Marketing research

Marketing research
What is meant by marketing research in classic consulting? What does it usually consist of?

I wouldn’t like to repeat the marketing textbooks, but there is nothing new. Like before, in consulting, marketing research means any researching or analytical activity. It is aimed at gathering, processing, analysis, interpretation, and presentation of data about consumers, goods or services, and competitors. According to this definition of marketing research, there are two following statements:

  • The subjects of such research are goods and services, consumers of these goods and services, and competitors, both real and potential;
  • The main stages of a marketing research project are collection of data, its processing and analysis, drawing conclusions, and presenting it to the client.
What benefits could a good-quality marketing research bring to a client? Who and why demands it?

First of all, a marketing research mission is to provide the tops of businesses with the necessary information to make justified decisions. These decisions can be of all kinds: from launching new products and closure of certain regional markets, to dynamic pricing. That is why marketing research can be both an independent product and an integral part of a larger project. Marketing research is usually an obligatory part of such projects as the development or updating of the company's overall strategy, writing a business plan and forming an investment strategy or marketing strategy.

What does a marketing research start with?

For the client, it begins with the awareness of the need for a research. For the consultants, marketing research begins with the terms of reference. Like any other consulting project, marketing research requires a thorough and responsible approach to the formation of the terms of reference. Just saying "analyze the market of blue cars" will not work. There is a very high risk that the client will not receive answers to their questions, since these questions are not clearly formulated. A clear formulation of a problem is already 30% of success.

Terms of reference are usually formed by clients and consultants together. During the preliminary meetings, the client talks about the business, its features and problems, voices their vision of the tasks and the scale of the upcoming work, etc. Based on the results of the meeting, the consultant processes the information and offers the client the formalized terms of reference. There it states clearly how, when, and with the help of what resources (what products and what markets, what regions or countries, what information sources and so on) the research will be conducted.

What information sources do consultants use? Is there any professional secret that increases the chances to get important reliable data?

Information sources depend on the type of research, which can be primary or secondary. Primary research is carried out from scratch by the companies themselves, by their employees or with the involvement of specialized consulting or marketing agencies. Primary marketing research does not use information from third-party sources and all data is collected independently. Primary research answers specific questions about a particular company. This type of research is more reliable because it is known exactly what data was collected, how it was collected and what counting methods were used. However, conducting research from scratch is often expensive and time-consuming. For such research, specialized consultants and agencies can be involved. An example of such an agency is the American company, Nielsen.

Primary marketing research is suitable for point-to-point operational solutions. One example of modern primary research is the collection and analysis of big data to determine the price of goods/services (for example, air tickets or taxis) on a specific day at a specific time.

Secondary research uses already existing materials, official and unofficial sources: reports of other companies, agencies, large banks, government organizations, specialized databases, competitors' websites, etc. There are a number of companies specializing in data collection, systematization and sale. Examples include the foreign agency Factiva or the Russian SPARK database. Access to such sources is never cheap. The databases themselves can also be difficult to use for analysis. Sometimes employees even have to undergo special training to use them. In general, information retrieval is a separate and important analytical skill. Our company even has a special training on information retrieval, which is mandatory for all employees who have joined our team.

Despite the apparent simplicity and speed, the disadvantage of secondary research is that it is impossible to be sure of the reliability of information and the correctness of calculations. Here, a lot of experience working with different sources of information helps is very convenient. Over time, consultants learn the problem areas and shortcomings of various sources. Although the data from secondary studies is often very general and aggregated, in most cases it is enough to make the right strategic decisions.

A separate type of secondary marketing research is expert surveys. Such surveys are conducted in relation to new products or markets for which there is not yet sufficient factual information and one can only make assumptions and forecasts. Another area of application of expert surveys is the activities of private companies. For example, companies related to the military-industrial complex. Some consulting companies own a wide list of experts and "sell" the opportunity to survey them.

What team capacities are usually needed to conduct marketing research? How many experts work on it and how long does it take?

Here, again, it is necessary to distinguish between primary and secondary marketing research.

Primary research take longer, from 1 month to 6-12 months. Previously, quite a lot of people were involved in primary research. Imagine how it was in the 90s to conduct a survey of the preferences of consumers of baby food or focus groups in 40 regions of Russia or in Eastern European countries. Each region required at least one person, preferably 2 to 3. Or it was a team that moved from region to region together.

With the development of Internet technologies, the situation has become much simpler and the methods of collecting information have digitalized. Online surveys are very easy to conduct and companies actively use them on websites and social networks. As a result of the coronavirus pandemic, many businesses have learned to get information from focus groups, interviews and other sources remotely. All in all, the time and the resources needed for primary research very much depends on the task. Sometimes 1 person could be enough for 1 month and sometimes a team of 10 people is needed for 6 months.

As for secondary research, the situation is somewhat simpler here. At almost any scale, secondary marketing research fits into 1-3 months of work with the involvement of 2-4 experienced consultants with good information searching and structuring skills. The development of the Internet and digital technologies has had a positive impact on the speed and complexity of desk research as well. Interviews with any expert can now be conducted online, many statistical agencies post data in a convenient format, there are many adapted databases, etc.

If the client's employees themselves have a high level of expertise in their market segment, why involve a third-party contractor to conduct a research?

To understand who and how should carry out marketing research, one needs to refer to the terms of reference mentioned previously and clearly understand the objectives of the research. If a company just needs to process its own large database to understand customer behavior, then most likely it can be done by its employees and attract consultants only for methodological and IT support. In this case, there is no need to carry out time-consuming information collection. The classic disadvantages of using internal employees for marketing analytics are their bias in assessments and being busy with other operational tasks. If a company has decided to conduct marketing research by its employees, it is necessary to single out a person or several who will temporarily have the research as their main job. Moreover, the company should ensure the objectivity of these employees, so that no personal and career interests of the research performers affect the analytical conclusions.

But if a company needs to conduct a primary research of narrow market segments, in a foreign country, then specialized agencies are usually attracted that focus precisely on performing such tasks. Such companies have already created all the necessary infrastructure and configured business processes for this kind of work. Of course, the client can try to organize it on their own, but most likely it will be more expensive and longer in time.

For more aggregated secondary research and expert classical consulting companies or marketing agencies usually get involved. Consultants usually professionally possess all the necessary skills for conducting marketing research. They know where and what information can be found quickly, which open data is collected correctly and which is not and are able to correctly interpret and display the collected information. Moreover, the client’s employees can be the experts themselves in such cases. The consultant acts as a coach who asks them the right questions and then interprets the answers.

How to choose a contractor to conduct marketing research?

Choosing a contractor to carry out any analytical work is a job itself. Having done it in an educated manner, you get confidence in a good and high-quality result of future research. If you decide to attract a specialized company to conduct marketing research, you should pay attention to the following criteria:

  • Industry and product specialization of the company, its regional and international representative offices (the research is international). Of course, the client always wants a potential contractor to specialize deeply in the industry that he will research and analyze. But here it should be noted that when conducting marketing research, the contractor isn’t necessarily constantly immersed in the industry. The contractor, who is planned to be involved in marketing research, must have a good command of the methodology, tools, be able to draw the right conclusions from the information received and present them correctly and have access to expertise.
  • Number and scale of clients (large business, medium or small). The presence of large, famous companies in the contractor's portfolio ensures the quality of the services they provide. Pay attention to customer reviews and their dates. In addition, by looking at previous clients, it can be seen in which price segment they operate.
  • Qualifications and experience of key employees of the company. The competencies of the company's experts and leaders will be at the disposal of the team allocated to conduct the research and their reputation will serve as a guarantee of quality.

This information is usually available at companies’ websites. There are usually posted examples of work or ready-made marketing research on the industries in which the company operates and is ready to share its expertise.

As a result, you have a shortlist of 3-5 companies that fit the experience, price segment and product portfolio. Among the companies from the shortlist, it is useful to hold a tender, at least a small one, such as a request for suggestions. Such suggestions usually include a general description of the methodology and depth of the study, its timing and cost and a project team resume. Nowadays, it has become possible to hold small online meetings with potential contractors, at which they present their suggestions. This will allow you to assess the interest of a potential contractor, their efficiency and competence, and simply understand whether there will be mutual trust, which is vital for a successful project. You can also ask potential contractors to send some examples of completed work. There are usually no confidentiality obligations to other clients. This will help you find out what sources of information the consultant uses and whether you understand the format and style of presenting the information.

Afterwards, you can compare the received offers and choose the most suitable in terms of price, quality and trust. Very cheap offers should alert you. There is a risk of getting parts of data from publicly available sources without analysis, conclusions and high-quality design. It is also advisable to avoid disinterested and non-operational contractors, as there is a great risk of delaying the project. As a result, undergoing this selection process will make it possible to make a final decision on the need to hire a professional consultant to conduct marketing research and choose a specific contractor.