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!

/by

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!

/by

How to Collect Actionable Feedback with Voice of the Customer Research

 

A popular method used to collect current and potential customer feedback, Voice of the Customer (VoC) research gives businesses data-driven insights to understand what customer’s think about their brand, products, services, and even concepts. Some typical research objectives addressed by VoC studies include investigating what customers want, understanding how customers feel about a product, service, or concept, what drives customer decisions, and how your products compare to those of competitors.

Organizations that effectively use VoC research to drive their business decisions create stronger customer experiences by listening and taking action that inspires brand loyalty, or “brand love.” The most loved companies, the ones with the most loyal customers, use VoC to explore customer expectations and actual customer experiences. The results measure the gap between the two and provides an opportunity to develop strategy to minimize the disparity between experience and expectations.

 

Why is VoC Research Important?

Voice of the Customer research is a critical tool used to build customer-centric, holistic strategies and maintain competitive advantage in your market. VoC helps you monitor your brand for early warning signs of potential brand crisis, screens new concepts, filters down solutions to current workflow challenges, allows you to tweak products and services to meet customer needs, guides budget decisions, and increases customer retention.

Still not convinced? Let’s dig into 5 key reasons you should be doing VoC research:

1- Measure Key Performance Indicators (KPIs)

VoC allows you to measure several KPIs that give you direct insights into how your products and services are performing.  Aided or unaided brand or product awareness, positive or negative perceptions, and purchase intent, including purchase drivers, are all examples of KPIs that you can measure using VoC data.

2- Build Better Customer Relationships

VoC has a direct influence on building customer relationships by revealing opportunities to improve the customer experience. The output allows you to understand a customer’s journey when researching, purchasing, and eventually using a product. Additionally, understanding why customers keep coming back reveals a point of difference (PoD) among competition and helps you understand the key differentiators of your products and services from your customer’s perspective.

3- Learn from Your Mistakes

Mistakes are an inevitable part of doing business. With VoC data, you can better determine the source of a problem, contextualize the issue, and map out your best course of action all based on specific customer feedback. The data can also help you discern which of your customer’s pain points are most significant and prioritize the fixes accordingly.

4- Provide Exceptional Service

Inquiries can improve customer satisfaction levels by providing you with results on the technical training, response times, and interactions with service representatives and/or field engineers. These results can inform where you should allocate training time to appropriately build out the skill set of your customer success teams.

5- Extend Customer Relationships

VoC data helps you to understand what factors are most important to the success of your customers, and which products and services they value most. This helps you to build your product roadmap based on your customer’s needs, making them want to stick around for longer.

 

Research Types and Methodology

The methodology of VoC research has a lot of similarities to the empirical scientific process. A good VoC strategy starts with you defining your objectives. What are you hoping to accomplish with your study? Are you wanting to retain current customers, improve their experience, or gain new customers? Maybe the answer is all of the above. Regardless, you want to go into the study with some ideas, theories, questions, and goals. Once you’ve defined some objectives, it’s time to gather feedback. In the case of VoC research, feedback will be self-report data from customers, potential customers, or other samples you can access. After you’ve collected the feedback, you’ll need to analyze it critically and objectively. Finally, you’ve got to act. The data will tell you the story, it’s up to you to let it guide your insights and your steps forward for implementing what you’ve learned.

There are two types of research methodologies that can be used for collecting actionable customer data: qualitative and quantitative. Neither is superior to the other, they’re just appropriate for different circumstances, take you through different steps of the research process, and, often, get you different conclusions.

Qualitative research includes any non-numerical or observational data. Popular ways to collect qualitative data include interviews, focus groups, and open-ended questionnaires, but you can leverage other non-traditional techniques as well like live chats and social media. One of the main benefits of qualitative research is you’re more likely to get a “real” response from respondents. In these formats, people tend to feel less restricted than they do within the confines of a more structured survey where response options are on a 0 to 10 scale. This results in more naturalistic observations. It also is a great option if you don’t have questions or goals defined, because the broad, open-ended nature of qualitative research can act as a first step for generating ideas.

Contrary to qualitative research, quantitative research always has a numerical data output associated with it. In this format, you are setting up the potential responses that respondents can give you for each question, making it more defined and specific. This is a great option if you want to do statistical analyses like testing a hypothesis for significance or looking at quantitative differences between segments. This methodology allows you to generate common metrics like a Net Promoter Score (NPS) and gives you an opportunity to put real numeric values around more abstract concepts like brand awareness and customer pain points.

 

Actionable Insights that Guide Your Next Steps

VoC data should be taken in consideration at every point in the life cycle of a product or service, from planning and development to implementation and marketing for a holistic product experience. We’ve explained why having this type of data is important, and even given you some insights into effective methodologies for conducting your research, but to set up your study for success, you really need to think about where you’re going.

What do you really want to focus on after you take stock of all the data you’ve collected and all the analyses you’ve done? Think about what you could hone in on to improve your success with customers. What features do they want? What factors are bothering them? What would they like to see? What are they happy with? What are they unhappy with? And make sure that you identify the factors that you think could more successfully help you retain customers and get new ones.

Finally, you need to share the results of your research with the customers themselves. We’re not suggesting you share the spreadsheets of data, but rather communicate to the customers that the improvements they were asking for are being addressed. If customers aren’t told that their ideas are being implemented, they won’t feel that their feedback has had any effect. Customer loyalty grows when a business reports back to the customers with the specific action being taken in response to their comments.

In short, it’s like any relationship: communication is key. The more a customer feels heard by a business, the more they feel understood, the better their needs are addressed in meaningful ways and the more loyal they will be.

To learn more about how VoC research could positively impact your business strategy contact us today. Our team of market research experts look forward to discussing how we can partner with you to get you the insights you need to make data-driven decisions!

/by

Three Methods for Pricing Research to Drive a Successful Product Launch

The pricing of your products and services has a substantial impact on market perception, your go-to-market success rate, and, ultimately, top line revenue. Whether you’re launching a new product to market, or making a pricing change to an existing product, it’s essential to understand the potential impact that your pricing strategy will have on projected quantity and revenue, and how those findings fit into your overall business strategy.

When pricing a product, the perceived value of the product and its attributes to buyers, customer’s willingness to pay, and price elasticity can all be used to optimize your revenue. Not only do these insights inform your pricing strategy, but they also contribute to your product roadmap, go-to-market planning, segmentation, marketing messaging, and sales strategy.

In today’s post, we’ll explore three different market research methodologies for collecting pricing input. For each methodology, we’ll discuss use cases, pros, cons, and the types of conclusions you can draw from the outputs. Let’s jump in!

1. Van Westendorp Pricing Model

The Van Westendorp Pricing Model is a price sensitivity meter that uses inputs collected through a series of four key questions:

  • What price would you consider this product price so low that you would question its quality or too cheap?
  • At what price would you consider this product to be a bargain? A great value for the money.
  • At what price would you consider this product as starting to get expensive? It’s not out of the question that you would purchase, but you need to give it more thought before purchasing.
  • At what price would you consider this product to be so expensive that you would not consider purchasing it?

The distribution of data collected for each of the four questions is plotted into one consolidated view, and the areas where distribution lines intersect tell you optimal price point, point of marginal cheapness, point of marginal expensiveness, and indifference price point.

The straightforward questions posed by this model leave you with a simple, fast analysis and ample survey room to collect other data. This is an ideal methodology when assessing a new product that most people don’t have experience purchasing or during early production development when testing a simple product concept.

On the contrary, because there are no questions that dig into likelihood to purchase, and the product is being assessed in isolation, this model is not ideal when you’re looking to compare competitive scenarios. It also leaves much to be desired when you’re assessing a common product or service for which respondents generally know what they spend when purchasing because you’ll see the data skew towards the pricing models they’ve experienced with their current or past vendors.

To summarize, if you need quick and easy insights on product pricing, the Van Westendorp Model is a great option, but if you need real data on likeliness to purchase or real-world competitive scenarios, this method will miss the mark.

2. Gabor-Granger Pricing Model 

Like the Van Westendorp Pricing Model, Gabor-Granger can provide simple and quick analysis, but there are some key differences to consider. This research technique is used to gauge optimal price points using a set of predefined price points. For this methodology to be effective, you need to go into the research knowing some ranges of prices that you think the market will accept. You’ll test those specific prices, unlike Van Westendorp where respondents can input whatever price they feel is fair.

To collect data, respondents will simply be asked if they would purchase a product if the price was reasonable. Those who show interest are then asked a series of follow up questions using the pre-determined price points. If, on their first question, the respondent gives a positive response, they’ll be prompted to answer the same question on increasing price points until a maximum price is reached. Alternatively, if the respondent gives a negative response on their first question, they’ll receive varying lower price points until you reach the price that is acceptable for them to purchase. The output of this data would be a chart showing you at what price you could maximize your revenue.

This model allows you to identify maximum price, generates elasticity of demand, and identifies your revenue-maximizing point with low survey efforts and easy analysis. These are key factors when you’re considering a price increase or decrease, but all other components of the product are fixed, and when you’re trying to identify that sweet spot to maximize revenue.

A challenge of this model is that respondents easily understand the exercise and, as a result, are capable of “gaming” their answers to pick lower prices. Additionally, it does not consider real-world competitive scenarios, and, because the price range is pre-determined, respondents could value the product at a dollar amount outside of the tested range, leaving you with an incomplete picture.

Keeping the above in mind, the Gabor-Granger Model is a quick and easy tool for understanding how to maximize your revenue, but, like the Van Westendorp Model, it’s not going to provide more in-depth analysis like competitive comparisons.

3. Conjoint Analysis

Substantially more complex than the two above, Conjoint Analysis is a method for pricing and product research used to measure the value customers place on product attributes and services. To conduct this type of research, you’ll need to create a list of attributes and levels within those attributes. This set up allows you to compare various configurations against each other and gives you a more accurate gauge of tradeoffs customers make when making purchasing decisions in the real world.

Data provided by these tradeoffs is modeled to create several outputs:

  • Attribute Importance Scores: These indicate which attributes within the configuration most impact purchasing.
  • Preference Scores and Utilities: These identify which levels within an individual attribute are most or least preferred.
  • Market stimulators: This is the key output allowing you to test hundreds of different product configurations and price points against the competition.

For this methodology, respondents are presented with multiple options at once and asked to list out which products would or would not meet their needs. As they progress through the exercise, they’ll be asked to pick which option they’d be most likely to purchase from a lineup of products. The results show you how important each attribute is to the purchase decision, or how much impact it’s having on the decision. It also tells you, within each attribute, which levels are most or least preferred. Putting all the data together, and running several analyses allows you to see price sensitivity by segmentation, competitor comparisons, share of preference, and revenue maximization.

Perhaps the biggest benefit of this analysis style is the robust analyses it allows you to conduct. This complexity more closely stimulates real-world purchasing conditions and can be used to predict the acceptance of new products before launch, determine which features drive purchasing decisions, and measure yourself against your competition.

As you might have expected, this methodology does take quite a bit more time than the two previously explained models, but if you have the time, it presents you with richer data insights that can more effectively drive your product strategy.

There are several ways you can collect insights on pricing your product. Whether you utilize one of the three methods above, or a method of your own, this is a pivotal part of your go-to-market planning. To learn more about how pricing research could be a valuable tool for launching your next product, contact us today. Our team of market research experts look forward to discussing the best methodologies to get you the insights you need to optimize your product strategy!

/by