Volume 37, Issue 9, September 2002

Knowledge is Power

How to Get the Most Value from Market Research

by Nick Limb

As the old adage goes, knowledge is power, and this has never been more appropriate than in today’s knowledge-based economy. Accurate and relevant information is the fundamental building block for developing and implementing successful sales and marketing strategies, and market research is a vital tool for any business seeking to extend its knowledge.

Although expenditures for industrial product research are minuscule compared with expenditures for consumer research, market research is just as important, perhaps more so, in business markets, but with a different set of challenges. The purchase decision in industrial product markets is a complex process involving a number of individuals, who may be spread across several different job functions, locations or even organizations. In most industrial markets, a few companies account for most of the volume. The 80/20 pyramid applies to nearly every business market: 80 percent of volume is accounted for by 20 percent of the participants, and 80 percent of any one company’s sales are made to 20 percent of its customer base. Where there are fewer, more important customers, market research often is a canvas of the universe rather than a sampling.

Defining Deliverables

The first and most important step for any company in a research project is to think through exactly what information is needed carefully. A set of well-defined deliverables for a research project is absolutely critical. These can be determined by answering a series of questions:

·        What is the key issue or question? (current market size/segmentation, competitive position, product quality, customer perceptions, future opportunities ... );

·        Why do we want this information? Based on it, what decisions will be made?; (opportunity assessment, marketing planning, performance bench marking, advertising strategy, sales action plans ... );

·        What do we know already?;

·        When do we need the information?; and

·        What is the value of the information?

Preparing a Brief

Once answers to these questions have been ascertained, a brief can be prepared to give to the researcher. A good brief will describe the background of the project, the key deliverables, available resources to reference, timing requirements and any other relevant information.

The researcher you use can be either an internal resource or an outside market research company. An internal resource can be the most qualified and cost effective resource for many projects. Even when this resource exists, an outside research company may be preferred based on the breadth of its experience, its technical expertise, and most importantly, its ability to conduct independent research.

Once a researcher is chosen, the next step is to determine how to gather the information. A major distinction in methodology is between primary and secondary research. Secondary research is the gathering of existing data from available or secondary resources, including publications, periodicals, government statistics, industry reports and company information. This can a quick and cost effective way of gathering general data, but does not usually provide the level of detail typically required to answer strategic issues. Primary research entails engaging and talking directly to industry participants to gather specific information. This can be done through discussions in person, telephone interviews, mail surveys, focus groups, etc. While this is more time-consuming and thus expensive, it is only by “reaching out and touching someone” that in-depth information specific to a company’s needs can be gathered.

My company conducts primary market research, and most of the projects we conduct utilize telephone interviews, which we find to be the most effective combination of depth, focus and economy. We often supplement this with a small number of face-to-face interviews with key respondents. Focus groups, where a group of up to 12 respondents are gathered for a round table interactive discussion, can be very useful. In my experience these are most helpful in evaluating a new product concept, particularly if samples are available for viewing. If a more quantitative opportunity assessment is required, conjoint analysis is a technique that can be employed, using computer software to model preferences and forecast demand scenarios.

Designing an Interview Outline

Once the scope, deliverables, and methodology have been agreed between the client and the researcher, the next step is for the researcher to design an interview outline. A good outline is critical to obtaining good information. It can employ both open and closed questions depending on the information needed, it should have a smooth and logical flow to questioning, vocabulary should be direct and familiar and there should be clear instructions for the interviewer on how to follow-up on specific responses. Typically questions designed to classify the respondent are asked at the beginning of the interview, and the most sensitive questions are asked at the end. It is particularly important to test an interview outline with a small sample of less important respondents--changes are often required.

Final Research Stages

The key for the client throughout the interviewing process is to stay involved. The researcher will often make findings that can change the emphasis of the study during the interviewing process. Key contact points within the client’s company should be made available to the researcher for guidance or clarification on issues as they emerge during field work. Progress review meetings, typically via teleconference, should be held regularly throughout the project. In our experience unsuccessful projects can usually be attributed to a lack of dialogue between researcher and client between project initiation and completion.

The next step is to present the study findings which can be done in a presentation or report format. For anything other than a very simple study, a formal presentation is highly recommended, with attendance by as many people as possible from the client’s organization. The researchers usually will have stored a huge amount of supporting information in addition to the presentation mentally, and an open and comprehensive discussion of the findings is necessary to capture everything possible.

The final stage is the follow up. Hopefully, on-going communication and a comprehensive final presentation will provide all the information required, but many times there are follow up questions that can be quickly answered from the existing database of information that has been gathered. Clients should not be afraid to ask as many questions as possible.

In conclusion, the success of a market research project is equally dependent on both the client and the research firm, and the team must include both. The research firm is the technical expert in terms of recommending methodology, designing the interview outline and conducting the fieldwork, but a successful project requires the client to communicate a clear set of deliverables and to participate throughout the process.

Ultimate success is based on what happens after the study. Research is a means to an end and not the end itself, and before a project is started every company should have a clear understanding of how the research will be used and follow through with this. 

 

Nick Limb is general manager of Ducker Industrial Standards, a division of Ducker Worldwide based in Bloomfield Hills, MI. Ducker is an independent market research firm that has been studying industrial markets, including glass and glazing products, since 1961.

 


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