Budgeting for Market Research: Best Practices and How to Optimize Your Spend

No matter their role, most people must justify where and how their spending their allotted budget to someone. Inevitably, throughout the year, there will be surprise expenses that come up, or unforeseen needs that maybe weren’t planned for initially during budgeting and approvals. Considering the weight it carries when it comes to your product and marketing strategies, market research should not be one of those unaccounted-for expenses. It’s important to make market research a part of your budget from the jump, but with fluctuation in pricing based on the research type, methodologies, and other variables, it can be challenging to accurately budget those expenses, especially if you’re new to the process.

In this post we’ll explore how to justify market research as a budget item, what to consider when determining your budget, and how to optimize the budget you’re given to maximize the success of your market research. Let’s dig in!

 

Budget Justification

Market research is a valuable tool for supporting your business decisions, but how do you communicate the value to those approving your budget? Here are a few examples of how market research provides value to your business:

1- Reliable Data to Inform Decision-Making

It’s not recommended that you make strategic decisions based on your own experiences or the anecdotal experience of others. You need evidence. Market research gives you reliable data and information to make evidence-based decisions.

2- Market Segmentation & Product Development

Market research gives you the ability to segment the market, so you can develop products, features, and services that directly address the needs of specific market segments. This, ultimately, will improve the success of your products across the markets you serve.

3- Forward-Looking Information

Without relevant research, you’re left to make decisions based on past consumer behavior. This can be risky, because, as you know, markets can change rapidly. An example that most all companies had to consider was COVID. If you were making decisions on how to move your business forward with data on pre-COVID consumer behavior, your strategy would not be in your best interest.

4- Understand Customer Perceptions

You need to understand how customers feel about your products, services, brand, and how you’re communicating. You can keep a pulse on your customer’s thoughts, opinions, and feedback through market research. This allows you to hear directly from your consumer how to improve.

 

Good market research brings clarity and objectivity and provides constant communication with you and your target audience, ultimately improving your products and services. Taking it a step further, successful market research helps you to meet your business goals, improves your customer satisfaction, gets you new customers, and retains your current customers.

There are several costs to consider when justifying and building your research budget. To name a few: subscriptions, publications, personnel needed to conduct and analyze the research, participant honoraria, supplies like prototypes, equipment, travel, facilities, consultants, agency needs, transcription and translation services.

It’s imperative that you take all these budget items into account, otherwise you may find that your driven to choose methodologies that aren’t appropriate for your needs, leading to decreased research quality, incomplete research, and insufficient answers to your research questions.

 

Determining Your Research Budget

When building your budget list all the research activities and associated milestones, so you can get estimates to assess costs for each research activity. Account for funding regulations or requirements and track all information in a dynamic spreadsheet that you’ll be able to use to monitor spend throughout the year.

If you have no idea where to start, designate approximately 15% of your total budget for research. This would include front-end research when you’re trying to build a strategy, back-end research when you’re trying to see if the strategy worked, and how you should move forward if you need to make changes.

Before you can build your detailed budget, you need to understand if you’re going to use internal information sources, external information sources, or a combination of the two. Internal information sources include data that your organization is generating, like sales data. If, for example, all you want to know is what your sales numbers are, trends, and how to segment customers based on their purchasing, you have that data in-house and won’t need to source anything externally.

Most of the time, your research needs will extend past what you have available to you internally. External information generally comes from the market as a whole and can give you a better indication of your position in the market and how to grow your business. When considering external data sources, first look to see if there are secondary sources to meet your needs. Secondary sources are high-level, off-the-shelf reports that provide data on the market, specific technology, or different trends. These reports are usually lower cost, or even free, and act as a great starting point with minimal time and money investment.

If you’re not finding everything you need from secondary research, then you will want to consider primary research. Primary research describes custom projects that are specifically designed to meet your needs and provide insights about your business, consumers, brand, and market position. Primary research methodologies include both quantitative and qualitative methodologies, and often call for a combination of the two.

The types of research your conducting, and the methodologies used will come with different price points and will carry different expenses based on factors like:

  • Are you engaging a firm or consultant to conduct the research?
  • What’s your sample size?
  • What’s the length of the interview and/or survey?
  • Do you need any technology components?
  • Will you have any professional fees?
  • Are there any associated travel expenses?
  • Will you need additional resourcing to help with data analysis?

Keeping all these factors in mind will help you to accurately gauge the necessary budget allotment for market research throughout the year, secondary or primary.

 

How to Optimize Your Market Research Budget

You’ve done your due diligence to justify your market research budget and put together an accurate representation of your estimated budget needs. It’s approved! Now, it’s up to you to be a good steward of those funds and make the most out of the budget you have. Below we detail five ways to optimize your market research spend:

1- Clearly Define Goals and Objectives

One of the biggest wastes of market research dollars is an unfocused approach. Determine the focus of your research and define no more than 5 clear, actionable objectives. Objectives help to narrow your focus, drive the project, and ensure alignment with all your stakeholders. Objectives should be SMART: specific, measurable, achievable, relevant, and time-based. When defining your objectives, it’s best to be inclusive of your stakeholders’ feedback, especially those that will be using the output to make decisions.

2- Carefully Design a Sampling Plan

Your sampling plan should be based on your end goal, and should be targeted, but not so niche that you struggle to find anyone that fits your specifications. While sample size does have a direct impact on statistical power, it’s important to understand if you truly need statistical significance. If you don’t, then you can often save yourself some money on sample size. To build a sampling plan: define the target population, determine the sampling frame, select a sampling technique, determine sample size, and then execute. Consider how precise you need your data to be, costs associated with achieving your desired sample, and level of difficulty for reaching your target population.

3- Pick the Right Time

The goal is always to avoid knee-jerk, need-it-now market research. Ideally, market research should be used to inform strategic decisions, not to confirm decisions that have already been made. To appropriately plan, consider your strategic planning cycle, your budget schedule, and product development and marketing schedules. Proactively using market research to track key indicators will help you keep a pulse on your performance and allow you to catch problems before they arise.

4- Select the Best Method

To put it simply, don’t spend money on research methods that won’t give you the answers you need. Methodology should be determined based on desired results, not cost or convenience. Always start with secondary and internal data sources, then use primary custom research to fill any gaps, considering that mixed-method research may be your best option.

5- Think of Research as a Strategic Investment

Your competitors are using market research techniques- don’t get left behind. Market research allows you to set growth KPIs, understand your customers better, test products before launch, identify issues before they happen, and focus your message to target your audience. This gives you a huge competitive advantage and allows you to stay ahead of the competition.

 

There are several ways you can collect valuable market research. Regardless of your approach, taking your needs into account when budgeting is key to having access to the research you need to drive your strategic decision-making. To learn more about market research or get estimates for 2023 budgeting, contact us today. Our team of market research experts look forward to partnering with you!

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Top Qualitative Research Methods and Applications to Optimize Outcomes

Qualitative research collects and analyzes non-numerical data to understand concepts, opinions, or experiences by using a moderator to interview respondents. While quantitative research is focused on the ‘what’ of consumer behavior, qualitative research is focused on the ‘why.’ Qualitative studies allow you to hear directly from the consumer in more depth to better understand their decisions, behaviors and thought processes.

There are several different methods to evaluate when considering qualitative research. While there are similarities, the various methodologies give you the opportunity to tailor your study to your needs and optimize your outcomes.

 

Qualitative Market Research Methods

The way you conduct your qualitative research will vary based on your goals, budget, timeline, and what information it is you’re trying to collect. Let’s dig into the top three styles of qualitative research that our team sees as most effective and things to consider for each method.

1- In-Depth Interviews (IDIs)

The most common qualitative method, in-depth interviews (IDIs), are conducted by an experienced moderator one-on-one, in dyads, or even in triads. If you are fielding interviewees in dyads or triads, it’s important that the people you’re speaking to have some familiarity with each other, or some type of connection. IDIs are considered semi-structured which means that there will be a discussion guide to drive the conversation. This guide will ensure that you ask questions to meet your objectives, but gives you flexibility to probe more or less about certain topics based on how the conversation is going.

The kind of data collected in these in-depth interviews are a moderator’s own notes, physical recordings (either in person or online), and transcripts. Transcripts are really common and popular. They’re a great tool, but seeing the person being interviewed, whether that be via Zoom or in person, can be helpful to analyze things like body language. For this reason, we recommend having a video component when possible.

Because there are not many people involved, IDIs tend to be easy to schedule. Video conferencing allows these interviews to be conducted across the globe, extending your reach to respondents. This qualitative method also allows you to use a variety of tactics like product stimuli, whiteboarding, and A/B testing during discussion, and gives you the flexibility to change your questions as the conversation evolves.

When using this type of data, it’s important to remember that, due to the low n, qualitative outcomes are directional in nature, and we recommend at least an n of 7 for IDIs to ensure your results aren’t just a fluke or outlier.

2- Focus Groups

Another great addition to your qualitative toolbox, focus groups, allow you to group 6-12 respondents together and ask them questions about your topic of interest. Whether you’re conducting the focus group in person or using a virtual platform, these tend to emulate real-world decision-making scenarios in which many people are involved and influence one another’s thoughts and opinions.  We don’t operate in a vacuum in our day-to-day life, so observations about the group’s dynamic, answers, and relationship can help answer important research questions. Data collection for focus groups can vary. Clients can participate or watch from backrooms, sessions can be recorded, and transcripts can be ordered.

With a larger number of participants at once, focus groups help you gain multiple points of view quickly, and the group dynamic allows participants to mention points they might have glossed over or forgotten if they were in an IDI format without hearing the thoughts and opinions of those around them.

It’s important to consider how the group dynamic can impact your data. Participants can be wary of delving into sensitive topics around other people and the group setting means respondents might be hesitant to express their true feelings, especially if it’s in opposition to someone else in the group.

3- Ethnographies

Ethnographies are a study where researchers observe and/or interact with participants in their real-life environment. There can be both unobtrusive or direct observation methods. Unobtrusive methods are things like looking at social media postings or archival work. Direct observation methods mean you are observing the consumer in their work setting. For example you might watch a scientist work at their lab. Because this method is about understanding what a person is doing rather than what they say they’re doing, optimal data collection would include recordings. After initial observations a guide can be developed help you codify, or structure, your notes.

Let’s talk through an example. A life-science company sent out a new consumable kit to respondents who then opened and unboxed the reagents while on video with a moderator. This allowed the company to see how scientists were interacting with their product packaging in the laboratory environment.  What did they take out first? Is it easy for them to determine. Do they understand what goes where If things need to go in separate fridges or freezers? How do they look at the packaging? How easy is it for them to figure out how to start?

This qualitative method is especially good at identifying bottlenecks and issues in workflows, is helpful for UI/UX testing, and a valuable resource for early project development or improvements to existing product lines, but you need to be mindful of best practices to avoid observation bias and potential confidentiality challenges.

4- Mixed Methods

Mixed method studies describe quantitative and qualitative data collection working in tandem to achieve greater insights

You can approach this by starting with a quantitative phase and then moving to a qualitative phase, but we also see the inverse where you begin with qualitative research and then move into quantitative research. For example, we worked with a biotech company that wanted to better understand why physicians were not ordering their diagnostic test. First, a small qualitative study interviewed clinicians who were current and potential customers. The qual was able to hypothesize several personas (early adopters, needs CME to adopt, hesitant to change, etc.). A quantitative study was designed to confirm these personas and identify best areas to focus new marketing.

This methodology is a great tool to help you better define your research objectives for a more focused quantitative study. They also can help add more voice of the customer style context and provide good follow up to quantitative studies. As you might have expected, mixed method studies take longer than an individual qualitative or quantitative study. It’s also important to keep in mind that not every respondent who agrees to participate in one will agree to participant in the other, so plan for that when it comes to study design and recruitment efforts.

 

When to Choose Qualitative Research

Both qualitative and quantitative research can be applied to a variety of scenarios. To name a few:

  • New product idea generation and development
  • Investigating current or potential products, services, brand positioning, and marketing strategy
  • Understanding dynamics of purchase decision dynamics
  • Exploring market segments, such as demographic and customer groups
  • Assessing the usability of websites or other interactive products or services
  • Understanding perceptions of a company, brand, category, and product

When you’re trying to choose between the two methodologies, you have to keep your needs and goals in mind. Is the purpose of your research to test an existing hypothesis or to explore perceptions? Do you want to measure opinions or understand the why behind the customer opinions? Do you need to use this data to extrapolate for a larger population or are directional trends sufficient? Are you choosing methods and designing studies based on best practices? Are your budget and time constraints influencing your research method? How will you use the data? These questions will help you decide the best path forward.

Qualitative research is a great tool when subject matter is unfamiliar and for exploratory research when relevant concepts are unknown, or definitions are unclear. It’s especially valuable when meaning rather than frequencies are sought, when flexibility of approach is needed to allow for discovery of unexpected feedback, and when you need to study selected issues, cases, or events in detail.

To learn more about how qualitative methods could help you achieve your market research goals contact us today. Our team of market research experts look forward to discussing how we can partner with you to get you the in-depth information you need to drive your business forward!

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