Today’s post is the third part of our ‘How Ideas Arise For Market Research’ series. The fourth and final part will be posted on Tuesday 4th April. Click here for more white papers.
The Information – what is required?
The information required may not have been presented in the most orderly fashion in the brief. A research sponsor knows what action will be taken if the outcome is positive and will have a view on the type of information that will help in that decision. All this will be shared in the brief. The researcher must now offer some order to the decision outcomes, the research objectives and any specific questions that may be asked. Examples of these three levels are as follows:
The researcher must work out what can reasonably be included in the project as an objective as well as what may have to be left out. As the researcher is thinking about the objectives, inevitably there will be consideration of the methods by which these will be achieved.
Consider the table above and think about what methods you would use for this range of outcomes, objectives and questions. Actually the researcher has a choice and could use a qualitative tool such as focus groups to get a reasonable fix on the answers. However, even with a number of focus groups it would still be a qualitative finding. You would have a good feel and understanding of all the answers to the questions but that is all it would be – a feel and understanding. If the research is being commissioned to make a decision on the launch of a new product, some quantification is required. Here the choices are two-fold; home placement tests or mall/hall tests (where the respondent is recruited from the shopping mall and brought to a nearby hall to experience the product). The arguments in favour of one approach rather than another or mixing different approaches will be made in the proposal under the “methods� section.
The accuracy – how accurate does it need to be?
When professional market researchers ask their clients how accurate any data should be, the answer is often such as “very accurate” or “as accurate as possible”. However, accuracy, at least where fieldwork is involved, has a price and as general rule, increases in accuracy not only cost more but disproportionately more .
Nor is a high level of accuracy always needed to meet the overall research objective. If a company is entering a new market, where common sense and observation tells us the market is huge in size, there may be little point in spending lots of money closely measuring its size. An approximation will do and the money saved may be better spent on some other information need. For example, a company that considers sales of $1 million per annum to be worthwhile might not care if the total market size was $100 million or $150 million (an accuracy of +/- 50%). If, however, in an advertising research study, the objective was to measure the impact of a campaign on brand awareness through comparing before and after campaign measures, the accuracy must be at least commensurate with the anticipated increase in awareness.
The required accuracy must, therefore, be linked to how the resulting data will be used - the nature of the decisions which the research will guide. Even if a precise definition of accuracy is not practically possible (this is often the case) some judgement should still be made on the reliability sought from the information. This may be as simple as a contrast between an attempt at measurement (quantitative research) compared to just description and explanation (qualitative research). Both approaches can contribute to effective marketing decisions but it is important that neither is used for the wrong application. Like information coverage, accuracy levels need to be considered before deciding on appropriate research methods.
The budget – how much have I got to play with?
What budget should be made available for the research project? The methodologically pure researcher would argue that the budget should be whatever is needed to meet the research objectives, provide the information required and to finance the methods needed to produce that information to the defined accuracy level. However, in practice, it is more a question of what funds are available or can be afforded for the project relative to other calls on business expenditure. Furthermore, even if cash is freely available, there are other considerations and especially the amount at risk in the decision which the research is to guide. If the decision entails capital expenditure of $20 million, a research budget of $50,000 may be well worth spending - if the research indicates that the planned expenditure is a poor investment, only the research cost will be lost rather than most or all of the $20 million investment. (In writing this we are reminded of the many chemical plants that have been built around the world in anticipation of growth in demand that has never materialised. We suspect that many were commissioned without any solid market research studies). However, if the business investment decision has low cost implications, the justification for carrying out the research will be less. Obviously there is no point in spending $10,000 on research to decide whether to invest in a project entailing only this level of expenditure.
The only qualification we would make to this bland statement is regarding research which contributes to a series of future decisions. We recently carried out a research project examining the effectiveness of a planned promotional campaign for an industrial gas manufacturer. The cost of the research was $30,000 and the campaign itself was only $200,000. However, the gas manufacturer runs many such campaigns across its divisions and the learning about what makes its advertising more effective sharpened all its campaigns and will do so for some years to come. The long time pay-back will be considerable.
This entry was posted
on Friday, March 31st, 2006 at 9:32 am and is filed under Sampling, Quantitative Research, Market Research, Articles.
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