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Market Research - FAQs (Frequently Asked Questions)

• What is marketing research?
• What are the steps in the marketing research process?
• Why should I do marketing research?
• What are the major research activities of US organizations?
• What is primary data or research?
• What is secondary data or research?
• What is qualitative research?
• What is quantitative research?
• What are the methods of data collection?
• What are the advantages and disadvantages of mail surveys?
• What are the advantages and disadvantages of telephone surveys?
• What are the advantages and disadvantages of in person surveys?
• What are the advantages and disadvantages of Internet surveys?
• What are the advantages and disadvantages of group interviews?
• What are the major analysis techniques used to analyze the data?

What is marketing research?

According to the American Marketing Association, "Marketing research is the function which links the consumer, customer, and public to the marketer through information - information used to identify and define marketing opportunities and problems; generate, refine and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing research specifies the information required to address these issues; designs the method for collecting information; manages and implements the data collection process; analyses the results; and communicates the findings and their implications.

What are the steps in the marketing research process?

The steps in the marketing research process are:

• Defining the marketing problem
• Determining the research design and methodology
• Identifying the target market (audience)
• Designing the sample
• Designing the data collection methodology
• Implementing the data collection process
• Analyzing the results
• Reporting the results

Why should I do marketing research?

Market research is useful in gathering and analyzing data that may be used to help make decisions in the following areas:

• Understand the needs and wants of the marketplace
• Understand how your products/services are viewed in the marketplace
• Understand your competitors and competitive environment

What are the major research activities of US organizations?

According to a recent AMA survey, the major activities in market research are:

• Business/economic and corporate research
• Pricing research
• Product research
• Distribution research
• Promotion research
• Buyer behavior research

What is primary data or research?

Primary data or research is collected to address a specific marketing problem. It can consist of qualitative and/or quantitative methods. Qualitative research increases understanding: however, the results are not projectable. Therefore, business decisions should not be based on qualitative findings.

What is secondary data or research?

Secondary research or sources are those which already exist and have been collected for another problem. A major source of data is available internally within a company. External sources of data are government publications, academic publications, and public databases. The goal is compile relevant information from relatively low-cost sources. If secondary research turns up the required information, you will not have to conduct primary research to answer your question.

What is qualitative research?

Qualitative research is unstructured interviews with a small sample. This research is usually intended to generate hypotheses and ideas which can be tested in a quantitative survey. Focus group interviews (8-12 respondents) and depth interviews (one-on-one) are common forms of qualitative results.

What is quantitative research?

Quantitative research is a structured collection of data from a large sample of respondents. Since these surveys are statistically valid, the marketer can feel comfortable making decisions from the results. Quantitative studies include: market share studies, customer/market satisfaction studies, benchmark or tracking studies.

What are the methods of data collection?

The major forms of data collection are:

• Mail interviews
• Telephone interviews including fax surveys
• Personal in-person interviews
• Focus group interviews (also auditorium/theater surveys)
• Internet interviews
• A combination of the above

What are the advantages and disadvantages of mail surveys?

The advantages of mail surveys are:

• No interviewer bias
• Low cost
• Repeatability (consistent measures over time)
• Solicits thoughtful answers

The disadvantages are:

• Doesn't ensure qualified respondent
• Poor response rate
• Inability to probe
• Poor turnaround time

What are the advantages and disadvantages of telephone surveys?

The advantages of telephone surveys are:

• Ensure qualified respondent
• Ability to probe (in-depth interviews)
• Fast turnaround time
• Good response rate

The disadvantages are:

• Distribution bias (difficult to reach certain segments)
• Use of phone mail and answering machines
• No absolute assurance of confidentiality
• Interviewer bias

What are the advantages and disadvantages of in-person or face-to-face surveys?

The advantages of in-person surveys are:

• Ensure qualified respondent
• Ability to probe and view materials or see important operations
• Good response rate
• Respondent involvement

The disadvantages are:

• Pontential exists for interviewer bias
• Expensive because of travel and other costs
• Interviewer bias can be extreme
• Poor turnaround time

What are the advantages and disadvantages of Internet surveys?

The advantages of Internet surveys are:

• Low cost
• No interviewer bias

The disadvantages of Internet surveys are:

• Doesn't ensure qualified respondent
• Biased respondent demographics (not projectable)
• Inability to probe (can ask only a couple of questions)
• Poor response rates

What are the major advantages and disadvantages of focus groups?

The advantages of focus groups are:

• Can include product demo’s, visuals, and food service
• Good idea generator (brain storming)

The disadvantages are:

• Can be very expensive (recruiting, incentives, etc.)
• One focus group session represents just one data point (not statistically valid)
• A group leader may appear and bias overall results
• Participants may not show (high risk of failure)
• Recruiting is limited to people who work or live near-by
• Client personnel may couch participates or edit transcripts

What are the major analysis techniques used to analyze the data?

The major analysis tools that are used to analyze market research data are:

Multiple regression analysis - a statistical technique to analyze the relationship between one dependent variable and many independent variables. The relationship can be linear or non-linear. High R2 values mean the equations is an excellent predictor (i.e., useful for forecasting purposes). Applications: demand analysis, sales forecasting, price elasticity.

Factor analysis - a statistical technique which examines the relationships of a large number of variables and determines if the information can be summarized in a smaller set of variables. The goal is data reduction (i.e., reducing the number of parameters down to three or four factors). Based on an extensive amount of research, we known that the key buying factors for an engineered product are: product quality/performance, delivery/services, technical or engineering assistance, and pricing. Product quality factor usually consist of at least two key attributes: consistently meets product specifications or standards (no defects), and performs well over time without degradation (reliability. Delivery attributes can be: immediate delivery (off-the-shelf), short lead times, or meet promised delivery date (J.I.T). Pricing will normally include: competitive (low) prices, and good value relative to product/service offering. Technical assistance often involves many elements, but application engineering is becoming more important, while outside sales reps are becoming less important.

Cluster analysis - a statistical technique for grouping objects and/or individuals into clusters so that the members of each cluster are homogenous. This technique is similar to factor analysis described above.

Conjoint analysis - a statistical technique that emphasizes the decomposition of subjective responses on attributes into estimated utility parameters. Choice analysis - a statistical technique similar to conjoint analysis but it includes a "no purchase" option. This makes the task more realistic and enables the analysis to work with a total market size that is not fixed. Applications: trade off analysis (designing the optimal product, determining the best combination of features), evaluating brand equity, etc.

Discriminate analysis - a statistical technique that is similar to conjoint analysis but is used to determine an equation that predicts a Z-score. The Z-score indicates which pre-specified group the company belongs to. Application: predict which companies are going bankrupt, classify companies, etc.

Structural equation modeling - a statistical technique to analyze the relationships between multiple independent and multiple dependent variables. In other words, it involves developing a set of equations that explain a certain phenomenon. Partial least squares (PLS) and LISREL are examples of this approach. Applications: econometric models, buying process models, etc.