on computers, such as the notes that sales or other front-line staff may keep of meetings and conversations with customers.
These may record what the customers think of the organisation’s services, of others’ services, and about what the organisation should be doing to provide better value.
Turnover reports. These can provide data about volume and frequency of customers and transactions. They can be, for example, records of what products or services were sold, to whom and when they were sold, or of how many visits to the doctor were made by various classifications of people, and what they were suffering from and when.
Next week we will continue to look at important data sources when considering quality...
This week starts by considering how data, and the information that results from data, are an extension of “listening to customers”. It distinguishes between secondary and primary data, and then between qualitative and quantitative research methods, exploring some of the techniques that can be used to collect data.
In a conversation you speak and you listen. In market research you listen. Despite some stereotypes, the best salespeople and the most customer-oriented managers make time and effort to listen.
Amid the urgency and noise of work, many managers lose sight of the all-important requirement to observe and listen to their customers.
The example below relates a conversation between two guests at a hotel. The hotel manager could have learned a lot if he had been listening to what the guests were saying:
Bob is rejoining Gill in the garden of a hotel at lunchtime.
Gill: Have you ordered our food?
Bob: Yes, but if you want to eat in the garden they only serve sandwiches. We need to listen for them to call ‘Table 15’.
Gill: That’s a shame. I wanted a cooked meal. Why do they only serve sandwiches?
Bob: They started to explain but it all seemed very complicated. Anyway, I’ve ordered two steak and onion baguettes with salad — they were very reasonable.
Gill: Drinks were cheap too, for a hotel.
Bob: Yes, I thought they might have increased their prices since they smartened the place up.
Gill: Mind you, they’ve still got a lot to do in this garden — look at all those weeds in that bed. And this garden furniture doesn’t match the style of the new conservatory at all.
Bob: I think I heard her call Table 15 — at least they’re quick!
Gill: Might mean they’re not freshly made.
(After the sandwiches have been brought to the table)
Gill: Well, she seemed to be in a really bad mood!
Bob: Yes, good thing she brought us the right sandwiches — I didn’t even dare ask for the mustard!
Gill: Hey, that’s not fair: you’ve got loads of onions and I’ve got almost none.
Bob: You can have some of mine — but eat up, it’s scarcely warm.
Gill: Oh no! Those young men heading for the next table look as though they’ve had far too much already.
Bob: I thought the hotel was trying to lose that sort of clientele now.
Gill: The language! I'm glad your mother decided not to join us for lunch after all.
Bob: Shall we finish up and go now?
In the life of a hotel, one conversation recording the experiences and perceptions of just two customers is not significant. None the less, this one is full of data which could be of interest to the manager, especially if complemented by data about the experiences and perceptions of other customers.
A long list from a short conversation? Decisions about pricing policy, staff training, portion control procedures, ordering procedures, decor, the resources devoted to gardening and the promotion of the hotel to targeted population segments could flow from this conversation. Such decisions could have a significant impact on the value that customers would attach to their experience of the hotel.
However, the manager would need more data from more customers (and perhaps past or potential customers) to see if the resulting information presented a coherent and convincing case for any particular decisions. Information from other hotels could also be useful, such as the prices similar hotels charge.
This example shows some of the key elements of market research:
Usually market research will be done to find out specific information to help with particular decisions. To do this it is important to establish what questions need to be asked, of whom, and how they should be phrased.
Strictly speaking, research into the markets for products and services is known as ‘market research’ and research into marketing practices such as advertising is known as ‘marketing research’, but the terms are often used interchangeably. We will use the term ‘market research’ to cover both aspects.
Data, information and decisions
Data is defined simply as raw, undigested facts. An example of data is the number of people using different brands of toothpaste. Information, on the other hand, is data that has been made sense of, generally by combining and comparing it with other data: for example, that peppermint is the most popular flavour of toothpaste sold to adults between the ages of 20 and 40.
Decisions may follow. For example, a company may decide to launch a new brand of toothpaste taking account of information about population segments, customers’ preferences, competitors' products and much else besides.
Market research can be considered as an information management process or system, which Dibb et al. (1997) describe in three stages:
1. the gathering of inputs (data) from internal and external information sources
2. the processing of the data into information: classifying, storing, indexing and retrieving it (this can be informal as well as formal)
3. the output of informed decision making.
Across sectors, market research can lead to decisions that better reflect the customers’ needs, behaviours and desires. For example, “What should our advertisement be saying?” is better expressed by the questions: “What needs do customers have which our service meets, and how do we tell them about our ability to meet their needs?”
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