Research is the key tool in your kit

Companies are spoilt for choice when it comes to ways of gleaning market information, writes Kathy Foley

IT'S a typical Tuesday evening in the Murphy household. Mum and eldest daughter Mary are curled up on the couch watching Coronation Street. Dad is sitting in his armchair reading the paper and sneaking the occasional peek at the soap's goings-on. Younger sons Michael and Martin are playing with their train set on the floor. And the ethnographic market researcher is perched on the other armchair taking copious notes.

Ethnographic, or observational, research is the latest trend in market research, a service used by companies to find out more about the demographics of their customer base and when, why and how those customers buy and use the firm's products or services.

"Companies do market research to improve or amend existing products and services, to find out what customers think of them, to develop new product lines, and to generate and test new ideas," says Philly Desai, the spokesman for the Market Research Society and managing director of Turnstone Research.

"It also allows firms to look at the effectiveness of marketing and advertising.

If the company has developed a new campaign, maybe new leaflets, it can find out whether it is effective in terms of brand recognition, communicating the message and so on," says Desai.

The global market for market research in 2002 was E17.6billion, according to Esomar, the world association of opinion and marketing research professionals. In Ireland, certain sectors tend to conduct or commission research regularly.

The key sectors are fast-moving consumer goods, including such companies as Cadburys, Mars and Glanbia, banks, financial and insurance companies, telecommunications firms, government and semi-state bodies, according to Richard Waring, the director of Lansdowne Market Research.

As useful as market research can be, companies should always have a reason to do it. "Research is fine but there is no point in doing it just for the sake of it," says Peter Dolan, the marketing manager of Woodie's DIY.

A firm needs to work out what decisions it needs to make before doing research.

Does it want to launch a new product or open a new store? The answers to such questions should influence the decision on whether or not to do research and the type to go for.

"There are two different sorts of research. An ad-hoc piece of research is designed to examine one particular issue at a certain point in time, for example if a company is launching a product and needs to test it or wants to find out how a brand is performing," says Waring.

"Tracking research continually measures the performance of the company. Most of the large multinationals have continuous research into customer satisfaction or advertising tracking," he says.

Market research can be further broken down into quantitative and qualitative research. "Quantitative is best for answering how many. Qualitative is best for answering why and how," says Waring.

Quantitative or numerical research is designed to produce and measure data and statistics and enable a company to easily compare results over a period of time or between different groups of people. It usually consists of polling a large number of people by telephone, post, face-to-face or online.

Qualitative research, on the other hand, is more concerned with people's attitudes and perceptions and is used when deeper insights into customer behaviour are needed. This type of research is generally carried out in small focus groups or in individual interviews.

Woodie's DIY is among many Irish companies that regularly makes use of focus groups for market research purposes, particularly six months or so after it opens a new store.

"When we have been trading for a while in an area, we undertake focus groups there. We get people's opinions and views once we are established in the area. We find out what they think of us and how we fare visavis competitors," says Dolan.

"They can be very valuable and you get a lot of off-the-cuff remarks that you do not get in a basic survey... they helped us turn the emphasis towards the ladies.

DIY stores were seen as 'hard' and not places women were visiting on weekends, so we turned them more into shops. A lot of that information came out of the focus groups," he says.

Although useful, focus groups can have a downside, says Dolan. "You get the odd occasion when one person will hog it. They can influence the group and drive the findings ... someone from Woodie's is always in attendance so we know what happened on the night."

In addition to this qualitative research, Woodie's also commissions an annual quantitative study, consisting of door-to-door research on the Woodie's brand image.

Some companies need to carry out more regular market research than others, according to Desai. "In markets that move very quickly, such as pop music, film and any youth trends, companies would do research every couple of months.

"If a company were tracking brand awareness or its general corporate image, it would not want to do that every three months unless it had been through a huge crisis. Some do statistical monitoring too regularly and then find that nothing changes from quarter to quarter."

The downside of market research, especially for small-and medium-sized firms, is that it is extremely expensive. "Most clients tend to be larger companies with bigger budgets. They can allocate some of their resources to research. Very few of our projects would cost hundreds of euros; it would generally cost thousands or tens of thousands. For a smaller company, E5,000 or E10,000 is a lot of money but it would be a small task for us," says Waring.

In addition, certain types of research are more expensive than others.

Observational research is more expensive than focus groups, which in turn are more expensive to run than a simple poll.

"The point is what you get out of it. You can work out which type is cheapest but it is not necessarily going to be the most cost-effective," says Desai, who adds that research can save firms money on development costs by enabling them to find out, ahead of time, if there is a market for a planned product or service.

Waring also cautions against trying to cut costs where research is concerned. "You have got to be aware of the pitfalls. If you are buying inexpensive rough-and-ready research, remember that bad information can be far more dangerous than no information."

It is also critical that those surveyed or interviewed are representative of the target market as a whole.

Companies that decide to commission market research should draw up a shortlist of firms and then submit a detailed brief to those on the list, requesting a fully costed proposal from each of them.

Once the study is done, the research company should provide the client with a substantial report complete with recommendations.

For companies that cannot afford professional market research, Waring recommends desk research as a good starting point. The Central Statistics Office website (www.cso.ie) has plenty of freely available research as do many government and industry bodies.

Businesses can also design a simple questionnaire requesting basic information from its customers, finding out how much they know about the company and how they think its products or services can be improved.

"Research does not have to have an enormous sample or be hugely expensive. You just accept the fact that it might not be as robust and will just give you an indication. It's a balance between how much money you have and the level of accuracy you want," says Waring.

Dolan believes that knowing your own business is just as important as market research. "When you are close to your business, you know what is going on and get a lot of information from managers and customers," he says.

"We are a very tightly run organisation. Head office is not hidden away. We are constantly out in our stores, not desk people. I'm out there at weekends, meeting customers and watching the service. There is a lot to be learnt on the floor."

Desai agrees: "A lot of companies feel they have masses of data but not much insight. Sometimes, all that data can take away from the reality of the human consumer and companies want to get back into close contact with their clients.

"Market research is one way of gaining views on what is going on but, within a complex organisation, there is a wide range of other information sources available such as the sales team or the customer-service department.

"Good knowledge management can bring together all those sources of information and make sense of them."