Chapter 18 Market Research

What Is Market Research?

Market research is a process that aids business decisions. It involves systematically gathering, recording, and analyzing data and information about customers, competitors, and the market.

Research can be based on primary data and information or secondary data and information. Primary research is conducted when data or information is gathered for a particular product or hypothesis. This is where information does not exist already or is not accessible and so needs to be specifically collected from consumers or businesses. Surveys, focus groups, research panels, and research communities can all be used when conducting primary market research.

Secondary research uses existing, published data and research as a source of research. It can be more cost effective than conducting primary research, and the Internet opens a wealth of resources for conducting this research. However, the data would have originally been collected for solving problems other than the one at hand, so they might not be sufficiently specific. That being said, secondary research can be useful in identifying problems to be investigated through primary research.

Research can also be classified as qualitative or quantitative. Qualitative research can be classified as exploratory. Qualitative research aids in identifying potential hypotheses, whereas quantitative research puts hard numbers behind these hypotheses. Qualitative research seeks to find out what potential consumer perceptions and feelings exist around a given subject. This research can often be used to advise the design of quantitative research, which relies on numerical data to demonstrate statistically significant outcomes.

The Internet is a useful tool for both primary and secondary research and can be used to gather both qualitative and quantitative data. In fact, the communities on the Web can be viewed as one large focus group, regularly and willingly sharing their opinions on products, markets, and companies. Today, organizations transacting online have a wealth of research information freely available to them, as well as sophisticated tools for gathering further data.

Market research should produce information that leads to actions.

Gathering Data: Quantitative and Qualitative Research

Both quantitative and qualitative research can be conducted using primary or secondary data, and the Internet provides an ideal tool for both avenues.

Web analytics packages are a prime source of data. Using data such as search terms, referral URLs (uniform resource locators), and internal search data can lead to qualitative assumptions about the consumers visiting a Web site. However, when data are measurable and specific, such as impressions and click-through rates, this leads to quantitative data.

The Internet and Secondary Research

Market research based on secondary resources uses data that already exist for analysis. This includes both internal data and external data and is useful for exploring the market and marketing problems that exist.

Research based on secondary data should precede primary data research. It should be used in establishing the context and parameters for primary research.

Uses of secondary data include the following:

1. The data can provide enough information to solve the problem at hand, thereby negating the need for further research.
2. Secondary data can provide sources for hypotheses that can be explored through primary research.
3. Sifting through secondary data is a necessary precursor for primary research, as it can provide information relevant to sample sizes and audience, for example.
4. The data can be used as a reference base to measure the accuracy of primary research.

Companies that transact online have a wealth of data that can be mined that exist due to the nature of the Internet. Every action that is performed on the company Web site is recorded in the server logs for the Web site.

Customer communications are also a source of data that can be used, particularly communications with a customer service department. Committed customers who either complain, comment, or compliment are providing information that can form the foundation for researching customer satisfaction.

Social networks, blogs, and other forms of social media have emerged as forums where consumers discuss their likes and dislikes, and customers can be particularly vocal about companies and products. These data can, and should, be tracked and monitored to establish consumer sentiment. If a community is established for research purposes, this should be considered primary data, but using social media to research existing sentiments is considered secondary research.

The Internet is an ideal starting point for conducting secondary research based on published data and findings. But with so much information out there, it can be a daunting task to find reliable resources.

Figure 18.3

Google shows many entries for “research.”

The first point of call for research online is usually a search engine, such as http://www.google.com or http://www.yahoo.com. Search engines usually have an array of advanced features that can aid online research. For example, Google offers Advanced Search (http://www.google.com/advanced_ search?hl=en), Google Scholar (http://scholar.google.com), and Google Book Search (http://www.google.com/books).

Learning how to use search engines to find the information you need is a valuable skill in using the Internet for research.

Many research publications are available online, some for free and some for a fee. Many of the top research companies feature analyst blogs, which provide some industry data and analysis for free. Some notable resources are the following:

• http://www.e-consultancy.com
• http://www.jupiterresearch.com
• http://www.hitwise.com
• http://www.pewinternet.org (U.S. data)
• http://www.worldwideworx.com (South African data)

The Internet and Primary Research

Primary research involves gathering data for a specific research task. It is based on data that have not been gathered beforehand. Primary research can be either qualitative or quantitative.

Primary research can be used to explore a market and can help develop the hypotheses or research questions that must be answered by further research. Generally, qualitative data are gathered at this stage. For example, online research communities can be used to identify consumer needs that are not being met and brainstorm possible solutions. Further quantitative research can investigate what proportion of consumers share these problems and which potential solutions best meet those needs.

Developing Surveys: Asking Questions

The success of a survey in gathering useful data is largely determined by the design of the survey, and particularly by the questions that are asked. A survey can comprise any number and types of questions, and these should be structured in such a way that more complicated questions only appear once users are comfortable with the survey.

Be careful when creating questions that you do not introduce biasAn influence on the research process that affects one’s ability to analyze the research results objectively. by asking leading questions.

Types of Survey Questions

Open-Ended Types

Open-ended questions allow respondents to answer in their own words. This usually results in qualitative data. Take the following example:

What features would you like to see on the Web site for the eMarketing textbook?

If there are enough respondents to an open-ended question, the responses can be used quantitatively. For example, you can say with some certainty, “37 percent of people thought that case studies were an important feature.”

Closed-Ended Types

Closed-ended questions give respondents specific responses to choose from (i.e., they are multiple choice, with one answer or multiple answers). This results in quantitative data. Take the following examples:

Do you use the eMarketing textbook Web site? Choose one that applies.

—Yes

—No

What features of the eMarketing textbook Web site do you use? Check all that apply.

—Blog

—Case studies

—Free downloads

—Additional resources

Ranked or Ordinal Questions

These questions ask respondents to rank items in order of preference or relevance. Respondents are given a numeric scale to indicate order. This results in quantitative data. Take the following example:

Rate the features of the eMarketing textbook Web site, where 1 is the most useful and 4 is the least useful.

—Blog

—Case studies

—Free downloads

—Additional resources

Matrix and Rating Types

These types of questions can be used to quantify qualitative data. Respondents are asked to rank behavior or attitude. Take the following example:

The eMarketing textbook Web site is a useful tool for further studies.

Figure 18.5 Different Types of Rating Scales

Or

The eMarketing textbook Web site is a useful tool for further studies.

Figure 18.6

Rating scales can be balanced or unbalanced. When creating the questions and answers, choosing balanced or unbalanced scales will affect whether you are collecting data where someone can express a neutral opinion or not.

Figure 18.7

Figure 18.8

How to Get Responses: Incentives and Assurances

As the researcher, you know what’s in it for you in sending out a survey: you will receive valuable data that will aid in making business decisions. But what is in it for the respondents?

According to SurveyMonkey, the ways in which the surveys are administered play a role in response rates for surveys, and these can be relative:

• Mail. 50 percent adequate, 60 to 70 percent good to very good.
• Phone. 80 percent good.
• E-mail. 40 percent average, 50 to 60 percent good to very good.
• Online. 30 percent average.
• Classroom pager. More than 50 percent good.
• Face to face. 80 to 85 percent good.SurveyMonkey, “Smart Survey Design,” June 12, 2008, http://s3.amazonaws.com/SurveyMonkeyFiles/SmartSurvey.pdf (accessed September 29, 2008).

Response rates can be improved by offering respondents an incentive for completing the survey, such as a chance at winning a grand prize, a lower priced incentive for every respondent, or even the knowledge that they are improving a product or service that they care about.

There is a train of thought that paying incentives is not always a good thing. Among less affluent or educated respondents it may predispose them to feel that they need to give so-called good or correct answers that may bias your results. Alternatively you may attract respondents who are in it just for the reward. One approach could be to run the survey with no incentive with the option to offer one if responses are limited.

Figure 18.9

An incentive is offered for completing a survey.

Designing the survey so as to assure respondents of the time commitment, and privacy implications, of completing the survey can also help increase responses.

Conducting Research Surveys: A Step-by-Step Guide

As with all things eMarketing, careful planning goes a long way to determining success. As market research can be an expensive project, it is important that planning helps to determine the cost versus the benefit of the research. Qualitative research and secondary research are critical steps in determining whether a larger-scale research project is called for.

Bear in mind that many tasks that fall under the umbrella of research should be ongoing requirements of eMarketing activities, such as conversion testing and optimizing and online reputation management. Polls and small surveys can also be conducted regularly, and nonintrusively, among visitors to your Web site.

Room for Error

With all research, there is a given amount of error that needs to be dealt with. Errors may result from the interviewers administering a questionnaire (and possibly leading the respondents) to the design and wording of the questionnaire itself, sample errors, and respondent errors. Using the Internet to administer surveys and questionnaires removes the bias that may arise from an interviewer. However, with no interviewer to explain questions, there is potential for greater respondent error. This is why survey design is so important and why it is crucial to test and run pilots of the survey before going live.

Respondent errorAn error that occurs when respondents become desensitized to the research process. also arises when respondents become too used to the survey process. There is the possibility of respondents becoming desensitized. There is even a growing trend of professional survey takers, especially where there is an incentive involved. The general industry standard is to limit respondents to being interviewed once every six months.

Sample errorAn inaccuracy in the results of research that occurs when a population sample is used to explain the behavior of the total population. is a fact of market research. Some people are just not interested in, nor will ever be interested in, taking part in surveys. Are these people fundamentally different, with different purchasing behavior, from those who do? Is there a way of finding out? To some extent, Web analytics, which tracks the behavior of all visitors to your Web site, can be useful in determining the answer to this question.

When conducting any survey, it is crucial to understand who is in the target universe and what the best way to reach that target universe is. Web surveys exclude elements of the population, due to access or ability. It is vital to determine if this is acceptable to the survey and to use other means of capturing data if it is not.

Conducting Research: Who’s Going to Pay?

Regular research is an important aspect of the growth strategy of any business, but it can be tough to justify the budget necessary for research without knowing the benefit to the business. Conducting research can cost little more than the time of someone who works for a company, depending on the skills base of employees, or it can be an expensive exercise involving external experts. Deciding where your business needs are on the investment scale depends on the depth of the research required and what the expected growth will be for the business. When embarking on a research initiative, the cost to benefit ratio should be determined.

Testing should be an ongoing feature of any eMarketing activity. Tracking is a characteristic of most eMarketing that allows for constant testing of the most basic hypothesis: is this campaign successful in reaching the goals of the business?