Market Research & Business Intelligence
In order to understand the market needs you must do research. You must understand when and how to use qualitative and quantitative research, when and how to do primary research, and where to acquire secondary research, along with how to compile competitive business intelligence and conduct an accurate analysis. The primary purpose of market research is risk aversion–to understand what the market (not just a few customers) want and reduce the risk of creating the wrong product.
(Note: Much of the information within the research section was contributed by Mike Tracy, a market research professional that I used to work with. He would participate in over 300 focus groups and over a million surveys each year–so this is HANDS on, in-the-trenches tips and advice. Thanks, Mike…for the excellent content.)
Categories of Research
Research methods can be divided into two basic categories – qualitative and quantitative research. The labels describe the basic difference in the results. Quantitative methods use samples large enough that there is statistics confidence in the results. Qualitative methods use very small samples with no statistical significance. A complete (and typical) research plan includes both categories of research. The mix depends on the stage of development, the research objectives, available funds, and other variables.
Often, qualitative research such as a focus group can be used to better identify what the issues are. Quantitative research is then employed to determine how prevalent the issue or need is.
Research can be divided into primary and secondary sources. Primary research is done by your own team and can be a focus group, survey, benchmark, etc. Secondary research is from another source such as a magazine, outside survey, consultant, etc. The methodology used to gather the information, whether primary or secondary, determines the accuracy of the data. The cost for primary or secondary can be higher or lower depending on potential economies of scale, whether you have the internal resources or must subcontract the services, etc.
The following sections give very brief descriptions of qualitative and quantitative research.
Qualitative research is the term applied to research that is considered exploratory or conceptual. Qualitative research will provide context, insights, and ideas for more research. The idea is to get participants to talk about experiences, give opinions about situations, and to react to scenarios or prototypes. Here are the basic characteristics of qualitative research.
- broad objectives
- small samples – results not generalizable to general or target population
- best used early to identify issues, and again later in the process to validate
These methods are the most common qualitative research methods.
- review of secondary information
- focus groups and related techniques (brainstorming, etc.)
- observations/ethnographic studies (in setting where product or service is actually used)
Quantitative research is the term applied to research that is considered conclusive. You might use quantitative research to test hypotheses, describe market or target population characteristics, and check relationships among variables. The results lead to formal conclusions and recommendations to inform decision-making. The idea is to get enough response that you feel confident the results reflect the market. Here are the basic characteristics of quantitative research.
- defined objectives that include hypothesis or hypotheses
- a focused research design that identifies who, how, what, why, when (and sometimes even where)
- large enough sample to allow generalization, projection of results
- heart of the research
These methods are the most common quantitative research methods.
- surveys – mail, telephone, online
- usability studies
- field testing
- laboratory testing
- conjoint analysis
To Disguise or Not?
One of the first decisions you will have to make is whether or not you want to “disguise” different aspects of the research. You disguise the research so the participants do not know who is doing the research. You might do this to avoid bias caused by brand recognition or to protect the confidentiality of a product or concept under development. Both qualitative and quantitative research can be disguised. Your decisions will influence the methods of research you select throughout the research process.
A Research Plan
As mentioned earlier, a typical research plan uses different methods depending on the needs and purposes. Here is the recommended (and typical) way to decide what and how to do the research.
- Specify Decisions – Purpose of Study
- Determine Information Needs – Objectives
- Ascertain Types of Data Required – Decide on type(s) of research
- Collect Data
- Analyze Data – Draw Conclusions (what results mean to us) and Make Recommendations (what to do)
- Report Results at Action Plan Meeting
- Continue Cycle (as needed)
A Typical Research Cycle
The research cycle is different depending on where in the product development cycle the research is done. For new product generation, a typical research cycle would contain several steps. (I’ve not attached a timeline because I’m not familiar with the length of your new product development timeline.) Your research might include most or all of these steps.
Secondary Literature Search – An amazing amount of information exists – or is being collected – about consumer needs, wants, and behavior; about markets, prices, and opportunities; etc. Build your first lists of questions and assumptions and head for the library (or Internet) to locate studies that relate. This is an inexpensive way to prepare for the other research steps. At this point you are thinking about opportunities, potential, etc. and looking for information to help you formulate plans.
Exploratory Focus Groups – These groups let you hear people talk about needs, wishes, current products (especially strengths and weaknesses), how they compensate for something they don’t have, attitudes about the market, etc. At this point you are still thinking about opportunities, potential, etc. and looking for information to help you formulate plans.
Ethnographic Study – You may want to observe people using related products and services in real time. This helps clarify what you’ve read in research studies and heard in focus groups. At this point you are still thinking about opportunities, potential, etc. and looking for information to help you formulate plans.
Large-Scale Survey – The survey allows you to collect quantifiable information about your assumptions, questions raised by the focus groups, planning, and general market conditions. At this point, you have some assumptions about your customers, their needs, and the market in general. You are looking to verify those assumptions and ideas – or not – with statistical confidence. (You may want to conduct other surveys throughout the development process to clarify issues, help you make choices, etc.)
Usability Testing/Laboratory Testing – These tests help you refine various features of the product as it’s being developed. Are the buttons in the right place, etc? At this point, you’re building your prototype according to the information you’ve collected. As you create the major components it’s best to test their functionality with real customers.
Prototype Focus Groups – These groups test the execution of your plans. Do the “features” of the prototype meet the needs of the market? At this point you want specific, direct feedback about the look, feel, feasibility, etc. of the prototype. (Expect at least two or three rounds of groups as you continue to refine your product.)
Field Test – These tests the product in use. Users put the prototype through its paces. You might want to make sure you test in a variety of settings to make sure the product goes through the range of possible experiences. At this point, the product has been designed and built. Now you are testing how well it works.
I HIGHLY recommend the latest release of The Product Marketing Handbook. It contains an entirely new section on market research and competitive analysis.