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?”
For an organisation to communicate effectively with its external audiences, it is necessary for it to have effective internal communication. Yet how often do we hear about well-laid plans being ruined by poor internal communication, for example when employees are the last to be told about plans, or when managers fail to listen to those around them?
All the communication principles described earlier apply equally within organisations; indeed, they are an essential part of management. The need for good communication underpins everything that managers do.
In communicating with other members of the organisation, a manager has to exchange ideas, attitudes, values, opinions and information. This may take up most of their time, but without this concern for communication managers achieve little.
Within organisations, communication means more than just sending information. The meaning of the message must be clear, all parties need to understand what is being said, and the sender must be ready to receive feedback and react to it. So managers need to develop these skills.
Some of the reasons for communication within an organisation are:
These broad aims are channelled - formally and informally - to a variety of audiences.
Formal channels follow the structure of the organisation. As a manager, you need to send messages to subordinates, peers and superiors - downward, horizontal and upward communications. Equally importantly, all these people need to communicate with you, to provide feedback on messages received from you, and to feed through their ideas, opinions and information.
We have looked at the communication process and the audiences. Next week we will look at the different vehicles that can be used to carry the message.
Let us think about your organisation’s external audiences. External customers include actual or potential buyers or users of a product or service and a host of other people, groups or organisations who might have an influence on the organisation’s behaviour. Below we list a fairly typical range.
Audiences who might buy from your organisation:
Audiences your organisation might wish to influence:
No doubt you can add to this list from your own experience. Whoever your audiences are, you need to find an appropriate way to inform, influence and communicate with them.
Some of the messages you send might be saying, “We have something for you”. Your organisation might be launching a new brand or a new aspect of its consultancy service, or perhaps a “new, improved” version of a long-established product. Other messages might be saying, “We are better/more dependable/friendlier/more concerned about the environment than our competitors”.
Some reasons for communicating with external audiences are:
One of the important parts of ISO 9001:2015 can be categorised as one word - communication.
We can never be sure that our messages are understood, even when dealing with work colleagues, so think how much harder it is when we talk to other organisations or the general public. The major assumption underlying this session is that all organisations and individuals need to communicate: to impart or exchange information in a meaningful, timely and clear way.
You will no doubt agree that communication is not straightforward. How can you tell whether your understanding matches what was intended? If will depend on a number of factors: the message, the vehicle and the type of person you are.
The vehicle or channel that is used to communicate might affect your interpretation of the message. For example, you may expect a suit to be more expensive if it is advertised in an exclusive magazine rather than in a widely distributed newspaper. An experiment a few years ago proved this.
Customers were asked to estimate the price of the same dress advertised in two different magazines. Those who were shown the advertisement in an exclusive magazine priced the dress at about 25 per cent more than those who saw it in the lower-priced, less exclusive one.
The situation in which a message is sent or received will have an effect as well. While this paragraph may have been written in a sunny study with a view of trees outside the window, you may be reading it on a commuter train after an exhausting day at work: the writer’s attention was focused on the message, your attention may be distracted by the ticket inspector or the headlines in your neighbour's newspaper.
What we are beginning to describe here is the classic model of communication.
All messages have a sender and a receiver. The sender seeks to transmit the message in such a way that the receiver understands it and acts on it as the sender intended. The sender, therefore, needs to encode the message and send it via a vehicle (the medium of transmission, or channel) so that it can be decoded by the receiver. The aim is for the message ‘as sent’ to be the same as the message ‘as received’, although in practice there will be a lot of noise and distortion.
The way a sender encodes a message depends on the content of the message, the abilities and mood of the sender, and the assumptions the sender makes about the receiver.
The message may be conveyed using a communication vehicle such as television, the newspaper, radio, e-mail, the Internet and so on. The communication vehicle itself may be carrying lots of other messages - for example advice, information, advertising - much of which will be background noise.
The audience will have to decode the message, and whether they do so will depend not only on their abilities but also on the amount of noise surrounding the message. We would expect some response from the audience once they have decoded the message: an expression of satisfaction, a purchase, or a request for more information.
Last week we looked at the link between quality and brand performance. This week we look at how customers’ needs change over time, and the way their expectations of products also change.
For a brand to be successful, wherever it is sold it must:
1. deliver functional benefits to meet the market need at least as well as the competition does
2. offer intangible benefits over and above the basic benefit of the core product
3. comprise various benefits which are consistent with each other and present a unified character or identity
4. offer special features that customers want, that is, something valued and which customers judge nobody else can offer. Being ozone-friendly or low in cholesterol are features that are appropriate in the 21st century, although they probably would not have sold many products 50 years ago!
As a final comment on meeting customers’ needs and wants, we can link together our discussion on product levels, product life-cycles and brands. We have seen that customers’ needs change over time and their expectations of products also change.
Needs may change because circumstances change; for example, when a couple have children, they may need a larger car. Consumers’ expectations change as organisations develop and later products and think up new features and benefits which add value to their offering.
Customers begin to expect new features as part of the standard offering and look to organisations to provide them. The implication for organisations is that they have to continually develop the products they offer as well as launch new products to fulfil new needs that customers may have.
It also means that over time some products are no longer wanted by customers so organisations have to stop providing them and therefore need other products to replace the revenue that they lose. In order to achieve this, organisations need a balance between cash-generating or resource-attracting products (income) and cash- or resource-using ones (expenditure).
Organisations cannot sustain a negative cashflow over a long period unless they have substantial reserves and clear objectives for doing so. So a major task for organisations is to decide which products to encourage and develop, continue with, phase down or phase out in order to maintain cashflow.
Organisations also need a constant flow of new ideas from which new products will eventually grow and be introduced to the market.
In addition to new product ideas, other innovations are necessary:
New product development, then, is an important part of any organisation's activities. It does not happen by chance, but must be planned for and given resources to ensure it happens.
A final implication of the constantly changing nature of customers’ needs and expectations is the development of brand names by organisations. This drive is aimed at creating repeat purchasing among customers and, hopefully, loyalty to a particular product.
This means that although organisations still need to improve existing products and develop new ones, customers may continue to buy an organisation's products because they trust the quality, and feel an affinity with the brand identity rather than because it always provides the most innovative products.
Last week we looked at how brands which are well known and trusted can serve as a shortcut for consumers trying to choose between competing offers. This week we look at the link between quality and brand performance.
Arnold (1992) says that three important principles have emerged from research into brand performance:
1. Market leaders and superior brand positions are interlinked. Top brands are virtually all leaders, or joint leaders, in their markets. This is not just because the companies spend a lot on advertising or because the brands have a good name or are inherently better quality products. It is the perception of quality by the customer which is important. That perception depends on how the product meets customers’ needs and wants.
UNICEF, the children’s charity, is able to encourage donations through a well-established image and a perception that it is meeting customers’ needs - both the children it helps and the people who give their time or money so that the organisation can carry out its objectives.
2. Market-leading brands tend to have higher proﬁt margins. Research shows that market leaders command a price premium and therefore make higher profits. Recent surveys conclude that in the USA the market leader returns a margin four times that of the number two in the market, and in the UK the margin is six times greater. Leading brands also demonstrate greater resilience during recessions or price wars. Perceived superior quality is reflected in consumers’ willingness to pay more.
3. There is no such thing as a brand life-cycle. Once a leading brand is established with a loyal customer base, there is no reason why that position cannot be maintained almost indefinitely. Brands are larger than products. They can be updated regularly and altered in almost any aspect to maintain their relevance to the market. As long as the brand is kept up to date there is no reason why it should not live forever.
This does not mean that brands will live forever, just that they may be able to if properly managed and looked after. There are examples of brands which have disappeared or run into trouble. One distinguished brand which has been in existence in the UK since 1894 — Marks & Spencer, a retail store selling clothing, home furnishings and food — went through difficult times in the late 1990s. Brands which have been around for over 60 years and show no signs of disappearing. All purchase decisions involve an element of risk, and buying behaviour shows that the drive for something well-known and trusted is often stronger than the drive for novelty.
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