marketing research process

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10.2 Steps in the Marketing Research Process

Learning objective.

• Describe the basic steps in the marketing research process and the purpose of each step.

The basic steps used to conduct marketing research are shown in Figure 10.6 “Steps in the Marketing Research Process” . Next, we discuss each step.

Figure 10.6 Steps in the Marketing Research Process

Step 1: Define the Problem (or Opportunity)

There’s a saying in marketing research that a problem half defined is a problem half solved. Defining the “problem” of the research sounds simple, doesn’t it? Suppose your product is tutoring other students in a subject you’re a whiz at. You have been tutoring for a while, and people have begun to realize you’re darned good at it. Then, suddenly, your business drops off. Or it explodes, and you can’t cope with the number of students you’re being asked help. If the business has exploded, should you try to expand your services? Perhaps you should subcontract with some other “whiz” students. You would send them students to be tutored, and they would give you a cut of their pay for each student you referred to them.

Both of these scenarios would be a problem for you, wouldn’t they? They are problems insofar as they cause you headaches. But are they really the problem? Or are they the symptoms of something bigger? For example, maybe your business has dropped off because your school is experiencing financial trouble and has lowered the number of scholarships given to incoming freshmen. Consequently, there are fewer total students on campus who need your services. Conversely, if you’re swamped with people who want you to tutor them, perhaps your school awarded more scholarships than usual, so there are a greater number of students who need your services. Alternately, perhaps you ran an ad in your school’s college newspaper, and that led to the influx of students wanting you to tutor them.

Businesses are in the same boat you are as a tutor. They take a look at symptoms and try to drill down to the potential causes. If you approach a marketing research company with either scenario—either too much or too little business—the firm will seek more information from you such as the following:

• In what semester(s) did your tutoring revenues fall (or rise)?
• In what subject areas did your tutoring revenues fall (or rise)?
• In what sales channels did revenues fall (or rise): Were there fewer (or more) referrals from professors or other students? Did the ad you ran result in fewer (or more) referrals this month than in the past months?
• Among what demographic groups did your revenues fall (or rise)—women or men, people with certain majors, or first-year, second-, third-, or fourth-year students?

The key is to look at all potential causes so as to narrow the parameters of the study to the information you actually need to make a good decision about how to fix your business if revenues have dropped or whether or not to expand it if your revenues have exploded.

The next task for the researcher is to put into writing the research objective. The research objective is the goal(s) the research is supposed to accomplish. The marketing research objective for your tutoring business might read as follows:

To survey college professors who teach 100- and 200-level math courses to determine why the number of students referred for tutoring dropped in the second semester.

This is admittedly a simple example designed to help you understand the basic concept. If you take a marketing research course, you will learn that research objectives get a lot more complicated than this. The following is an example:

“To gather information from a sample representative of the U.S. population among those who are ‘very likely’ to purchase an automobile within the next 6 months, which assesses preferences (measured on a 1–5 scale ranging from ‘very likely to buy’ to ‘not likely at all to buy’) for the model diesel at three different price levels. Such data would serve as input into a forecasting model that would forecast unit sales, by geographic regions of the country, for each combination of the model’s different prices and fuel configurations (Burns & Bush, 2010).”

Now do you understand why defining the problem is complicated and half the battle? Many a marketing research effort is doomed from the start because the problem was improperly defined. Coke’s ill-fated decision to change the formula of Coca-Cola in 1985 is a case in point: Pepsi had been creeping up on Coke in terms of market share over the years as well as running a successful promotional campaign called the “Pepsi Challenge,” in which consumers were encouraged to do a blind taste test to see if they agreed that Pepsi was better. Coke spent four years researching “the problem.” Indeed, people seemed to like the taste of Pepsi better in blind taste tests. Thus, the formula for Coke was changed. But the outcry among the public was so great that the new formula didn’t last long—a matter of months—before the old formula was reinstated. Some marketing experts believe Coke incorrectly defined the problem as “How can we beat Pepsi in taste tests?” instead of “How can we gain market share against Pepsi?” (Burns & Bush, 2010)

New Coke Is It! 1985

(click to see video)

This video documents the Coca-Cola Company’s ill-fated launch of New Coke in 1985.

1985 Pepsi Commercial—“They Changed My Coke”

This video shows how Pepsi tried to capitalize on the blunder.

Step 2: Design the Research

The next step in the marketing research process is to do a research design. The research design is your “plan of attack.” It outlines what data you are going to gather and from whom, how and when you will collect the data, and how you will analyze it once it’s been obtained. Let’s look at the data you’re going to gather first.

There are two basic types of data you can gather. The first is primary data. Primary data is information you collect yourself, using hands-on tools such as interviews or surveys, specifically for the research project you’re conducting. Secondary data is data that has already been collected by someone else, or data you have already collected for another purpose. Collecting primary data is more time consuming, work intensive, and expensive than collecting secondary data. Consequently, you should always try to collect secondary data first to solve your research problem, if you can. A great deal of research on a wide variety of topics already exists. If this research contains the answer to your question, there is no need for you to replicate it. Why reinvent the wheel?

Sources of Secondary Data

Your company’s internal records are a source of secondary data. So are any data you collect as part of your marketing intelligence gathering efforts. You can also purchase syndicated research. Syndicated research is primary data that marketing research firms collect on a regular basis and sell to other companies. J.D. Power & Associates is a provider of syndicated research. The company conducts independent, unbiased surveys of customer satisfaction, product quality, and buyer behavior for various industries. The company is best known for its research in the automobile sector. One of the best-known sellers of syndicated research is the Nielsen Company, which produces the Nielsen ratings. The Nielsen ratings measure the size of television, radio, and newspaper audiences in various markets. You have probably read or heard about TV shows that get the highest (Nielsen) ratings. (Arbitron does the same thing for radio ratings.) Nielsen, along with its main competitor, Information Resources, Inc. (IRI), also sells businesses scanner-based research . Scanner-based research is information collected by scanners at checkout stands in stores. Each week Nielsen and IRI collect information on the millions of purchases made at stores. The companies then compile the information and sell it to firms in various industries that subscribe to their services. The Nielsen Company has also recently teamed up with Facebook to collect marketing research information. Via Facebook, users will see surveys in some of the spaces in which they used to see online ads (Rappeport, Gelles, 2009).

By contrast, MarketResearch.com is an example of a marketing research aggregator. A marketing research aggregator is a marketing research company that doesn’t conduct its own research and sell it. Instead, it buys research reports from other marketing research companies and then sells the reports in their entirety or in pieces to other firms. Check out MarketResearch.com’s Web site. As you will see there are a huge number of studies in every category imaginable that you can buy for relatively small amounts of money.

Figure 10.7

Market research aggregators buy research reports from other marketing research companies and then resell them in part or in whole to other companies so they don’t have to gather primary data.

Source: http://www.marketresearch.com .

Your local library is a good place to gather free secondary data. It has searchable databases as well as handbooks, dictionaries, and books, some of which you can access online. Government agencies also collect and report information on demographics, economic and employment data, health information, and balance-of-trade statistics, among a lot of other information. The U.S. Census Bureau collects census data every ten years to gather information about who lives where. Basic demographic information about sex, age, race, and types of housing in which people live in each U.S. state, metropolitan area, and rural area is gathered so that population shifts can be tracked for various purposes, including determining the number of legislators each state should have in the U.S. House of Representatives. For the U.S. government, this is primary data. For marketing managers it is an important source of secondary data.

The Survey Research Center at the University of Michigan also conducts periodic surveys and publishes information about trends in the United States. One research study the center continually conducts is called the “Changing Lives of American Families” ( http://www.isr.umich.edu/home/news/research-update/2007-01.pdf ). This is important research data for marketing managers monitoring consumer trends in the marketplace. The World Bank and the United Nations are two international organizations that collect a great deal of information. Their Web sites contain many free research studies and data related to global markets. Table 10.1 “Examples of Primary Data Sources versus Secondary Data Sources” shows some examples of primary versus secondary data sources.

Table 10.1 Examples of Primary Data Sources versus Secondary Data Sources

Gauging the Quality of Secondary Data

When you are gathering secondary information, it’s always good to be a little skeptical of it. Sometimes studies are commissioned to produce the result a client wants to hear—or wants the public to hear. For example, throughout the twentieth century, numerous studies found that smoking was good for people’s health. The problem was the studies were commissioned by the tobacco industry. Web research can also pose certain hazards. There are many biased sites that try to fool people that they are providing good data. Often the data is favorable to the products they are trying to sell. Beware of product reviews as well. Unscrupulous sellers sometimes get online and create bogus ratings for products. See below for questions you can ask to help gauge the credibility of secondary information.

Gauging the Credibility of Secondary Data: Questions to Ask

• Who gathered this information?
• For what purpose?
• What does the person or organization that gathered the information have to gain by doing so?
• Was the information gathered and reported in a systematic manner?
• Is the source of the information accepted as an authority by other experts in the field?
• Does the article provide objective evidence to support the position presented?

Types of Research Design

Now let’s look specifically at the types of research designs that are utilized. By understanding different types of research designs, a researcher can solve a client’s problems more quickly and efficiently without jumping through more hoops than necessary. Research designs fall into one of the following three categories:

• Exploratory research design
• Descriptive research design
• Causal research design (experiments)

An exploratory research design is useful when you are initially investigating a problem but you haven’t defined it well enough to do an in-depth study of it. Perhaps via your regular market intelligence, you have spotted what appears to be a new opportunity in the marketplace. You would then do exploratory research to investigate it further and “get your feet wet,” as the saying goes. Exploratory research is less structured than other types of research, and secondary data is often utilized.

One form of exploratory research is qualitative research. Qualitative research is any form of research that includes gathering data that is not quantitative, and often involves exploring questions such as why as much as what or how much . Different forms, such as depth interviews and focus group interviews, are common in marketing research.

The depth interview —engaging in detailed, one-on-one, question-and-answer sessions with potential buyers—is an exploratory research technique. However, unlike surveys, the people being interviewed aren’t asked a series of standard questions. Instead the interviewer is armed with some general topics and asks questions that are open ended, meaning that they allow the interviewee to elaborate. “How did you feel about the product after you purchased it?” is an example of a question that might be asked. A depth interview also allows a researcher to ask logical follow-up questions such as “Can you tell me what you mean when you say you felt uncomfortable using the service?” or “Can you give me some examples?” to help dig further and shed additional light on the research problem. Depth interviews can be conducted in person or over the phone. The interviewer either takes notes or records the interview.

Focus groups and case studies are often utilized for exploratory research as well. A focus group is a group of potential buyers who are brought together to discuss a marketing research topic with one another. A moderator is used to focus the discussion, the sessions are recorded, and the main points of consensus are later summarized by the market researcher. Textbook publishers often gather groups of professors at educational conferences to participate in focus groups. However, focus groups can also be conducted on the telephone, in online chat rooms, or both, using meeting software like WebEx. The basic steps of conducting a focus group are outlined below.

The Basic Steps of Conducting a Focus Group

• Establish the objectives of the focus group. What is its purpose?
• Identify the people who will participate in the focus group. What makes them qualified to participate? How many of them will you need and what they will be paid?
• Obtain contact information for the participants and send out invitations (usually e-mails are most efficient).
• Develop a list of questions.
• Choose a facilitator.
• Choose a location in which to hold the focus group and the method by which it will be recorded.
• Conduct the focus group. If the focus group is not conducted electronically, include name tags for the participants, pens and notepads, any materials the participants need to see, and refreshments. Record participants’ responses.
• Summarize the notes from the focus group and write a report for management.

A case study looks at how another company solved the problem that’s being researched. Sometimes multiple cases, or companies, are used in a study. Case studies nonetheless have a mixed reputation. Some researchers believe it’s hard to generalize, or apply, the results of a case study to other companies. Nonetheless, collecting information about companies that encountered the same problems your firm is facing can give you a certain amount of insight about what direction you should take. In fact, one way to begin a research project is to carefully study a successful product or service.

Two other types of qualitative data used for exploratory research are ethnographies and projective techniques. In an ethnography , researchers interview, observe, and often videotape people while they work, live, shop, and play. The Walt Disney Company has recently begun using ethnographers to uncover the likes and dislikes of boys aged six to fourteen, a financially attractive market segment for Disney, but one in which the company has been losing market share. The ethnographers visit the homes of boys, observe the things they have in their rooms to get a sense of their hobbies, and accompany them and their mothers when they shop to see where they go, what the boys are interested in, and what they ultimately buy. (The children get seventy-five dollars out of the deal, incidentally.) (Barnes, 2009)

Projective techniques are used to reveal information research respondents might not reveal by being asked directly. Asking a person to complete sentences such as the following is one technique:

People who buy Coach handbags __________.

(Will he or she reply with “are cool,” “are affluent,” or “are pretentious,” for example?)

KFC’s grilled chicken is ______.

Or the person might be asked to finish a story that presents a certain scenario. Word associations are also used to discern people’s underlying attitudes toward goods and services. Using a word-association technique, a market researcher asks a person to say or write the first word that comes to his or her mind in response to another word. If the initial word is “fast food,” what word does the person associate it with or respond with? Is it “McDonald’s”? If many people reply that way, and you’re conducting research for Burger King, that could indicate Burger King has a problem. However, if the research is being conducted for Wendy’s, which recently began running an advertising campaign to the effect that Wendy’s offerings are “better than fast food,” it could indicate that the campaign is working.

Completing cartoons is yet another type of projective technique. It’s similar to finishing a sentence or story, only with the pictures. People are asked to look at a cartoon such as the one shown in Figure 10.8 “Example of a Cartoon-Completion Projective Technique” . One of the characters in the picture will have made a statement, and the person is asked to fill in the empty cartoon “bubble” with how they think the second character will respond.

Figure 10.8 Example of a Cartoon-Completion Projective Technique

In some cases, your research might end with exploratory research. Perhaps you have discovered your organization lacks the resources needed to produce the product. In other cases, you might decide you need more in-depth, quantitative research such as descriptive research or causal research, which are discussed next. Most marketing research professionals advise using both types of research, if it’s feasible. On the one hand, the qualitative-type research used in exploratory research is often considered too “lightweight.” Remember earlier in the chapter when we discussed telephone answering machines and the hit TV sitcom Seinfeld ? Both product ideas were initially rejected by focus groups. On the other hand, relying solely on quantitative information often results in market research that lacks ideas.

The Stone Wheel—What One Focus Group Said

Watch the video to see a funny spoof on the usefulness—or lack of usefulness—of focus groups.

Descriptive Research

Anything that can be observed and counted falls into the category of descriptive research design. A study using a descriptive research design involves gathering hard numbers, often via surveys, to describe or measure a phenomenon so as to answer the questions of who , what , where , when , and how . “On a scale of 1–5, how satisfied were you with your service?” is a question that illustrates the information a descriptive research design is supposed to capture.

Physiological measurements also fall into the category of descriptive design. Physiological measurements measure people’s involuntary physical responses to marketing stimuli, such as an advertisement. Elsewhere, we explained that researchers have gone so far as to scan the brains of consumers to see what they really think about products versus what they say about them. Eye tracking is another cutting-edge type of physiological measurement. It involves recording the movements of a person’s eyes when they look at some sort of stimulus, such as a banner ad or a Web page. The Walt Disney Company has a research facility in Austin, Texas, that it uses to take physical measurements of viewers when they see Disney programs and advertisements. The facility measures three types of responses: people’s heart rates, skin changes, and eye movements (eye tracking) (Spangler, 2009).

Figure 10.9

A woman shows off her headgear for an eye-tracking study. The gear’s not exactly a fashion statement but . . .

lawrencegs – Google Glass – CC BY 2.0.

A strictly descriptive research design instrument—a survey, for example—can tell you how satisfied your customers are. It can’t, however, tell you why. Nor can an eye-tracking study tell you why people’s eyes tend to dwell on certain types of banner ads—only that they do. To answer “why” questions an exploratory research design or causal research design is needed (Wagner, 2007).

Causal Research

Causal research design examines cause-and-effect relationships. Using a causal research design allows researchers to answer “what if” types of questions. In other words, if a firm changes X (say, a product’s price, design, placement, or advertising), what will happen to Y (say, sales or customer loyalty)? To conduct causal research, the researcher designs an experiment that “controls,” or holds constant, all of a product’s marketing elements except one (or using advanced techniques of research, a few elements can be studied at the same time). The one variable is changed, and the effect is then measured. Sometimes the experiments are conducted in a laboratory using a simulated setting designed to replicate the conditions buyers would experience. Or the experiments may be conducted in a virtual computer setting.

You might think setting up an experiment in a virtual world such as the online game Second Life would be a viable way to conduct controlled marketing research. Some companies have tried to use Second Life for this purpose, but the results have been somewhat mixed as to whether or not it is a good medium for marketing research. The German marketing research firm Komjuniti was one of the first “real-world” companies to set up an “island” in Second Life upon which it could conduct marketing research. However, with so many other attractive fantasy islands in which to play, the company found it difficult to get Second Life residents, or players, to voluntarily visit the island and stay long enough so meaningful research could be conducted. (Plus, the “residents,” or players, in Second Life have been known to protest corporations invading their world. When the German firm Komjuniti created an island in Second Life to conduct marketing research, the residents showed up waving signs and threatening to boycott the island.) (Wagner, 2007)

Why is being able to control the setting so important? Let’s say you are an American flag manufacturer and you are working with Walmart to conduct an experiment to see where in its stores American flags should be placed so as to increase their sales. Then the terrorist attacks of 9/11 occur. In the days afterward, sales skyrocketed—people bought flags no matter where they were displayed. Obviously, the terrorist attacks in the United States would have skewed the experiment’s data.

An experiment conducted in a natural setting such as a store is referred to as a field experiment . Companies sometimes do field experiments either because it is more convenient or because they want to see if buyers will behave the same way in the “real world” as in a laboratory or on a computer. The place the experiment is conducted or the demographic group of people the experiment is administered to is considered the test market . Before a large company rolls out a product to the entire marketplace, it will often place the offering in a test market to see how well it will be received. For example, to compete with MillerCoors’ sixty-four-calorie beer MGD 64, Anheuser-Busch recently began testing its Select 55 beer in certain cities around the country (McWilliams, 2009).

Figure 10.10

Select 55 beer: Coming soon to a test market near you? (If you’re on a diet, you have to hope so!)

Martine – Le champagne – CC BY-NC 2.0.

Many companies use experiments to test all of their marketing communications. For example, the online discount retailer O.co (formerly called Overstock.com) carefully tests all of its marketing offers and tracks the results of each one. One study the company conducted combined twenty-six different variables related to offers e-mailed to several thousand customers. The study resulted in a decision to send a group of e-mails to different segments. The company then tracked the results of the sales generated to see if they were in line with the earlier experiment it had conducted that led it to make the offer.

Step 3: Design the Data-Collection Forms

If the behavior of buyers is being formally observed, and a number of different researchers are conducting observations, the data obviously need to be recorded on a standardized data-collection form that’s either paper or electronic. Otherwise, the data collected will not be comparable. The items on the form could include a shopper’s sex; his or her approximate age; whether the person seemed hurried, moderately hurried, or unhurried; and whether or not he or she read the label on products, used coupons, and so forth.

The same is true when it comes to surveying people with questionnaires. Surveying people is one of the most commonly used techniques to collect quantitative data. Surveys are popular because they can be easily administered to large numbers of people fairly quickly. However, to produce the best results, the questionnaire for the survey needs to be carefully designed.

Questionnaire Design

Most questionnaires follow a similar format: They begin with an introduction describing what the study is for, followed by instructions for completing the questionnaire and, if necessary, returning it to the market researcher. The first few questions that appear on the questionnaire are usually basic, warm-up type of questions the respondent can readily answer, such as the respondent’s age, level of education, place of residence, and so forth. The warm-up questions are then followed by a logical progression of more detailed, in-depth questions that get to the heart of the question being researched. Lastly, the questionnaire wraps up with a statement that thanks the respondent for participating in the survey and information and explains when and how they will be paid for participating. To see some examples of questionnaires and how they are laid out, click on the following link: http://cas.uah.edu/wrenb/mkt343/Project/Sample%20Questionnaires.htm .

How the questions themselves are worded is extremely important. It’s human nature for respondents to want to provide the “correct” answers to the person administering the survey, so as to seem agreeable. Therefore, there is always a hazard that people will try to tell you what you want to hear on a survey. Consequently, care needs to be taken that the survey questions are written in an unbiased, neutral way. In other words, they shouldn’t lead a person taking the questionnaire to answer a question one way or another by virtue of the way you have worded it. The following is an example of a leading question.

Don’t you agree that teachers should be paid more ?

The questions also need to be clear and unambiguous. Consider the following question:

Which brand of toothpaste do you use ?

The question sounds clear enough, but is it really? What if the respondent recently switched brands? What if she uses Crest at home, but while away from home or traveling, she uses Colgate’s Wisp portable toothpaste-and-brush product? How will the respondent answer the question? Rewording the question as follows so it’s more specific will help make the question clearer:

Which brand of toothpaste have you used at home in the past six months? If you have used more than one brand, please list each of them 1 .

Sensitive questions have to be asked carefully. For example, asking a respondent, “Do you consider yourself a light, moderate, or heavy drinker?” can be tricky. Few people want to admit to being heavy drinkers. You can “soften” the question by including a range of answers, as the following example shows:

How many alcoholic beverages do you consume in a week ?

• __0–5 alcoholic beverages
• __5–10 alcoholic beverages
• __10–15 alcoholic beverages

Many people don’t like to answer questions about their income levels. Asking them to specify income ranges rather than divulge their actual incomes can help.

Other research question “don’ts” include using jargon and acronyms that could confuse people. “How often do you IM?” is an example. Also, don’t muddy the waters by asking two questions in the same question, something researchers refer to as a double-barreled question . “Do you think parents should spend more time with their children and/or their teachers?” is an example of a double-barreled question.

Open-ended questions , or questions that ask respondents to elaborate, can be included. However, they are harder to tabulate than closed-ended questions , or questions that limit a respondent’s answers. Multiple-choice and yes-and-no questions are examples of closed-ended questions.

Testing the Questionnaire

You have probably heard the phrase “garbage in, garbage out.” If the questions are bad, the information gathered will be bad, too. One way to make sure you don’t end up with garbage is to test the questionnaire before sending it out to find out if there are any problems with it. Is there enough space for people to elaborate on open-ended questions? Is the font readable? To test the questionnaire, marketing research professionals first administer it to a number of respondents face to face. This gives the respondents the chance to ask the researcher about questions or instructions that are unclear or don’t make sense to them. The researcher then administers the questionnaire to a small subset of respondents in the actual way the survey is going to be disseminated, whether it’s delivered via phone, in person, by mail, or online.

Getting people to participate and complete questionnaires can be difficult. If the questionnaire is too long or hard to read, many people won’t complete it. So, by all means, eliminate any questions that aren’t necessary. Of course, including some sort of monetary incentive for completing the survey can increase the number of completed questionnaires a market researcher will receive.

Step 4: Specify the Sample

Once you have created your questionnaire or other marketing study, how do you figure out who should participate in it? Obviously, you can’t survey or observe all potential buyers in the marketplace. Instead, you must choose a sample. A sample is a subset of potential buyers that are representative of your entire target market, or population being studied. Sometimes market researchers refer to the population as the universe to reflect the fact that it includes the entire target market, whether it consists of a million people, a hundred thousand, a few hundred, or a dozen. “All unmarried people over the age of eighteen who purchased Dirt Devil steam cleaners in the United States during 2011” is an example of a population that has been defined.

Obviously, the population has to be defined correctly. Otherwise, you will be studying the wrong group of people. Not defining the population correctly can result in flawed research, or sampling error. A sampling error is any type of marketing research mistake that results because a sample was utilized. One criticism of Internet surveys is that the people who take these surveys don’t really represent the overall population. On average, Internet survey takers tend to be more educated and tech savvy. Consequently, if they solely constitute your population, even if you screen them for certain criteria, the data you collect could end up being skewed.

The next step is to put together the sampling frame , which is the list from which the sample is drawn. The sampling frame can be put together using a directory, customer list, or membership roster (Wrenn et. al., 2007). Keep in mind that the sampling frame won’t perfectly match the population. Some people will be included on the list who shouldn’t be. Other people who should be included will be inadvertently omitted. It’s no different than if you were to conduct a survey of, say, 25 percent of your friends, using friends’ names you have in your cell phone. Most of your friends’ names are likely to be programmed into your phone, but not all of them. As a result, a certain degree of sampling error always occurs.

There are two main categories of samples in terms of how they are drawn: probability samples and nonprobability samples. A probability sample is one in which each would-be participant has a known and equal chance of being selected. The chance is known because the total number of people in the sampling frame is known. For example, if every other person from the sampling frame were chosen, each person would have a 50 percent chance of being selected.

A nonprobability sample is any type of sample that’s not drawn in a systematic way. So the chances of each would-be participant being selected can’t be known. A convenience sample is one type of nonprobability sample. It is a sample a researcher draws because it’s readily available and convenient to do so. Surveying people on the street as they pass by is an example of a convenience sample. The question is, are these people representative of the target market?

For example, suppose a grocery store needed to quickly conduct some research on shoppers to get ready for an upcoming promotion. Now suppose that the researcher assigned to the project showed up between the hours of 10 a.m. and 12 p.m. on a weekday and surveyed as many shoppers as possible. The problem is that the shoppers wouldn’t be representative of the store’s entire target market. What about commuters who stop at the store before and after work? Their views wouldn’t be represented. Neither would people who work the night shift or shop at odd hours. As a result, there would be a lot of room for sampling error in this study. For this reason, studies that use nonprobability samples aren’t considered as accurate as studies that use probability samples. Nonprobability samples are more often used in exploratory research.

Lastly, the size of the sample has an effect on the amount of sampling error. Larger samples generally produce more accurate results. The larger your sample is, the more data you will have, which will give you a more complete picture of what you’re studying. However, the more people surveyed or studied, the more costly the research becomes.

Statistics can be used to determine a sample’s optimal size. If you take a marketing research or statistics class, you will learn more about how to determine the optimal size.

Of course, if you hire a marketing research company, much of this work will be taken care of for you. Many marketing research companies, like ResearchNow, maintain panels of prescreened people they draw upon for samples. In addition, the marketing research firm will be responsible for collecting the data or contracting with a company that specializes in data collection. Data collection is discussed next.

Step 5: Collect the Data

As we have explained, primary marketing research data can be gathered in a number of ways. Surveys, taking physical measurements, and observing people are just three of the ways we discussed. If you’re observing customers as part of gathering the data, keep in mind that if shoppers are aware of the fact, it can have an effect on their behavior. For example, if a customer shopping for feminine hygiene products in a supermarket aisle realizes she is being watched, she could become embarrassed and leave the aisle, which would adversely affect your data. To get around problems such as these, some companies set up cameras or two-way mirrors to observe customers. Organizations also hire mystery shoppers to work around the problem. A mystery shopper is someone who is paid to shop at a firm’s establishment or one of its competitors to observe the level of service, cleanliness of the facility, and so forth, and report his or her findings to the firm.

Make Extra Money as a Mystery Shopper

Watch the YouTube video to get an idea of how mystery shopping works.

Survey data can be collected in many different ways and combinations of ways. The following are the basic methods used:

• Face-to-face (can be computer aided)
• Telephone (can be computer aided or completely automated)
• Mail and hand delivery
• E-mail and the Web

A face-to-face survey is, of course, administered by a person. The surveys are conducted in public places such as in shopping malls, on the street, or in people’s homes if they have agreed to it. In years past, it was common for researchers in the United States to knock on people’s doors to gather survey data. However, randomly collected door-to-door interviews are less common today, partly because people are afraid of crime and are reluctant to give information to strangers (McDaniel & Gates, 1998).

Nonetheless, “beating the streets” is still a legitimate way questionnaire data is collected. When the U.S. Census Bureau collects data on the nation’s population, it hand delivers questionnaires to rural households that do not have street-name and house-number addresses. And Census Bureau workers personally survey the homeless to collect information about their numbers. Face-to-face surveys are also commonly used in third world countries to collect information from people who cannot read or lack phones and computers.

A plus of face-to-face surveys is that they allow researchers to ask lengthier, more complex questions because the people being surveyed can see and read the questionnaires. The same is true when a computer is utilized. For example, the researcher might ask the respondent to look at a list of ten retail stores and rank the stores from best to worst. The same question wouldn’t work so well over the telephone because the person couldn’t see the list. The question would have to be rewritten. Another drawback with telephone surveys is that even though federal and state “do not call” laws generally don’t prohibit companies from gathering survey information over the phone, people often screen such calls using answering machines and caller ID.

Probably the biggest drawback of both surveys conducted face-to-face and administered over the phone by a person is that they are labor intensive and therefore costly. Mailing out questionnaires is costly, too, and the response rates can be rather low. Think about why that might be so: if you receive a questionnaire in the mail, it is easy to throw it in the trash; it’s harder to tell a market researcher who approaches you on the street that you don’t want to be interviewed.

By contrast, gathering survey data collected by a computer, either over the telephone or on the Internet, can be very cost-effective and in some cases free. SurveyMonkey and Zoomerang are two Web sites that will allow you to create online questionnaires, e-mail them to up to one hundred people for free, and view the responses in real time as they come in. For larger surveys, you have to pay a subscription price of a few hundred dollars. But that still can be extremely cost-effective. The two Web sites also have a host of other features such as online-survey templates you can use to create your questionnaire, a way to set up automatic reminders sent to people who haven’t yet completed their surveys, and tools you can use to create graphics to put in your final research report. To see how easy it is to put together a survey in SurveyMonkey, click on the following link: http://help.surveymonkey.com/app/tutorials/detail/a_id/423 .

Like a face-to-face survey, an Internet survey can enable you to show buyers different visuals such as ads, pictures, and videos of products and their packaging. Web surveys are also fast, which is a major plus. Whereas face-to-face and mailed surveys often take weeks to collect, you can conduct a Web survey in a matter of days or even hours. And, of course, because the information is electronically gathered it can be automatically tabulated. You can also potentially reach a broader geographic group than you could if you had to personally interview people. The Zoomerang Web site allows you to create surveys in forty different languages.

Another plus for Web and computer surveys (and electronic phone surveys) is that there is less room for human error because the surveys are administered electronically. For instance, there’s no risk that the interviewer will ask a question wrong or use a tone of voice that could mislead the respondents. Respondents are also likely to feel more comfortable inputting the information into a computer if a question is sensitive than they would divulging the information to another person face-to-face or over the phone. Given all of these advantages, it’s not surprising that the Internet is quickly becoming the top way to collect primary data. However, like mail surveys, surveys sent to people over the Internet are easy to ignore.

Lastly, before the data collection process begins, the surveyors and observers need to be trained to look for the same things, ask questions the same way, and so forth. If they are using rankings or rating scales, they need to be “on the same page,” so to speak, as to what constitutes a high ranking or a low ranking. As an analogy, you have probably had some teachers grade your college papers harder than others. The goal of training is to avoid a wide disparity between how different observers and interviewers record the data.

Figure 10.11

Training people so they know what constitutes different ratings when they are collecting data will improve the quality of the information gathered in a marketing research study.

Ricardo Rodriquez – Satisfaction survey – CC BY-NC-ND 2.0.

For example, if an observation form asks the observers to describe whether a shopper’s behavior is hurried, moderately hurried, or unhurried, they should be given an idea of what defines each rating. Does it depend on how much time the person spends in the store or in the individual aisles? How fast they walk? In other words, the criteria and ratings need to be spelled out.

Collecting International Marketing Research Data

Gathering marketing research data in foreign countries poses special challenges. However, that doesn’t stop firms from doing so. Marketing research companies are located all across the globe, in fact. Eight of the ten largest marketing research companies in the world are headquartered in the United States. However, five of these eight firms earn more of their revenues abroad than they do in the United States. There’s a reason for this: many U.S. markets were saturated, or tapped out, long ago in terms of the amount that they can grow. Coke is an example. As you learned earlier in the book, most of the Coca-Cola Company’s revenues are earned in markets abroad. To be sure, the United States is still a huge market when it comes to the revenues marketing research firms generate by conducting research in the country: in terms of their spending, American consumers fuel the world’s economic engine. Still, emerging countries with growing middle classes, such as China, India, and Brazil, are hot new markets companies want to tap.

What kind of challenges do firms face when trying to conduct marketing research abroad? As we explained, face-to-face surveys are commonly used in third world countries to collect information from people who cannot read or lack phones and computers. However, face-to-face surveys are also common in Europe, despite the fact that phones and computers are readily available. In-home surveys are also common in parts of Europe. By contrast, in some countries, including many Asian countries, it’s considered taboo or rude to try to gather information from strangers either face-to-face or over the phone. In many Muslim countries, women are forbidden to talk to strangers.

And how do you figure out whom to research in foreign countries? That in itself is a problem. In the United States, researchers often ask if they can talk to the heads of households to conduct marketing research. But in countries in which domestic servants or employees are common, the heads of households aren’t necessarily the principal shoppers; their domestic employees are (Malhotra).

Translating surveys is also an issue. Have you ever watched the TV comedians Jay Leno and David Letterman make fun of the English translations found on ethnic menus and products? Research tools such as surveys can suffer from the same problem. Hiring someone who is bilingual to translate a survey into another language can be a disaster if the person isn’t a native speaker of the language to which the survey is being translated.

One way companies try to deal with translation problems is by using back translation. When back translation is used, a native speaker translates the survey into the foreign language and then translates it back again to the original language to determine if there were gaps in meaning—that is, if anything was lost in translation. And it’s not just the language that’s an issue. If the research involves any visual images, they, too, could be a point of confusion. Certain colors, shapes, and symbols can have negative connotations in other countries. For example, the color white represents purity in many Western cultures, but in China, it is the color of death and mourning (Zouhali-Worrall, 2008). Also, look back at the cartoon-completion exercise in Figure 10.8 “Example of a Cartoon-Completion Projective Technique” . What would women in Muslim countries who aren’t allowed to converse with male sellers think of it? Chances are, the cartoon wouldn’t provide you with the information you’re seeking if Muslim women in some countries were asked to complete it.

One way marketing research companies are dealing with the complexities of global research is by merging with or acquiring marketing research companies abroad. The Nielsen Company is the largest marketing research company in the world. The firm operates in more than a hundred countries and employs more than forty thousand people. Many of its expansions have been the result of acquisitions and mergers.

Step 6: Analyze the Data

Step 6 involves analyzing the data to ensure it’s as accurate as possible. If the research is collected by hand using a pen and pencil, it’s entered into a computer. Or respondents might have already entered the information directly into a computer. For example, when Toyota goes to an event such as a car show, the automaker’s marketing personnel ask would-be buyers to complete questionnaires directly on computers. Companies are also beginning to experiment with software that can be used to collect data using mobile phones.

Once all the data is collected, the researchers begin the data cleaning , which is the process of removing data that have accidentally been duplicated (entered twice into the computer) or correcting data that have obviously been recorded wrong. A program such as Microsoft Excel or a statistical program such as Predictive Analytics Software (PASW, which was formerly known as SPSS) is then used to tabulate, or calculate, the basic results of the research, such as the total number of participants and how collectively they answered various questions. The programs can also be used to calculate averages, such as the average age of respondents, their average satisfaction, and so forth. The same can done for percentages, and other values you learned about, or will learn about, in a statistics course, such as the standard deviation, mean, and median for each question.

The information generated by the programs can be used to draw conclusions, such as what all customers might like or not like about an offering based on what the sample group liked or did not like. The information can also be used to spot differences among groups of people. For example, the research might show that people in one area of the country like the product better than people in another area. Trends to predict what might happen in the future can also be spotted.

If there are any open-ended questions respondents have elaborated upon—for example, “Explain why you like the current brand you use better than any other brand”—the answers to each are pasted together, one on top of another, so researchers can compare and summarize the information. As we have explained, qualitative information such as this can give you a fuller picture of the results of the research.

Part of analyzing the data is to see if it seems sound. Does the way in which the research was conducted seem sound? Was the sample size large enough? Are the conclusions that become apparent from it reasonable?

The two most commonly used criteria used to test the soundness of a study are (1) validity and (2) reliability. A study is valid if it actually tested what it was designed to test. For example, did the experiment you ran in Second Life test what it was designed to test? Did it reflect what could really happen in the real world? If not, the research isn’t valid. If you were to repeat the study, and get the same results (or nearly the same results), the research is said to be reliable . If you get a drastically different result if you repeat the study, it’s not reliable. The data collected, or at least some it, can also be compared to, or reconciled with, similar data from other sources either gathered by your firm or by another organization to see if the information seems on target.

Stage 7: Write the Research Report and Present Its Findings

If you end up becoming a marketing professional and conducting a research study after you graduate, hopefully you will do a great job putting the study together. You will have defined the problem correctly, chosen the right sample, collected the data accurately, analyzed it, and your findings will be sound. At that point, you will be required to write the research report and perhaps present it to an audience of decision makers. You will do so via a written report and, in some cases, a slide or PowerPoint presentation based on your written report.

The six basic elements of a research report are as follows.

• Title Page . The title page explains what the report is about, when it was conducted and by whom, and who requested it.
• Table of Contents . The table of contents outlines the major parts of the report, as well as any graphs and charts, and the page numbers on which they can be found.
• Executive Summary . The executive summary summarizes all the details in the report in a very quick way. Many people who receive the report—both executives and nonexecutives—won’t have time to read the entire report. Instead, they will rely on the executive summary to quickly get an idea of the study’s results and what to do about those results.

Methodology and Limitations . The methodology section of the report explains the technical details of how the research was designed and conducted. The section explains, for example, how the data was collected and by whom, the size of the sample, how it was chosen, and whom or what it consisted of (e.g., the number of women versus men or children versus adults). It also includes information about the statistical techniques used to analyze the data.

Every study has errors—sampling errors, interviewer errors, and so forth. The methodology section should explain these details, so decision makers can consider their overall impact. The margin of error is the overall tendency of the study to be off kilter—that is, how far it could have gone wrong in either direction. Remember how newscasters present the presidential polls before an election? They always say, “This candidate is ahead 48 to 44 percent, plus or minus 2 percent.” That “plus or minus” is the margin of error. The larger the margin of error is, the less likely the results of the study are accurate. The margin of error needs to be included in the methodology section.

• Findings . The findings section is a longer, fleshed-out version of the executive summary that goes into more detail about the statistics uncovered by the research that bolster the study’s findings. If you have related research or secondary data on hand that back up the findings, it can be included to help show the study did what it was designed to do.
• Recommendations . The recommendations section should outline the course of action you think should be taken based on the findings of the research and the purpose of the project. For example, if you conducted a global market research study to identify new locations for stores, make a recommendation for the locations (Mersdorf, 2009).

As we have said, these are the basic sections of a marketing research report. However, additional sections can be added as needed. For example, you might need to add a section on the competition and each firm’s market share. If you’re trying to decide on different supply chain options, you will need to include a section on that topic.

As you write the research report, keep your audience in mind. Don’t use technical jargon decision makers and other people reading the report won’t understand. If technical terms must be used, explain them. Also, proofread the document to ferret out any grammatical errors and typos, and ask a couple of other people to proofread behind you to catch any mistakes you might have missed. If your research report is riddled with errors, its credibility will be undermined, even if the findings and recommendations you make are extremely accurate.

Many research reports are presented via PowerPoint. If you’re asked to create a slideshow presentation from the report, don’t try to include every detail in the report on the slides. The information will be too long and tedious for people attending the presentation to read through. And if they do go to the trouble of reading all the information, they probably won’t be listening to the speaker who is making the presentation.

Instead of including all the information from the study in the slides, boil each section of the report down to key points and add some “talking points” only the presenter will see. After or during the presentation, you can give the attendees the longer, paper version of the report so they can read the details at a convenient time, if they choose to.

Key Takeaway

Step 1 in the marketing research process is to define the problem. Businesses take a look at what they believe are symptoms and try to drill down to the potential causes so as to precisely define the problem. The next task for the researcher is to put into writing the research objective, or goal, the research is supposed to accomplish. Step 2 in the process is to design the research. The research design is the “plan of attack.” It outlines what data you are going to gather, from whom, how, and when, and how you’re going to analyze it once it has been obtained. Step 3 is to design the data-collection forms, which need to be standardized so the information gathered on each is comparable. Surveys are a popular way to gather data because they can be easily administered to large numbers of people fairly quickly. However, to produce the best results, survey questionnaires need to be carefully designed and pretested before they are used. Step 4 is drawing the sample, or a subset of potential buyers who are representative of your entire target market. If the sample is not correctly selected, the research will be flawed. Step 5 is to actually collect the data, whether it’s collected by a person face-to-face, over the phone, or with the help of computers or the Internet. The data-collection process is often different in foreign countries. Step 6 is to analyze the data collected for any obvious errors, tabulate the data, and then draw conclusions from it based on the results. The last step in the process, Step 7, is writing the research report and presenting the findings to decision makers.

Review Questions

• Explain why it’s important to carefully define the problem or opportunity a marketing research study is designed to investigate.
• Describe the different types of problems that can occur when marketing research professionals develop questions for surveys.
• How does a probability sample differ from a nonprobability sample?
• What makes a marketing research study valid? What makes a marketing research study reliable?
• What sections should be included in a marketing research report? What is each section designed to do?

1 “Questionnaire Design,” QuickMBA , http://www.quickmba.com/marketing/research/qdesign (accessed December 14, 2009).

Barnes, B., “Disney Expert Uses Science to Draw Boy Viewers,” New York Times , April 15, 2009, http://www.nytimes.com/2009/04/14/arts/television/14boys.html?pagewanted=1&_r=1 (accessed December 14, 2009).

Burns A. and Ronald Bush, Marketing Research , 6th ed. (Upper Saddle River, NJ: Prentice Hall, 2010), 85.

Malhotra, N., Marketing Research: An Applied Approach , 6th ed. (Upper Saddle River, NJ: Prentice Hall), 764.

McDaniel, C. D. and Roger H. Gates, Marketing Research Essentials , 2nd ed. (Cincinnati: South-Western College Publishing, 1998), 61.

McWilliams, J., “A-B Puts Super-Low-Calorie Beer in Ring with Miller,” St. Louis Post-Dispatch , August 16, 2009, http://www.stltoday.com/business/next-matchup-light-weights-a-b-puts-super-low-calorie/article_47511bfe-18ca-5979-bdb9-0526c97d4edf.html (accessed April 13, 2012).

Mersdorf, S., “How to Organize Your Next Survey Report,” Cvent , August 24, 2009, http://survey.cvent.com/blog/cvent-survey/0/0/how-to-organize-your-next-survey-report (accessed December 14, 2009).

Rappeport A. and David Gelles, “Facebook to Form Alliance with Nielsen,” Financial Times , September 23, 2009, 16.

Spangler, T., “Disney Lab Tracks Feelings,” Multichannel News 30, no. 30 (August 3, 2009): 26.

Wagner, J., “Marketing in Second Life Doesn’t Work…Here Is Why!” GigaOM , April 4, 2007, http://gigaom.com/2007/04/04/3-reasons-why-marketing-in-second-life-doesnt-work (accessed December 14, 2009).

Wrenn, B., Robert E. Stevens, and David L. Loudon, Marketing Research: Text and Cases , 2nd ed. (Binghamton, NY: Haworth Press, 2007), 180.

Zouhali-Worrall, M., “Found in Translation: Avoiding Multilingual Gaffes,” CNNMoney.com , July 14, 2008, http://money.cnn.com/2008/07/07/smallbusiness/language_translation.fsb/index.htm (accessed December 14, 2009).

Principles of Marketing Copyright © 2015 by University of Minnesota is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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Market Research

9 Key stages in your marketing research process

You can conduct your own marketing research. Follow these steps, add your own flair, knowledge and creativity, and you’ll have bespoke research to be proud of.

Marketing research is the term used to cover the concept, development, placement and evolution of your product or service, its growing customer base and its branding – starting with brand awareness , and progressing to (everyone hopes) brand equity . Like any research, it needs a robust process to be credible and useful.

Marketing research uses four essential key factors known as the ‘marketing mix’ , or the Four Ps of Marketing :

• Product (goods or service)
• Price ( how much the customer pays )
• Place (where the product is marketed)
• Promotion (such as advertising and PR)

These four factors need to work in harmony for a product or service to be successful in its marketplace.

The marketing research process – an overview

A typical marketing research process is as follows:

• Identify an issue, discuss alternatives and set out research objectives
• Develop a research program
• Choose a sample
• Gather information
• Gather data
• Organize and analyze information and data
• Present findings
• Make research-based decisions
• Take action based on insights

Step 1: Defining the marketing research problem

Defining a problem is the first step in the research process. In many ways, research starts with a problem facing management. This problem needs to be understood, the cause diagnosed, and solutions developed.

However, most management problems are not always easy to research, so they must first be translated into research problems. Once you approach the problem from a research angle, you can find a solution. For example, “sales are not growing” is a management problem, but translated into a research problem, it becomes “ why are sales not growing?” We can look at the expectations and experiences of several groups : potential customers, first-time buyers, and repeat purchasers. We can question whether the lack of sales is due to:

• Poor expectations that lead to a general lack of desire to buy, or
• Poor performance experience and a lack of desire to repurchase.

This, then, is the difference between a management problem and a research problem. Solving management problems focuses on actions: Do we advertise more? Do we change our advertising message? Do we change an under-performing product configuration? And if so, how?

Defining research problems, on the other hand, focus on the whys and hows, providing the insights you need to solve your management problem.

Step 2: Developing a research program: method of inquiry

The scientific method is the standard for investigation. It provides an opportunity for you to use existing knowledge as a starting point, and proceed impartially.

The scientific method includes the following steps:

• Define a problem
• Develop a hypothesis
• Make predictions based on the hypothesis
• Devise a test of the hypothesis
• Conduct the test
• Analyze the results

This terminology is similar to the stages in the research process. However, there are subtle differences in the way the steps are performed:

• the scientific research method is objective and fact-based, using quantitative research and impartial analysis
• the marketing research process can be subjective, using opinion and qualitative research, as well as personal judgment as you collect and analyze data

Step 3: Developing a research program: research method

As well as selecting a method of inquiry (objective or subjective), you must select a research method . There are two primary methodologies that can be used to answer any research question:

• Experimental research : gives you the advantage of controlling extraneous variables and manipulating one or more variables that influence the process being implemented.
• Non-experimental research : allows observation but not intervention – all you do is observe and report on your findings.

Step 4: Developing a research program: research design

Research design is a plan or framework for conducting marketing research and collecting data. It is defined as the specific methods and procedures you use to get the information you need.

There are three core types of marketing research designs: exploratory, descriptive, and causal . A thorough marketing research process incorporates elements of all of them.

Exploratory marketing research

This is a starting point for research. It’s used to reveal facts and opinions about a particular topic, and gain insight into the main points of an issue. Exploratory research is too much of a blunt instrument to base conclusive business decisions on, but it gives the foundation for more targeted study. You can use secondary research materials such as trade publications, books, journals and magazines and primary research using qualitative metrics, that can include open text surveys, interviews and focus groups.

Descriptive marketing research

This helps define the business problem or issue so that companies can make decisions, take action and monitor progress. Descriptive research is naturally quantitative – it needs to be measured and analyzed statistically , using more targeted surveys and questionnaires. You can use it to capture demographic information , evaluate a product or service for market, and monitor a target audience’s opinion and behaviors. Insights from descriptive research can inform conclusions about the market landscape and the product’s place in it.

Causal marketing research

This is useful to explore the cause and effect relationship between two or more variables. Like descriptive research , it uses quantitative methods, but it doesn’t merely report findings; it uses experiments to predict and test theories about a product or market. For example, researchers may change product packaging design or material, and measure what happens to sales as a result.

Step 5: Choose your sample

Your marketing research project will rarely examine an entire population. It’s more practical to use a sample - a smaller but accurate representation of the greater population. To design your sample, you’ll need to answer these questions:

• Which base population is the sample to be selected from? Once you’ve established who your relevant population is (your research design process will have revealed this), you have a base for your sample. This will allow you to make inferences about a larger population.
• What is the method (process) for sample selection? There are two methods of selecting a sample from a population:

1. Probability sampling : This relies on a random sampling of everyone within the larger population.

2. Non-probability sampling : This is based in part on the investigator’s judgment, and often uses convenience samples, or by other sampling methods that do not rely on probability.

• What is your sample size? This important step involves cost and accuracy decisions. Larger samples generally reduce sampling error and increase accuracy, but also increase costs. Find out your perfect sample size with our calculator .

Step 6: Gather data

Your research design will develop as you select techniques to use. There are many channels for collecting data, and it’s helpful to differentiate it into O-data (Operational) and X-data (Experience):

• O-data is your business’s hard numbers like costs, accounting, and sales. It tells you what has happened, but not why.
• X-data gives you insights into the thoughts and emotions of the people involved: employees, customers, brand advocates.

When you combine O-data with X-data, you’ll be able to build a more complete picture about success and failure - you’ll know why. Maybe you’ve seen a drop in sales (O-data) for a particular product. Maybe customer service was lacking, the product was out of stock, or advertisements weren’t impactful or different enough: X-data will reveal the reason why those sales dropped. So, while differentiating these two data sets is important, when they are combined, and work with each other, the insights become powerful.

With mobile technology, it has become easier than ever to collect data. Survey research has come a long way since market researchers conducted face-to-face, postal, or telephone surveys. You can run research through:

• Social media ( polls and listening )

Another way to collect data is by observation. Observing a customer’s or company’s past or present behavior can predict future purchasing decisions. Data collection techniques for predicting past behavior can include market segmentation , customer journey mapping and brand tracking .

Regardless of how you collect data, the process introduces another essential element to your research project: the importance of clear and constant communication .

And of course, to analyze information from survey or observation techniques, you must record your results . Gone are the days of spreadsheets. Feedback from surveys and listening channels can automatically feed into AI-powered analytics engines and produce results, in real-time, on dashboards.

Step 7: Analysis and interpretation

The words ‘ statistical analysis methods ’ aren’t usually guaranteed to set a room alight with excitement, but when you understand what they can do, the problems they can solve and the insights they can uncover, they seem a whole lot more compelling.

Statistical tests and data processing tools can reveal:

• Whether data trends you see are meaningful or are just chance results
• Your results in the context of other information you have
• Whether one thing affecting your business is more significant than others
• What your next research area should be
• Insights that lead to meaningful changes

There are several types of statistical analysis tools used for surveys. You should make sure that the ones you choose:

• Work on any platform - mobile, desktop, tablet etc.
• Integrate with your existing systems
• Are easy to use with user-friendly interfaces, straightforward menus, and automated data analysis
• Incorporate statistical analysis so you don’t just process and present your data, but refine it, and generate insights and predictions.

Here are some of the most common tools:

• Benchmarking : a way of taking outside factors into account so that you can adjust the parameters of your research. It ‘levels the playing field’ – so that your data and results are more meaningful in context. And gives you a more precise understanding of what’s happening.
• Regression analysis : this is used for working out the relationship between two (or more) variables. It is useful for identifying the precise impact of a change in an independent variable.
• T-test is used for comparing two data groups which have different mean values. For example, do women and men have different mean heights?
• Analysis of variance (ANOVA) Similar to the T-test, ANOVA is a way of testing the differences between three or more independent groups to see if they’re statistically significant.
• Cluster analysis : This organizes items into groups, or clusters, based on how closely associated they are.
• Factor analysis: This is a way of condensing many variables into just a few, so that your research data is less unwieldy to work with.
• Conjoint analysis : this will help you understand and predict why people make the choices they do. It asks people to make trade-offs when making decisions, just as they do in the real world, then analyzes the results to give the most popular outcome.
• Crosstab analysis : this is a quantitative market research tool used to analyze ‘categorical data’ - variables that are different and mutually exclusive, such as: ‘men’ and ‘women’, or ‘under 30’ and ‘over 30’.
• Text analysis and sentiment analysis : Analyzing human language and emotions is a rapidly-developing form of data processing, assigning positive, negative or neutral sentiment to customer messages and feedback.

Stats IQ can perform the most complicated statistical tests at the touch of a button using our online survey software , or data from other sources. Learn more about Stats iQ now .

Step 8: The marketing research results

Your marketing research process culminates in the research results. These should provide all the information the stakeholders and decision-makers need to understand the project.

The results will include:

• all your information
• a description of your research process
• the results
• conclusions
• recommended courses of action

They should also be presented in a form, language and graphics that are easy to understand, with a balance between completeness and conciseness, neither leaving important information out or allowing it to get so technical that it overwhelms the readers.

Traditionally, you would prepare two written reports:

• a technical report , discussing the methods, underlying assumptions and the detailed findings of the research project
• a summary report , that summarizes the research process and presents the findings and conclusions simply.

There are now more engaging ways to present your findings than the traditional PowerPoint presentations, graphs, and face-to-face reports:

• Live, interactive dashboards for sharing the most important information, as well as tracking a project in real time.
• Results-reports visualizations – tables or graphs with data visuals on a shareable slide deck
• Online presentation technology, such as Prezi
• Visual storytelling with infographics
• A single-page executive summary with key insights
• A single-page stat sheet with the top-line stats

You can also make these results shareable so that decision-makers have all the information at their fingertips.

Step 9 Turn your insights into action

Insights are one thing, but they’re worth very little unless they inform immediate, positive action. Here are a few examples of how you can do this:

• Stop customers leaving – negative sentiment among VIP customers gets picked up; the customer service team contacts the customers, resolves their issues, and avoids churn .
• Act on important employee concerns – you can set certain topics, such as safety, or diversity and inclusion to trigger an automated notification or Slack message to HR. They can rapidly act to rectify the issue.
• Address product issues – maybe deliveries are late, maybe too many products are faulty. When product feedback gets picked up through Smart Conversations, messages can be triggered to the delivery or product teams to jump on the problems immediately.
• Improve your marketing effectiveness - Understand how your marketing is being received by potential customers, so you can find ways to better meet their needs
• Grow your brand - Understand exactly what consumers are looking for, so you can make sure that you’re meeting their expectations

Download now: 8 Innovations to Modernize Market Research

Scott Smith

Scott Smith, Ph.D. is a contributor to the Qualtrics blog.

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Module 3: Market Research

The market research process.

Marketing research identifies opportunities, generates informed marketing actions, monitors marketing performance, and improves understanding of the marketing process.

There are three types of objectives that can be deployed in marketing research: exploratory research, descriptive research, and causal research.

1. Exploratory research

• Used to better define a problem or scout opportunities.
• In-depth interviews and discussions groups are commonly used.

2. Descriptive research

• Used to assess a situation in the marketplace (i.e., potential for a specific product or consumer attitudes).
• Methods include personal interviews and surveys.

3. Causal research

• Used for testing cause and effect relationships, typically through estimation.

The Marketing Research Process

The marketing research process involves six steps:

• Problem definition
• Development of an approach to the problem
• Research design formulation
• Data collection
• Data preparation and analysis
• Report preparation and presentation

Step 1: Problem Definition

The first step in any marketing research study is to define the problem, while taking into account the purpose of the study, the relevant background information, what information is needed, and how it will be used in decision making. This stage involves discussion with the decision makers, interviews with industry experts, analysis of secondary data, and, perhaps, some qualitative research, such as focus groups. There are three types of objectives that can be deployed in marketing research:

Step 2: Development of an Approach to the Problem

Step two includes formulating an objective or theoretical framework, analytical models, research questions, hypotheses, and identifying characteristics or factors that can influence the research design. This process is guided by discussions with management and industry experts , case studies and simulations, analysis of secondary data, qualitative research, and pragmatic considerations.

Step 3: Research Design Formulation

A research design is a framework or blueprint for conducting the marketing research project. It details the procedures necessary for obtaining the required information, and its purpose is to design a study that will test the hypotheses of interest, determine possible answers to the research questions, and provide the information needed for decision making. Decisions are also made regarding what data should be obtained from the respondents (e,g,, by conducting a survey or an experiment). A questionnaire and sampling plan also are designed in order to select the most appropriate respondents for the study. The following steps are involved in formulating a research design:

• Secondary data analysis (based on secondary research)
• Qualitative research
• Methods of collecting quantitative data (survey, observation, and experimentation)
• Definition of the information needed
• Measurement and scaling procedures
• Questionnaire design
• Sampling process and sample size
• Plan of data analysis

The research plan outlines sources of existing data and spells out the specific research approaches, contact methods, sampling plans, and instruments that researchers will use to gather data. This plan includes a written proposal that outlines the management problem, research objectives, information required, how the results will help management decisions, and the budget allocated for the research.

Step 4: Data Collection

Data collection is a crucial step in the research process because it enables the generation of insights that will influence the marketing strategy.

Field work, or data collection, involves a field force or staff that operates either in the field, as in the case of personal interviewing (focus group, in-home, mall intercept, or computer-assisted personal interviewing), from an office by telephone (telephone or computer-assisted telephone interviewing/CATI), or through mail (traditional mail and mail panel surveys with pre-recruited households). Proper selection, training, supervision, and evaluation of the field force helps minimize data-collection errors. I

An example of data collection is when a consumer goods company hires a market research company to conduct in-home ethnographies and in-store shop-alongs in an effort to collect primary research data.

Systematic planning is required at all stages of the marketing research process, especially in the data collection step. The procedures followed at each stage are methodologically sound, well documented, and, as much as possible, planned in advance. Marketing research uses the scientific method in that data are collected and analyzed to test prior notions or hypotheses.

Marketing research aims to provide accurate information that reflects a true state of affairs and thus, should be conducted impartially. While research is always influenced by the researcher’s philosophy, it should be free from the personal or political biases of the researcher or the management. This is especially important in the data collection phase. The data collected will be analysed and used to make marketing decisions. Hence, it is vital that the data collection process be free of as much bias as possible.

Primary Versus Secondary Research

There are many sources of information a marketer can use when collecting data. The Nielson Ratings is an audience measurement system that provides data on audience size and the composition of television markets in the United States. The Gallup Polls conduct public opinion polls with its results published daily in the form of data driven news. The U.S Census Bureau, directed by the U.S. Government is the principal agency that is responsible for producing data about American people and the economy. Population, housing and demographic characteristics are gathered to help plan and define transportation systems, police and fire precinct, election districts and schools.

Step 5: Data Preparation and Analysis

Data Analysis is an important step in the Marketing Research process where data is organized, reviewed, verified, and interpreted.

During this phase of the research process, data is carefully edited, coded, transcribed, and verified in order for it to be properly analyzed. Statistical market research tools are used. The validity of the results is also assessed to confirm how well the data measures what it is supposed to measure. Oftentimes, the research team will arrange a debriefing session with the client to review highlights from the data and brainstorm potential ideas on how the findings can be implemented . This typically happens when a client hires a market research company and they want to remain thoroughly involved in the research process.

Analysis of data is a process of inspecting, cleaning, transforming, and modeling data with the goal of highlighting useful information, suggesting conclusions, and supporting decision making. Data analysis has multiple facets and approaches, encompassing diverse techniques under a variety of names in different business, science, and social science domains. Data mining is a particular data analysis technique that focuses on modeling and knowledge discovery for predictive rather than purely descriptive purposes. Marketers use databases to extract applicable information that identifies customer patterns, characteristics and behaviors.

Business intelligence covers data analysis that relies heavily on aggregation and focusing on business information. In statistical applications, some people divide data analysis into descriptive statistics, exploratory data analysis (EDA), and confirmatory data analysis (CDA). EDA focuses on discovering new features in the data and CDA focuses on confirming or falsifying existing hypotheses. Predictive analytics focuses on application of statistical or structural models for predictive forecasting or classification. Text analytics applies statistical, linguistic, and structural techniques to extract and classify information from textual sources, a species of unstructured data. All are varieties of data analysis.

Step 6: Report Preparation & Presentation

During the Report Preparation & Presentation step, the entire project should be documented in a written report that addresses the specific research questions identified; describes the approach, the research design, data collection, and data analysis procedures adopted; and presents the results and the major findings. This permanent document is also helpful because it can be easily referenced by others who may not have been part of the research.

The findings should be presented in a comprehensible format so that they can be readily used in the decision making process. In addition, an oral presentation should be made to management using tables, figures, and graphs to enhance clarity and impact.

A successful presentation may include the following elements:

• Charts, graphs, and visual elements that help showcase important facts and make the presentation easily digestible and memorable
• Recommendations about how to apply the research
• Final conclusions (based on the insights gathered from data collected) that effectively meet the initial objectives of the research

A formal research report presentation typically includes the following:

• Table of Contents
• Executive Summary
• Research Objectives
• Research Methodology
• Highlights of  Data Collected
• Findings/Insights
• Recommendations/Implications and Action Plan
• Appendix (including Respondent Screening Instrument and Questionnaire)

business intelligence

Any information that pertains to the history, current status or future projections of a business organization

Values of qualitative or quantitative variables belonging to a set of items; typically the results of measurements and can be visualised using graphs or images

A technique for searching large-scale databases for patterns; used mainly to find previously unknown correlations between variables that may be commercially useful.

Information regarding cultural phenomena

executive summary

A short document or section of a document that summarizes a longer report or proposal  in such a way that readers can rapidly become acquainted with a large body of material without having to read it all.

A survey whereby respondents are intercepted in shopping in malls. The process involves stopping the shoppers, screening them for appropriateness, and either administering the survey on the spot or inviting them to a research facility located in the mall to complete the interview.

marketing research

The function that links the consumers, customers, and public to the marketer through information. This information is used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process.

Not influenced by irrational emotions or prejudices

qualitative research

A method of inquiry employed in many different academic disciplines, traditionally in the social sciences but also in market research and further contexts.

scientific method

A body of techniques for acquiring new knowledge or correcting and integrating previous knowledge. To be termed scientific, a method of inquiry must be based on empirical and measurable evidence subject to specific principles of reasoning.

secondary data

Information collected by someone other than the user of the data

secondary research

This process involves the summary, collation, and synthesis of existing research rather than primary research, where data is collected from subjects or experiments

Information from a predetermined set of questions that is given to a sample and is used to assess thoughts, opinions, and feeling

Carried out using a planned, ordered procedure

• Provided by : Lumen Learning. Located at : http://lumenlearning.com . License : CC BY: Attribution
• Marketing Research Process. Authored by : Boundless. Located at : https://www.boundless.com/marketing/textbooks/boundless-marketing-textbook/consumer-marketing-4/marketing-research-process-34/ . License : CC BY-SA: Attribution-ShareAlike
• Image: Scheduling. Authored by : DSP-user. Located at : http://en.wikipedia.org/wiki/Planning#mediaviewer/File:Planboard_planning.jpg . License : CC BY-SA: Attribution-ShareAlike
• CMI Marketing Research Mini Case Study. Authored by : Official CMI Channel. Located at : http://youtu.be/u4beu5bp2NU . License : All Rights Reserved . License Terms : Standard YouTube License

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How to do market research: The complete guide for your brand

Written by by Jacqueline Zote

Published on  April 13, 2023

Reading time  10 minutes

Blindly putting out content or products and hoping for the best is a thing of the past. Not only is it a waste of time and energy, but you’re wasting valuable marketing dollars in the process. Now you have a wealth of tools and data at your disposal, allowing you to develop data-driven marketing strategies . That’s where market research comes in, allowing you to uncover valuable insights to inform your business decisions.

Conducting market research not only helps you better understand how to sell to customers but also stand out from your competition. In this guide, we break down everything you need to know about market research and how doing your homework can help you grow your business.

Table of contents:

What is market research?

Why is market research important, types of market research, where to conduct market research.

• Steps for conducting market research
• Tools to use for market research

Market research is the process of gathering information surrounding your business opportunities. It identifies key information to better understand your audience. This includes insights related to customer personas and even trends shaping your industry.

Taking time out of your schedule to conduct research is crucial for your brand health. Here are some of the key benefits of market research:

Understand your customers’ motivations and pain points

Most marketers are out of touch with what their customers want. Moreover, these marketers are missing key information on what products their audience wants to buy.

Simply put, you can’t run a business if you don’t know what motivates your customers.

And spoiler alert: Your customers’ wants and needs change. Your customers’ behaviors today might be night and day from what they were a few years ago.

Market research holds the key to understanding your customers better. It helps you uncover their key pain points and motivations and understand how they shape their interests and behavior.

Figure out how to position your brand

Positioning is becoming increasingly important as more and more brands enter the marketplace. Market research enables you to spot opportunities to define yourself against your competitors.

Maybe you’re able to emphasize a lower price point. Perhaps your product has a feature that’s one of a kind. Finding those opportunities goes hand in hand with researching your market.

Maintain a strong pulse on your industry at large

Today’s marketing world evolves at a rate that’s difficult to keep up with.

Fresh products. Up-and-coming brands. New marketing tools. Consumers get bombarded with sales messages from all angles. This can be confusing and overwhelming.

By monitoring market trends, you can figure out the best tactics for reaching your target audience.

Not everyone conducts market research for the same reason. While some may want to understand their audience better, others may want to see how their competitors are doing. As such, there are different types of market research you can conduct depending on your goal.

Interview-based market research allows for one-on-one interactions. This helps the conversation to flow naturally, making it easier to add context. Whether this takes place in person or virtually, it enables you to gather more in-depth qualitative data.

Buyer persona research

Buyer persona research lets you take a closer look at the people who make up your target audience. You can discover the needs, challenges and pain points of each buyer persona to understand what they need from your business. This will then allow you to craft products or campaigns to resonate better with each persona.

Pricing research

In this type of research, brands compare similar products or services with a particular focus on pricing. They look at how much those products or services typically sell for so they can get more competitive with their pricing strategy.

Competitive analysis research

Competitor analysis gives you a realistic understanding of where you stand in the market and how your competitors are doing. You can use this analysis to find out what’s working in your industry and which competitors to watch out for. It even gives you an idea of how well those competitors are meeting consumer needs.

Depending on the competitor analysis tool you use, you can get as granular as you need with your research. For instance, Sprout Social lets you analyze your competitors’ social strategies. You can see what types of content they’re posting and even benchmark your growth against theirs.

Brand awareness research

Conducting brand awareness research allows you to assess your brand’s standing in the market. It tells you how well-known your brand is among your target audience and what they associate with it. This can help you gauge people’s sentiments toward your brand and whether you need to rebrand or reposition.

If you don’t know where to start with your research, you’re in the right place.

There’s no shortage of market research methods out there. In this section, we’ve highlighted research channels for small and big businesses alike.

Considering that Google sees a staggering 8.5 billion searches each day, there’s perhaps no better place to start.

A quick Google search is a potential goldmine for all sorts of questions to kick off your market research. Who’s ranking for keywords related to your industry? Which products and pieces of content are the hottest right now? Who’s running ads related to your business?

For example, Google Product Listing Ads can help highlight all of the above for B2C brands.

The same applies to B2B brands looking to keep tabs on who’s running industry-related ads and ranking for keyword terms too.

There’s no denying that email represents both an aggressive and effective marketing channel for marketers today. Case in point, 44% of online shoppers consider email as the most influential channel in their buying decisions.

Looking through industry and competitor emails is a brilliant way to learn more about your market. For example, what types of offers and deals are your competitors running? How often are they sending emails?

Email is also invaluable for gathering information directly from your customers. This survey message from Asana is a great example of how to pick your customers’ brains to figure out how you can improve your quality of service.

Industry journals, reports and blogs

Don’t neglect the importance of big-picture market research when it comes to tactics and marketing channels to explore. Look to marketing resources such as reports and blogs as well as industry journals

Keeping your ear to the ground on new trends and technologies is a smart move for any business. Sites such as Statista, Marketing Charts, AdWeek and Emarketer are treasure troves of up-to-date data and news for marketers.

And of course, there’s the  Sprout Insights blog . And invaluable resources like The Sprout Social Index™  can keep you updated on the latest social trends.

Social media

If you want to learn more about your target market, look no further than social media. Social offers a place to discover what your customers want to see in future products or which brands are killin’ it. In fact, social media is become more important for businesses than ever with the level of data available.

It represents a massive repository of real-time data and insights that are instantly accessible. Brand monitoring and social listening are effective ways to conduct social media research . You can even be more direct with your approach. Ask questions directly or even poll your audience to understand their needs and preferences.

The 5 steps for how to do market research

Now that we’ve covered the why and where, it’s time to get into the practical aspects of market research. Here are five essential steps on how to do market research effectively.

Step 1: Identify your research topic

First off, what are you researching about? What do you want to find out? Narrow down on a specific research topic so you can start with a clear idea of what to look for.

For example, you may want to learn more about how well your product features are satisfying the needs of existing users. This might potentially lead to feature updates and improvements. Or it might even result in new feature introductions.

Similarly, your research topic may be related to your product or service launch or customer experience. Or you may want to conduct research for an upcoming marketing campaign.

Step 2: Choose a buyer persona to engage

If you’re planning to focus your research on a specific type of audience, decide which buyer persona you want to engage. This persona group will serve as a representative sample of your target audience.

Engaging a specific group of audience lets you streamline your research efforts. As such, it can be a much more effective and organized approach than researching thousands (if not millions) of individuals.

You may be directing your research toward existing users of your product. To get even more granular, you may want to focus on users who have been familiar with the product for at least a year, for example.

Step 3: Start collecting data

The next step is one of the most critical as it involves collecting the data you need for your research. Before you begin, make sure you’ve chosen the right research methods that will uncover the type of data you need. This largely depends on your research topic and goals.

Remember that you don’t necessarily have to stick to one research method. You may use a combination of qualitative and quantitative approaches. So for example, you could use interviews to supplement the data from your surveys. Or you may stick to insights from your social listening efforts.

To keep things consistent, let’s look at this in the context of the example from earlier. Perhaps you can send out a survey to your existing users asking them a bunch of questions. This might include questions like which features they use the most and how often they use them. You can get them to choose an answer from one to five and collect quantitative data.

Plus, for qualitative insights, you could even include a few open-ended questions with the option to write their answers. For instance, you might ask them if there’s any improvement they wish to see in your product.

Step 4: Analyze results

Once you have all the data you need, it’s time to analyze it keeping your research topic in mind. This involves trying to interpret the data to look for a wider meaning, particularly in relation to your research goal.

So let’s say a large percentage of responses were four or five in the satisfaction rating. This means your existing users are mostly satisfied with your current product features. On the other hand, if the responses were mostly ones and twos, you may look for opportunities to improve. The responses to your open-ended questions can give you further context as to why people are disappointed.

Step 5: Make decisions for your business

Now it’s time to take your findings and turn them into actionable insights for your business. In this final step, you need to decide how you want to move forward with your new market insight.

What did you find in your research that would require action? How can you put those findings to good use?

The market research tools you should be using

To wrap things up, let’s talk about the various tools available to conduct speedy, in-depth market research. These tools are essential for conducting market research faster and more efficiently.

Social listening and analytics

Social analytics tools like Sprout can help you keep track of engagement across social media. This goes beyond your own engagement data but also includes that of your competitors. Considering how quickly social media moves, using a third-party analytics tool is ideal. It allows you to make sense of your social data at a glance and ensure that you’re never missing out on important trends.

Email marketing research tools

Keeping track of brand emails is a good idea for any brand looking to stand out in its audience’s inbox.

Tools such as MailCharts ,  Really Good Emails  and  Milled  can show you how different brands run their email campaigns.

Meanwhile, tools like  Owletter  allow you to monitor metrics such as frequency and send-timing. These metrics can help you understand email marketing strategies among competing brands.

Content marketing research

If you’re looking to conduct research on content marketing, tools such as  BuzzSumo  can be of great help. This tool shows you the top-performing industry content based on keywords. Here you can see relevant industry sites and influencers as well as which brands in your industry are scoring the most buzz. It shows you exactly which pieces of content are ranking well in terms of engagements and shares and on which social networks.

SEO and keyword tracking

Monitoring industry keywords is a great way to uncover competitors. It can also help you discover opportunities to advertise your products via organic search. Tools such as  Ahrefs  provide a comprehensive keyword report to help you see how your search efforts stack up against the competition.

Competitor comparison template

For the sake of organizing your market research, consider creating a competitive matrix. The idea is to highlight how you stack up side-by-side against others in your market. Use a  social media competitive analysis template  to track your competitors’ social presence. That way, you can easily compare tactics, messaging and performance. Once you understand your strengths and weaknesses next to your competitors, you’ll find opportunities as well.

Customer persona creator

Finally, customer personas represent a place where all of your market research comes together. You’d need to create a profile of your ideal customer that you can easily refer to. Tools like  Xtensio  can help in outlining your customer motivations and demographics as you zero in on your target market.

Build a solid market research strategy

Having a deeper understanding of the market gives you leverage in a sea of competitors. Use the steps and market research tools we shared above to build an effective market research strategy.

But keep in mind that the accuracy of your research findings depends on the quality of data collected. Turn to Sprout’s social media analytics tools to uncover heaps of high-quality data across social networks.

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Make informed decisions with the marketing research process

Reading time: about 7 min

Who is your target consumer? What does their buying journey look like? How should you price your new product or service?  

Today’s business markets are complex and rapidly evolving. So when answering questions like these, you can’t afford to guess. You need data. 

That’s where the marketing research process comes in. 

The marketing research process encompasses a number of activities focused on gathering product and consumer data to understand your target customers, validate new product ideas, iterate on existing products, and improve marketing and business decisions.  

If you want to understand your customer and set your products and marketing strategies up for success, you need marketing research. But where should you begin? And how can you ensure your efforts lead to actionable insights?

Below we’ll walk you through the 5 main marketing research steps. 

What is the marketing research process?

The marketing research process is a series of steps used to plan and conduct research on your target market. This process starts before the research ever begins, and it covers everything needed to make research effective, from planning to conducting to analyzing—all the way to finally presenting the results.

As much as we might want to believe our instincts are always right, that’s simply not the case. Research may back up your gut feeling, but it often reveals new, unexpected facts as well. The marketing research process helps you get all the information you need to make and justify a choice–and even gain a competitive edge.

Types of marketing research

There are multiple ways to conduct marketing research, depending on the question you’re trying to answer or the problem you’re trying to solve. Some marketing research process examples include: 

• Customer interviews
• Focus groups
• Competitive analysis
• Surveys or questionnaires
• Observation

Which method you should choose will depend on your objectives.

Benefits of doing market research

In 2018, less than 40% of marketers used consumer research to drive decisions. By 2021, 60% of marketers said they use customer data the majority of the time when making decisions. 

Why the jump? Marketers have realized the significant value of the marketing research process and are using it to improve their decision making across the business. 

Market research is powerful because it can help solve real problems. The marketing research process helps leaders answer questions and gain insight into their business, such as:  

• Why do customers buy certain products or behave a certain way
• What problems do customers have and what pain points the business can address
• What’s trending in the industry and what the competitive landscape looks like
• The level of demand for a type of product or service
• Customer perceptions or opinions on pricing
• Untapped opportunities for product development or marketing  

Bottom line? The marketing research process helps your bottom line. 

When you understand customer behavior and needs, the market landscape, and your own product performance, you can make better, strategic decisions that drive the business forward.

5 marketing research process steps

There are five basic steps to the marketing research process. The specific execution of these steps will vary based on your company’s specific needs and capabilities, but the outline below provides a good starting point.

1. Define the problem

In this initial step, determine why you need to conduct research in the first place. Once you’ve defined why you need research, decide what kind of information you need and how your team will use that information. This will make it easy to design an appropriate research plan in the next step.

For example, let’s say the business is seeing a drop in sales on one product. Your research question could be “Why are sales for product A dropping?” There could be a few reasons, such as loss of customer interest based on product performance or industry competition. Your marketing research can then be designed around investigating those possibilities.

Pro tip: Consult with decision-makers in your company. You’ll want to be sure that your marketing research adequately addresses their concerns and gives them the information they need to make a decision. Work with them to determine any specific metrics they’ll use to make their decision so you can tailor your research process to include their needs.

2. Develop a research plan

Next, begin outlining your research approach. Develop a hypothesis, and then determine how you will conduct research. There are many ways to gather data, including surveys and focus groups, so it’s important to choose a method that will give you the information you need from the people you care about.

• Your target audience
• The research tools you will use
• Who will be involved in the research process (e.g., customers, internal staff, or both?)
• How you will select research participants
• Your research timeline
• Project resources

If you’re conducting a survey, interviews, or focus group, consider how you will incentivize participants, what kinds of questions you will ask, and how to collect the responses.

3. Collect data

With a research plan in place, you can begin conducting your research. As you do so, ensure that everyone involved in collecting data has received training to do so effectively. You’ll want to supervise and evaluate their efforts throughout the research process to ensure you get quality data.

Make sure to collect and record data in a secure place, preferably using a standardized format, to ensure you have accurate, usable data.

4. Analyze data

As your research concludes, begin data analysis . This step includes editing, coding, or transcribing data as needed to make it readable and manipulatable. Data analysis can take many forms, but it often includes making graphs and tables to spot trends. Remember, your analysis should reveal whether your hypothesis established in step two was correct.

5. Prepare a report

The marketing research process concludes with a presentation of your research. Generally, this takes the form of a written report that includes the initial problem, an outline of the research, and recommendations for how to proceed. This step can also take the form of oral reports or presentations—anything that communicates your research clearly.

However you present this information, make your report clear and understandable for any individuals who weren’t directly involved in the research process. Give them all the information necessary for decision-making. At this point, your company can take action based on your findings, thus concluding the marketing research process.

Lucidchart and the marketing research process

One size does not fit all when it comes to the marketing research process. While the basic steps are applicable to most organizations, they will often be executed very differently. Your organization needs to personalize your process, and Lucidchart makes it easy to do so.

For example, the formality of the marketing research process varies from company to company. Smaller businesses might conduct casual research with a Google survey. A large company, however, might require carefully selected focus groups and formal questionnaires. With Lucidchart, you can customize your marketing research process to fit your organization’s needs.

Marketing research can play a key role in making the right decisions for your company. Developing your own marketing research process will help you achieve even better results from your data collection and analysis, in turn helping you make more informed choices.

Define your marketing research process today with Lucidchart.

About Lucidchart

Lucidchart, a cloud-based intelligent diagramming application, is a core component of Lucid Software's Visual Collaboration Suite. This intuitive, cloud-based solution empowers teams to collaborate in real-time to build flowcharts, mockups, UML diagrams, customer journey maps, and more. Lucidchart propels teams forward to build the future faster. Lucid is proud to serve top businesses around the world, including customers such as Google, GE, and NBC Universal, and 99% of the Fortune 500. Lucid partners with industry leaders, including Google, Atlassian, and Microsoft. Since its founding, Lucid has received numerous awards for its products, business, and workplace culture. For more information, visit lucidchart.com.

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Marketing Research Process

Table of Contents

What is the Marketing Research Process?

Every business collects data from their target markets to be able to create strategies and business plans that will succeed. This process is collectively known as marketing research. It involves the planning, collection, and analysis of market data based on certain goals that the company wants to achieve. It is the basic plan a brand creates before diving into the market and without it no brand can succeed.

Marketing research is a dynamic process. Since the market is highly competitive and volatile, businesses are expected to constantly update their marketing research and come up with suitable strategies. There are multiple aspects to cover while planning your marketing research process.

In this article we break down the most important steps towards conducing a successful marketing research. Read through them carefully to learn acute nuances that should guide a marketing research process.

Step 1: Define the Questions you Need to Solve

If your marketing research process is not goal oriented it is the least likely to be successful. It can be a singular long term goal that your process tries to achieve or multiple short term goals, or a mix of both. What you need to do is identify the key issues within your business and analyze how marketing can be a solution to these issues. This will serve as the roadmap to creating your marketing research plan as you will now know the particular aspects to look for.

An effective market research is meant to deliver data that will be analyzed to create solutions. And thus, the primary step towards creating the research plan is to know the problems that will need to be solved.

Step 2: Give Structure to Your Plan

There are multiple ways a research can be conducted; through interviews, surveys, tests, etc. If you know what your research is trying to achieve, it is now time to pick out the right tools that will help you succeed in your research. Since any professional market is huge in size this task may seem like an impossible one, however once the structure is in place the process will be much simpler. A step by step marketing research plan should be able to cover all aspects of your company.

Make sure that you are also checking for data that already exists within the system. This can help you save a lot of time by ensuring that you don’t run similar tests all over again.

Step 3: Data Collection

There are two major types of data, qualitative and quantitative. Both these types of data are important relating to what problems you are trying to solve through your market research. It is safer to collect both types of data in equal proportions to ensure that your research does not lack any of its important aspects. The data also needs to be updated, unbiased, and valid. A data centric marketing research process is bound to be successful.

Also make sure that the type of data you collect is feasible for the instruments you have chosen in step 2. Ensuring that each step is related to the others is a key to successfully creating a marketing research plan.

Step 4: Analysis Process

Now that you have collected the data the next big question is how the solutions will be devised from it. The first step is to digitalize the data so that the analysis tools can be used on them easily. Create different tables, charts, and graphs to understand the acute functionalities of your business and how the market aspect ties into them. This will reveal to you the major data trends that exist in your business process and how marketing can help enrich them.

Summaries are highly helpful while dealing with multiple reports and charts. Another aspect that one should look into is usage of Big Data and AI based tools in the analysis process. This provides better and more accurate results.

Step 5: Presenting the Results

At the end of the data collection and analysis process a thorough report needs to be created. This will help you easily communicate your findings to teams and managers who will be part of the marketing research process. If the research team and the marketing team are separate, the result presentation stage becomes crucially important in communicating the ideas and solutions devised from the data. There are industry specific methods that you can cater to or you can create your own method that will suit your team’s understanding.

Critical thinking is an important part of deciding the steps that will be taken in your marketing campaign. It is the results of the data analysis that will guide the marketing process; however experts will be able to pick the right marketing tools necessary for achieving the goals.

Step 6: The Marketing Process

As stated before, the marketing process is highly volatile and can only be created keeping in mind the needs of the current market and its trends. So, the actions taken in this step will ensure that the data centric structure incorporates the market persona. The type of market you are dealing in and your business goals will both be taken into consideration before the marketing process actually begins.

A holistic marketing strategy is as much based on data as it is on real life experiences. So make sure that you have plenty of both before running a marketing campaign. A successful marketing campaign should be able to boost brand awareness as well as achieve particular goals.

Wrap Up Marketing Research Process

These are the 6 primary steps that one needs to incorporate within their marketing research process. There are of course plenty of nuances to cover for a process this massive and important, but if you are unsure of where to start, these 6 steps will provide you the perfect strategy required to run a successful marketing research campaign. Make sure to use the latest technology available to aid your process and the results are bound to be accurate.

About The Author

Umar Farooq

How to Do Market Research: The Complete Guide

Learn how to do market research with this step-by-step guide, complete with templates, tools and real-world examples.

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What are your customers’ needs? How does your product compare to the competition? What are the emerging trends and opportunities in your industry? If these questions keep you up at night, it’s time to conduct market research.

Market research plays a pivotal role in your ability to stay competitive and relevant, helping you anticipate shifts in consumer behavior and industry dynamics. It involves gathering these insights using a wide range of techniques, from surveys and interviews to data analysis and observational studies.

In this guide, we’ll explore why market research is crucial, the various types of market research, the methods used in data collection, and how to effectively conduct market research to drive informed decision-making and success.

What is market research?

Market research is the systematic process of gathering, analyzing and interpreting information about a specific market or industry. The purpose of market research is to offer valuable insight into the preferences and behaviors of your target audience, and anticipate shifts in market trends and the competitive landscape. This information helps you make data-driven decisions, develop effective strategies for your business, and maximize your chances of long-term growth.

Why is market research important? 

By understanding the significance of market research, you can make sure you’re asking the right questions and using the process to your advantage. Some of the benefits of market research include:

• Informed decision-making: Market research provides you with the data and insights you need to make smart decisions for your business. It helps you identify opportunities, assess risks and tailor your strategies to meet the demands of the market. Without market research, decisions are often based on assumptions or guesswork, leading to costly mistakes.
• Customer-centric approach: A cornerstone of market research involves developing a deep understanding of customer needs and preferences. This gives you valuable insights into your target audience, helping you develop products, services and marketing campaigns that resonate with your customers.
• Competitive advantage: By conducting market research, you’ll gain a competitive edge. You’ll be able to identify gaps in the market, analyze competitor strengths and weaknesses, and position your business strategically. This enables you to create unique value propositions, differentiate yourself from competitors, and seize opportunities that others may overlook.
• Risk mitigation: Market research helps you anticipate market shifts and potential challenges. By identifying threats early, you can proactively adjust their strategies to mitigate risks and respond effectively to changing circumstances. This proactive approach is particularly valuable in volatile industries.
• Resource optimization: Conducting market research allows organizations to allocate their time, money and resources more efficiently. It ensures that investments are made in areas with the highest potential return on investment, reducing wasted resources and improving overall business performance.
• Adaptation to market trends: Markets evolve rapidly, driven by technological advancements, cultural shifts and changing consumer attitudes. Market research ensures that you stay ahead of these trends and adapt your offerings accordingly so you can avoid becoming obsolete. 

As you can see, market research empowers businesses to make data-driven decisions, cater to customer needs, outperform competitors, mitigate risks, optimize resources and stay agile in a dynamic marketplace. These benefits make it a huge industry; the global market research services market is expected to grow from $76.37 billion in 2021 to $108.57 billion in 2026 . Now, let’s dig into the different types of market research that can help you achieve these benefits.

Types of market research 

• Qualitative research
• Quantitative research
• Exploratory research
• Descriptive research
• Causal research
• Cross-sectional research
• Longitudinal research

Despite its advantages, 23% of organizations don’t have a clear market research strategy. Part of developing a strategy involves choosing the right type of market research for your business goals. The most commonly used approaches include:

1. Qualitative research

Qualitative research focuses on understanding the underlying motivations, attitudes and perceptions of individuals or groups. It is typically conducted through techniques like in-depth interviews, focus groups and content analysis — methods we’ll discuss further in the sections below. Qualitative research provides rich, nuanced insights that can inform product development, marketing strategies and brand positioning.

2. Quantitative research

Quantitative research, in contrast to qualitative research, involves the collection and analysis of numerical data, often through surveys, experiments and structured questionnaires. This approach allows for statistical analysis and the measurement of trends, making it suitable for large-scale market studies and hypothesis testing. While it’s worthwhile using a mix of qualitative and quantitative research, most businesses prioritize the latter because it is scientific, measurable and easily replicated across different experiments.

3. Exploratory research

Whether you’re conducting qualitative or quantitative research or a mix of both, exploratory research is often the first step. Its primary goal is to help you understand a market or problem so you can gain insights and identify potential issues or opportunities. This type of market research is less structured and is typically conducted through open-ended interviews, focus groups or secondary data analysis. Exploratory research is valuable when entering new markets or exploring new product ideas.

4. Descriptive research

As its name implies, descriptive research seeks to describe a market, population or phenomenon in detail. It involves collecting and summarizing data to answer questions about audience demographics and behaviors, market size, and current trends. Surveys, observational studies and content analysis are common methods used in descriptive research. 

5. Causal research

Causal research aims to establish cause-and-effect relationships between variables. It investigates whether changes in one variable result in changes in another. Experimental designs, A/B testing and regression analysis are common causal research methods. This sheds light on how specific marketing strategies or product changes impact consumer behavior.

6. Cross-sectional research

Cross-sectional market research involves collecting data from a sample of the population at a single point in time. It is used to analyze differences, relationships or trends among various groups within a population. Cross-sectional studies are helpful for market segmentation, identifying target audiences and assessing market trends at a specific moment.

7. Longitudinal research

Longitudinal research, in contrast to cross-sectional research, collects data from the same subjects over an extended period. This allows for the analysis of trends, changes and developments over time. Longitudinal studies are useful for tracking long-term developments in consumer preferences, brand loyalty and market dynamics.

Each type of market research has its strengths and weaknesses, and the method you choose depends on your specific research goals and the depth of understanding you’re aiming to achieve. In the following sections, we’ll delve into primary and secondary research approaches and specific research methods.

Primary vs. secondary market research

Market research of all types can be broadly categorized into two main approaches: primary research and secondary research. By understanding the differences between these approaches, you can better determine the most appropriate research method for your specific goals.

Primary market research 

Primary research involves the collection of original data straight from the source. Typically, this involves communicating directly with your target audience — through surveys, interviews, focus groups and more — to gather information. Here are some key attributes of primary market research:

• Customized data: Primary research provides data that is tailored to your research needs. You design a custom research study and gather information specific to your goals.
• Up-to-date insights: Because primary research involves communicating with customers, the data you collect reflects the most current market conditions and consumer behaviors.
• Time-consuming and resource-intensive: Despite its advantages, primary research can be labor-intensive and costly, especially when dealing with large sample sizes or complex study designs. Whether you hire a market research consultant, agency or use an in-house team, primary research studies consume a large amount of resources and time.

Secondary market research 

Secondary research, on the other hand, involves analyzing data that has already been compiled by third-party sources, such as online research tools, databases, news sites, industry reports and academic studies.

Here are the main characteristics of secondary market research:

• Cost-effective: Secondary research is generally more cost-effective than primary research since it doesn’t require building a research plan from scratch. You and your team can look at databases, websites and publications on an ongoing basis, without needing to design a custom experiment or hire a consultant. 
• Leverages multiple sources: Data tools and software extract data from multiple places across the web, and then consolidate that information within a single platform. This means you’ll get a greater amount of data and a wider scope from secondary research.
• Quick to access: You can access a wide range of information rapidly — often in seconds — if you’re using online research tools and databases. Because of this, you can act on insights sooner, rather than taking the time to develop an experiment. 

So, when should you use primary vs. secondary research? In practice, many market research projects incorporate both primary and secondary research to take advantage of the strengths of each approach.

One rule of thumb is to focus on secondary research to obtain background information, market trends or industry benchmarks. It is especially valuable for conducting preliminary research, competitor analysis, or when time and budget constraints are tight. Then, if you still have knowledge gaps or need to answer specific questions unique to your business model, use primary research to create a custom experiment. 

Market research methods

• Surveys and questionnaires
• Focus groups
• Observational research
• Online research tools
• Experiments
• Content analysis
• Ethnographic research

How do primary and secondary research approaches translate into specific research methods? Let’s take a look at the different ways you can gather data: 

1. Surveys and questionnaires

Surveys and questionnaires are popular methods for collecting structured data from a large number of respondents. They involve a set of predetermined questions that participants answer. Surveys can be conducted through various channels, including online tools, telephone interviews and in-person or online questionnaires. They are useful for gathering quantitative data and assessing customer demographics, opinions, preferences and needs. On average, customer surveys have a 33% response rate , so keep that in mind as you consider your sample size.

2. Interviews

Interviews are in-depth conversations with individuals or groups to gather qualitative insights. They can be structured (with predefined questions) or unstructured (with open-ended discussions). Interviews are valuable for exploring complex topics, uncovering motivations and obtaining detailed feedback. 

3. Focus groups

The most common primary research methods are in-depth webcam interviews and focus groups. Focus groups are a small gathering of participants who discuss a specific topic or product under the guidance of a moderator. These discussions are valuable for primary market research because they reveal insights into consumer attitudes, perceptions and emotions. Focus groups are especially useful for idea generation, concept testing and understanding group dynamics within your target audience.

4. Observational research

Observational research involves observing and recording participant behavior in a natural setting. This method is particularly valuable when studying consumer behavior in physical spaces, such as retail stores or public places. In some types of observational research, participants are aware you’re watching them; in other cases, you discreetly watch consumers without their knowledge, as they use your product. Either way, observational research provides firsthand insights into how people interact with products or environments.

5. Online research tools

You and your team can do your own secondary market research using online tools. These tools include data prospecting platforms and databases, as well as online surveys, social media listening, web analytics and sentiment analysis platforms. They help you gather data from online sources, monitor industry trends, track competitors, understand consumer preferences and keep tabs on online behavior. We’ll talk more about choosing the right market research tools in the sections that follow.

6. Experiments

Market research experiments are controlled tests of variables to determine causal relationships. While experiments are often associated with scientific research, they are also used in market research to assess the impact of specific marketing strategies, product features, or pricing and packaging changes.

7. Content analysis

Content analysis involves the systematic examination of textual, visual or audio content to identify patterns, themes and trends. It’s commonly applied to customer reviews, social media posts and other forms of online content to analyze consumer opinions and sentiments.

8. Ethnographic research

Ethnographic research immerses researchers into the daily lives of consumers to understand their behavior and culture. This method is particularly valuable when studying niche markets or exploring the cultural context of consumer choices.

How to do market research

• Set clear objectives
• Identify your target audience
• Choose your research methods
• Use the right market research tools
• Collect data
• Analyze data 
• Interpret your findings
• Identify opportunities and challenges
• Make informed business decisions
• Monitor and adapt

Now that you have gained insights into the various market research methods at your disposal, let’s delve into the practical aspects of how to conduct market research effectively. Here’s a quick step-by-step overview, from defining objectives to monitoring market shifts.

1. Set clear objectives

When you set clear and specific goals, you’re essentially creating a compass to guide your research questions and methodology. Start by precisely defining what you want to achieve. Are you launching a new product and want to understand its viability in the market? Are you evaluating customer satisfaction with a product redesign? 

Start by creating SMART goals — objectives that are specific, measurable, achievable, relevant and time-bound. Not only will this clarify your research focus from the outset, but it will also help you track progress and benchmark your success throughout the process. 

You should also consult with key stakeholders and team members to ensure alignment on your research objectives before diving into data collecting. This will help you gain diverse perspectives and insights that will shape your research approach.

2. Identify your target audience

Next, you’ll need to pinpoint your target audience to determine who should be included in your research. Begin by creating detailed buyer personas or stakeholder profiles. Consider demographic factors like age, gender, income and location, but also delve into psychographics, such as interests, values and pain points.

The more specific your target audience, the more accurate and actionable your research will be. Additionally, segment your audience if your research objectives involve studying different groups, such as current customers and potential leads.

If you already have existing customers, you can also hold conversations with them to better understand your target market. From there, you can refine your buyer personas and tailor your research methods accordingly.

3. Choose your research methods

Selecting the right research methods is crucial for gathering high-quality data. Start by considering the nature of your research objectives. If you’re exploring consumer preferences, surveys and interviews can provide valuable insights. For in-depth understanding, focus groups or observational research might be suitable. Consider using a mix of quantitative and qualitative methods to gain a well-rounded perspective. 

You’ll also need to consider your budget. Think about what you can realistically achieve using the time and resources available to you. If you have a fairly generous budget, you may want to try a mix of primary and secondary research approaches. If you’re doing market research for a startup , on the other hand, chances are your budget is somewhat limited. If that’s the case, try addressing your goals with secondary research tools before investing time and effort in a primary research study. 

4. Use the right market research tools

Whether you’re conducting primary or secondary research, you’ll need to choose the right tools. These can help you do anything from sending surveys to customers to monitoring trends and analyzing data. Here are some examples of popular market research tools:

• Market research software: Crunchbase is a platform that provides best-in-class company data, making it valuable for market research on growing companies and industries. You can use Crunchbase to access trusted, first-party funding data, revenue data, news and firmographics, enabling you to monitor industry trends and understand customer needs.

• Survey and questionnaire tools: SurveyMonkey is a widely used online survey platform that allows you to create, distribute and analyze surveys. Google Forms is a free tool that lets you create surveys and collect responses through Google Drive.
• Data analysis software: Microsoft Excel and Google Sheets are useful for conducting statistical analyses. SPSS is a powerful statistical analysis software used for data processing, analysis and reporting.
• Social listening tools: Brandwatch is a social listening and analytics platform that helps you monitor social media conversations, track sentiment and analyze trends. Mention is a media monitoring tool that allows you to track mentions of your brand, competitors and keywords across various online sources.
• Data visualization platforms: Tableau is a data visualization tool that helps you create interactive and shareable dashboards and reports. Power BI by Microsoft is a business analytics tool for creating interactive visualizations and reports.

5. Collect data

There’s an infinite amount of data you could be collecting using these tools, so you’ll need to be intentional about going after the data that aligns with your research goals. Implement your chosen research methods, whether it’s distributing surveys, conducting interviews or pulling from secondary research platforms. Pay close attention to data quality and accuracy, and stick to a standardized process to streamline data capture and reduce errors. 

6. Analyze data

Once data is collected, you’ll need to analyze it systematically. Use statistical software or analysis tools to identify patterns, trends and correlations. For qualitative data, employ thematic analysis to extract common themes and insights. Visualize your findings with charts, graphs and tables to make complex data more understandable.

If you’re not proficient in data analysis, consider outsourcing or collaborating with a data analyst who can assist in processing and interpreting your data accurately.

7. Interpret your findings

Interpreting your market research findings involves understanding what the data means in the context of your objectives. Are there significant trends that uncover the answers to your initial research questions? Consider the implications of your findings on your business strategy. It’s essential to move beyond raw data and extract actionable insights that inform decision-making.

Hold a cross-functional meeting or workshop with relevant team members to collectively interpret the findings. Different perspectives can lead to more comprehensive insights and innovative solutions.

8. Identify opportunities and challenges

Use your research findings to identify potential growth opportunities and challenges within your market. What segments of your audience are underserved or overlooked? Are there emerging trends you can capitalize on? Conversely, what obstacles or competitors could hinder your progress?

Lay out this information in a clear and organized way by conducting a SWOT analysis, which stands for strengths, weaknesses, opportunities and threats. Jot down notes for each of these areas to provide a structured overview of gaps and hurdles in the market.

9. Make informed business decisions

Market research is only valuable if it leads to informed decisions for your company. Based on your insights, devise actionable strategies and initiatives that align with your research objectives. Whether it’s refining your product, targeting new customer segments or adjusting pricing, ensure your decisions are rooted in the data.

At this point, it’s also crucial to keep your team aligned and accountable. Create an action plan that outlines specific steps, responsibilities and timelines for implementing the recommendations derived from your research. 

10. Monitor and adapt

Market research isn’t a one-time activity; it’s an ongoing process. Continuously monitor market conditions, customer behaviors and industry trends. Set up mechanisms to collect real-time data and feedback. As you gather new information, be prepared to adapt your strategies and tactics accordingly. Regularly revisiting your research ensures your business remains agile and reflects changing market dynamics and consumer preferences.

Online market research sources

As you go through the steps above, you’ll want to turn to trusted, reputable sources to gather your data. Here’s a list to get you started:

• Crunchbase: As mentioned above, Crunchbase is an online platform with an extensive dataset, allowing you to access in-depth insights on market trends, consumer behavior and competitive analysis. You can also customize your search options to tailor your research to specific industries, geographic regions or customer personas.

• Academic databases: Academic databases, such as ProQuest and JSTOR , are treasure troves of scholarly research papers, studies and academic journals. They offer in-depth analyses of various subjects, including market trends, consumer preferences and industry-specific insights. Researchers can access a wealth of peer-reviewed publications to gain a deeper understanding of their research topics.
• Government and NGO databases: Government agencies, nongovernmental organizations and other institutions frequently maintain databases containing valuable economic, demographic and industry-related data. These sources offer credible statistics and reports on a wide range of topics, making them essential for market researchers. Examples include the U.S. Census Bureau , the Bureau of Labor Statistics and the Pew Research Center .
• Industry reports: Industry reports and market studies are comprehensive documents prepared by research firms, industry associations and consulting companies. They provide in-depth insights into specific markets, including market size, trends, competitive analysis and consumer behavior. You can find this information by looking at relevant industry association databases; examples include the American Marketing Association and the National Retail Federation .
• Social media and online communities: Social media platforms like LinkedIn or Twitter (X) , forums such as Reddit and Quora , and review platforms such as G2 can provide real-time insights into consumer sentiment, opinions and trends. 

Market research examples

At this point, you have market research tools and data sources — but how do you act on the data you gather? Let’s go over some real-world examples that illustrate the practical application of market research across various industries. These examples showcase how market research can lead to smart decision-making and successful business decisions.

Example 1: Apple’s iPhone launch

Apple ’s iconic iPhone launch in 2007 serves as a prime example of market research driving product innovation in tech. Before the iPhone’s release, Apple conducted extensive market research to understand consumer preferences, pain points and unmet needs in the mobile phone industry. This research led to the development of a touchscreen smartphone with a user-friendly interface, addressing consumer demands for a more intuitive and versatile device. The result was a revolutionary product that disrupted the market and redefined the smartphone industry.

Example 2: McDonald’s global expansion

McDonald’s successful global expansion strategy demonstrates the importance of market research when expanding into new territories. Before entering a new market, McDonald’s conducts thorough research to understand local tastes, preferences and cultural nuances. This research informs menu customization, marketing strategies and store design. For instance, in India, McDonald’s offers a menu tailored to local preferences, including vegetarian options. This market-specific approach has enabled McDonald’s to adapt and thrive in diverse global markets.

Example 3: Organic and sustainable farming

The shift toward organic and sustainable farming practices in the food industry is driven by market research that indicates increased consumer demand for healthier and environmentally friendly food options. As a result, food producers and retailers invest in sustainable sourcing and organic product lines — such as with these sustainable seafood startups — to align with this shift in consumer values. 

The bottom line? Market research has multiple use cases and is a critical practice for any industry. Whether it’s launching groundbreaking products, entering new markets or responding to changing consumer preferences, you can use market research to shape successful strategies and outcomes.

Market research templates

You finally have a strong understanding of how to do market research and apply it in the real world. Before we wrap up, here are some market research templates that you can use as a starting point for your projects:

• Smartsheet competitive analysis templates : These spreadsheets can serve as a framework for gathering information about the competitive landscape and obtaining valuable lessons to apply to your business strategy.
• SurveyMonkey product survey template : Customize the questions on this survey based on what you want to learn from your target customers.
• HubSpot templates : HubSpot offers a wide range of free templates you can use for market research, business planning and more.
• SCORE templates : SCORE is a nonprofit organization that provides templates for business plans, market analysis and financial projections.
• SBA.gov : The U.S. Small Business Administration offers templates for every aspect of your business, including market research, and is particularly valuable for new startups. 

Strengthen your business with market research

When conducted effectively, market research is like a guiding star. Equipped with the right tools and techniques, you can uncover valuable insights, stay competitive, foster innovation and navigate the complexities of your industry.

Throughout this guide, we’ve discussed the definition of market research, different research methods, and how to conduct it effectively. We’ve also explored various types of market research and shared practical insights and templates for getting started. 

Now, it’s time to start the research process. Trust in data, listen to the market and make informed decisions that guide your company toward lasting success.

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4.1 The Marketing Research Process – Steps 1 and 2

The marketing research process.

The basic steps used to conduct marketing research, defining the problem, designing the research, designing the data collections forms, specifying the sample, collecting the data, analyzing the data, and writing / presenting the findings,  are shown below. After the graphic, each step will be explained in detail.

Figure 4.1.1: The Marketing Research Process

Step 1: Define the Problem (or Opportunity)

There’s a saying in marketing research that a problem half defined is a problem half solved. Defining the “problem” of the research sounds simple, doesn’t it? Suppose your product is tutoring other students in a subject you’re a whiz at. You have been tutoring for a while, and people have begun to realize you’re very good at it. Then, suddenly, your business drops off. Or it explodes, and you can’t cope with the number of students you’re being asked to help. If the business has exploded, should you try to expand your services? Perhaps you should subcontract with some other “whiz” students. You would send them students to be tutored, and they would give you a cut of their pay for each student you referred to them.

Both of these scenarios would be a problem for you, wouldn’t they? They are problems insofar as they cause you headaches. But are they really  the  problem? Or are they the symptoms of something bigger? For example, maybe your business has dropped off because your school is experiencing financial trouble and has lowered the number of scholarships given to incoming freshmen. Consequently, there are fewer total students on campus who need your services. Conversely, if you’re swamped with people who want you to tutor them, perhaps your school awarded more scholarships than usual, so there are a greater number of students who need your services. Alternately, perhaps you ran an ad in your school’s college newspaper, and that led to the influx of students wanting you to tutor them.

Businesses are in the same boat you are as a tutor. They take a look at symptoms and try to drill down to the potential causes. If you approach a marketing research company with either scenario—either too much or too little business—the firm will seek more information from you such as the following:

• In what semester(s) did your tutoring revenues fall (or rise)?
• In what subject areas did your tutoring revenues fall (or rise)?
• In what sales channels did revenues fall (or rise): Were there fewer (or more) referrals from professors or other students? Did the ad you ran result in fewer (or more) referrals this month than in the past months?
• Among what demographic groups did your revenues fall (or rise)—women or men, people with certain majors, or first-year, second-, third-, or fourth-year students?

The key is to look at all potential causes so as to narrow the parameters of the study to the information you actually need to make a good decision about how to fix your business if revenues have dropped or whether or not to expand it if your revenues have exploded.

A hypothesis should then be constructed. The hypothesis is an educated guess as to what the researcher expects to discover. Every bit of data collected, should go towards proving or disproving the hypothesis. Once this is clear, the next task for the researcher is to put into writing the research objective. The research objective is the goal(s) the research is supposed to accomplish. The marketing research objective for your tutoring business might read as follows:

To survey college professors who teach 100- and 200-level math courses to determine why the number of students referred for tutoring dropped in the second semester.

This is admittedly a simple example designed to help you understand the basic concept. If you take a marketing research course, you will learn that research objectives get a lot more complicated than this. The following is an example:

“To gather information from a sample representative of the U.S. population among those who are ‘very likely’ to purchase an automobile within the next 6 months, which assesses preferences (measured on a 1–5 scale ranging from ‘very likely to buy’ to ‘not likely at all to buy’) for the model diesel at three different price levels. Such data would serve as input into a forecasting model that would forecast unit sales, by geographic regions of the country, for each combination of the model’s different prices and fuel configurations (Burns & Bush, 2010).”

Now do you understand why defining the problem is complicated and half the battle? Many a marketing research effort is doomed from the start because the problem was improperly defined. Coke’s ill-fated decision to change the formula of Coca-Cola in 1985 is a case in point: Pepsi had been creeping up on Coke in terms of market share over the years as well as running a successful promotional campaign called the “Pepsi Challenge,” in which consumers were encouraged to do a blind taste test to see if they agreed that Pepsi was better. Coke spent four years researching “the problem.” Indeed, people seemed to like the taste of Pepsi better in blind taste tests. Thus, the formula for Coke was changed. But the outcry among the public was so great that the new formula didn’t last long—a matter of months—before the old formula was reinstated. Some marketing experts believe Coke incorrectly defined the problem as “How can we beat Pepsi in taste tests?” instead of “How can we gain market share against Pepsi?” also, in the blind taste tests, participants were not told that the original Coke would be taken away (Burns & Bush, 2010) While this example is dated, it is a perfect example of research gone wrong.

II. Step 2: Design the Research

The next step in the marketing research process is to do a research design. The research design is your “plan of attack.” It outlines what data you are going to gather and from whom, how and when you will collect the data, and how you will analyze it once it’s been obtained. Let’s look at the data you’re going to gather first.

There are two basic types of data you can gather. The first type is primary data. Primary data is information you collect yourself, using hands-on tools such as interviews or surveys, specifically for the research project you’re conducting. Secondary data is data that has already been collected by someone else, or data you have already collected for another purpose. Collecting primary data is more time consuming, work intensive, and expensive than collecting secondary data. Consequently, you should always try to collect secondary data first to solve your research problem, if you can. A great deal of research on a wide variety of topics already exists. If this research contains the answer to your question, there is no need for you to replicate it. Why reinvent the wheel?

Sources of Secondary Data

Your company’s internal records are a source of secondary data. Data that has been collected as part of your marketing intelligence gathering efforts for other projects are secondary data. Syndicated data can be purchased from other firms, typically from research companies. Syndicated research is primary data that marketing research firms collect on a regular basis and sell to other companies. J.D. Power & Associates is a provider of syndicated research. The company conducts independent, unbiased surveys of customer satisfaction, product quality, and buyer behavior for various industries. The company is best known for its research in the automobile sector. Another of the best-known sellers of syndicated research is the Nielsen Company, which produces the Nielsen ratings. The Nielsen ratings measure the size of television, radio, and newspaper audiences in various markets. You have probably read or heard about TV shows that get the highest (Nielsen) ratings. (Arbitron does the same thing for radio ratings.) Nielsen, along with its main competitor, Information Resources, Inc. (IRI), also sells businesses scanner-based research. Scanner-based research is information collected by scanners at checkout stands in stores. Each week Nielsen and IRI collect information on the millions of purchases made at stores. The companies then compile the information and sell it to firms in various industries that subscribe to their services. The Nielsen Company has also recently teamed up with Facebook to collect marketing research information. Via Facebook, users will see surveys in some of the spaces in which they used to see online ads (Rappeport, Gelles, 2009).

By contrast, MarketResearch.com is an example of a marketing research aggregator. A marketing research aggregator is a marketing research company that doesn’t conduct its own research and sell it. Instead, it buys research reports from other marketing research companies and then sells the reports in their entirety or in pieces to other firms. Check out MarketResearch.com’s Web site. As you will see there are a huge number of studies in every category imaginable that you can buy for relatively small amounts of money.

Market research aggregators buy research reports from other marketing research companies and then resell them in part or in whole to other companies so they don’t have to gather primary data.

Source:  http://www.marketresearch.com .

The library is a good place to gather free secondary data. It has searchable databases as well as handbooks, dictionaries, and books, some of which you can access online. Government agencies also collect and report information on demographics, economic and employment data, health information, and balance-of-trade statistics, among a lot of other information. The U.S. Census Bureau collects census data every ten years to gather information about who lives where. Basic demographic information about sex, age, race, and types of housing in which people live in each U.S. state, metropolitan area, and rural area is gathered so that population shifts can be tracked for various purposes, including determining the number of legislators each state should have in the U.S. House of Representatives. For the U.S. government, this is primary data. For marketing managers it is an important source of secondary data.

Table 4.1: Examples of Primary Data Sources versus Secondary Data Sources

Gauging the Quality of Secondary Data

When you are gathering secondary information, it’s always good to be a little skeptical of it. Sometimes studies are commissioned to produce the result a client wants to hear—or wants the public to hear. For example, throughout the twentieth century, numerous studies found that smoking was good for people’s health. The problem was the studies were commissioned by the tobacco industry. Web research can also pose certain hazards. There are many biased sites that try to fool people that they are providing good data. Often the data is favorable to the products they are trying to sell. Beware of product reviews as well. Unscrupulous sellers sometimes get online and create bogus ratings for products. See below for questions you can ask to help gauge the credibility of secondary information.

Gauging the Credibility of Secondary Data: Questions to Ask

• Who gathered this information?
• For what purpose?
• What does the person or organization that gathered the information have to gain by doing so?
• Was the information gathered and reported in a systematic manner?
• Is the source of the information accepted as an authority by other experts in the field?
• Does the article provide objective evidence to support the position presented?

Types of Research Design

Now let’s look specifically at the types of research designs that are utilized. By understanding different types of research designs, a researcher can solve a client’s problems more quickly and efficiently without jumping through more hoops than necessary. Research designs fall into one of the following three categories:

• Exploratory research design
• Descriptive research design
• Causal research design (experiments)

Exploratory Research

An exploratory research design is useful when you are initially investigating a problem but  haven’t defined it well enough to do an in-depth study. Perhaps via your regular market intelligence, you have spotted what appears to be a new opportunity in the marketplace. You would then do exploratory research to investigate it further and “get your feet wet,” as the saying goes. Exploratory research is less structured than other types of research, and secondary data is often utilized.

One form of exploratory research is qualitative research. Qualitative research is any form of research that includes gathering data that is not quantitative, and involves exploring questions such as why  as much as  what  or  how much . Different forms, such as in-depth interviews and focus group interviews, are common in marketing research.

The in-depth interview—engaging in detailed, one-on-one, question-and-answer sessions with potential buyers—is an exploratory research technique. However, unlike surveys, the people being interviewed aren’t asked a series of standard questions. Instead the interviewer is armed with some general topics and asks questions that are open ended, meaning that they allow the interviewee to elaborate. “How did you feel about the product after you purchased it?” is an example of a question that might be asked. An in-depth interview also allows a researcher to ask logical follow-up questions such as “Can you tell me what you mean when you say you felt uncomfortable using the service?” or “Can you give me some examples?” to help dig further and shed additional light on the research problem. In-depth interviews can be conducted in person, online, or over the phone. The interviewer either takes notes or records the interview.

Focus groups and case studies are often utilized for exploratory research as well. A focus group is a group of potential buyers who are brought together to discuss a marketing research topic with one another. A moderator is used to focus the discussion, the sessions are recorded, and the main points of consensus are later summarized by the market researcher. Textbook publishers often gather groups of professors at educational conferences to participate in focus groups. However, focus groups can also be conducted on the telephone, in online chat rooms, or both, using meeting software like WebEx. The basic steps of conducting a focus group are outlined below.

The Basic Steps of Conducting a Focus Group

• Establish the objectives of the focus group. What is its purpose?
• Identify the people who will participate in the focus group. What makes them qualified to participate? How many of them will you need and what they will be paid?
• Obtain contact information for the participants and send out invitations (usually e-mails are most efficient).
• Develop a list of questions.
• Choose a facilitator.
• Choose a location in which to hold the focus group and the method by which it will be recorded.
• Conduct the focus group. If the focus group is not conducted electronically, include name tags for the participants, pens and notepads, any materials the participants need to see, and refreshments. Record participants’ responses.
• Summarize the notes from the focus group and write a report for management.

A case study looks at how another company solved the problem that’s being researched. Sometimes multiple cases, or companies, are used in a study. Case studies nonetheless have a mixed reputation. Some researchers believe it’s hard to generalize, or apply, the results of a case study to other companies. Nonetheless, collecting information about companies that encountered the same problems your firm is facing can give you a certain amount of insight about what direction you should take. In fact, one way to begin a research project is to carefully study a successful product or service.

Two other types of qualitative data used for exploratory research are ethnographies and projective techniques. In an ethnography, researchers interview, observe, and often videotape people while they work, live, shop, and play. The Walt Disney Company has recently begun using ethnographers to uncover the likes and dislikes of boys aged six to fourteen, a financially attractive market segment for Disney, but one in which the company has been losing market share. The ethnographers visit the homes of boys, observe the things they have in their rooms to get a sense of their hobbies, and accompany them and their mothers when they shop to see where they go, what the boys are interested in, and what they ultimately buy. (The children get seventy-five dollars out of the deal, incidentally.) (Barnes, 2009)

Projective techniques are used to reveal information research respondents might not reveal by being asked directly. Asking a person to complete sentences such as the following is one technique:

People who buy Coach handbags  __________.

(Will he or she reply with “are cool,” “are affluent,” or “are pretentious,” for example?)

KFC’s grilled chicken is  ______.

Or the person might be asked to finish a story that presents a certain scenario. Word associations are also used to discern people’s underlying attitudes toward goods and services. Using a word-association technique, a market researcher asks a person to say or write the first word that comes to his or her mind in response to another word. If the initial word is “fast food,” what word does the person associate it with or respond with? Is it “McDonald’s”? If many people reply that way, and you’re conducting research for Burger King, that could indicate Burger King has a problem. However, if the research is being conducted for Wendy’s, which recently began running an advertising campaign to the effect that Wendy’s offerings are “better than fast food,” it could indicate that the campaign is working.

Completing cartoons is yet another type of projective technique. It’s similar to finishing a sentence or story, only with the pictures. People are asked to look at a cartoon such as the one shown in  Figure 4.2 “Example of a Cartoon-Completion Projective Technique” . One of the characters in the picture will have made a statement, and the person is asked to fill in the empty cartoon “bubble” with how they think the second character will respond. In this example, how do you think the woman would reply to being asked, “Thanks for doing business with us today. Is there a way we can better serve you in the future?”

Figure 4.1.2: Example of a Cartoon-Completion Projective Technique

In some cases, your research might end with exploratory research. Perhaps you have discovered your organization lacks the resources needed to produce the product. In other cases, you might decide you need more in-depth, quantitative research such as descriptive research or causal research, which are discussed next. Most marketing research professionals advise using both types of research, if it’s feasible. On the one hand, the qualitative-type research used in exploratory research is often considered too “lightweight.” On the other hand, relying solely on quantitative information often results in market research that lacks ideas.

Descriptive Research

Anything that can be observed and counted falls into the category of descriptive research design. A study using a descriptive research design involves gathering hard numbers, often via surveys, to describe or measure a phenomenon so as to answer the questions of  who ,  what ,  where ,  when , and  how . “On a scale of 1–5, how satisfied were you with your service?” is a question that illustrates the information a descriptive research design is supposed to capture.

Physiological measurements also fall into the category of descriptive design. Physiological measurements measure people’s involuntary physical responses to marketing stimuli, such as an advertisement. Elsewhere, we explained that researchers have gone so far as to scan the brains of consumers to see what they  really  think about products versus what they say about them. Eye tracking is another cutting-edge type of physiological measurement. It involves recording the movements of a person’s eyes when they look at some sort of stimulus, such as a banner ad or a Web page. The Walt Disney Company has a research facility in Austin, Texas, that it uses to take physical measurements of viewers when they see Disney programs and advertisements. The facility measures three types of responses: people’s heart rates, skin changes, and eye movements (eye tracking) (Spangler, 2009).

A woman shows off her headgear for an eye-tracking study. The gear’s not exactly a fashion statement but . . .

lawrencegs –  Google Glass  – CC BY 2.0.

A strictly descriptive research design instrument—a survey, for example—can tell you how satisfied your customers are. It can’t, however, tell you why. Nor can an eye-tracking study tell you  why  people’s eyes tend to dwell on certain types of banner ads—only that they do. To answer “why” questions an exploratory research design or causal research design is needed (Wagner, 2007).

Causal Research

Causal research design examines cause-and-effect relationships. Using a causal research design allows researchers to answer “what if” types of questions. In other words, if a firm changes  X  (say, a product’s price, design, placement, or advertising), what will happen to  Y  (say, sales or customer loyalty)? To conduct causal research, the researcher designs an experiment that “controls,” or holds constant, all of a product’s marketing elements except one (or using advanced techniques of research, a few elements can be studied at the same time). The one variable is changed, and the effect is then measured. Sometimes the experiments are conducted in a laboratory using a simulated setting designed to replicate the conditions buyers would experience. Or the experiments may be conducted in a virtual computer setting.

You might think setting up an experiment in a virtual world such an  online game would be a viable way to conduct controlled marketing research. Some companies have tried to use Second Life for this purpose, but the results have been somewhat mixed as to whether or not it is a good medium for marketing research. The German marketing research firm Komjuniti was one of the first “real-world” companies to set up an “island” in Second Life upon which it could conduct marketing research. However, with so many other attractive fantasy islands in which to play, the company found it difficult to get Second Life residents, or players, to voluntarily visit the island and stay long enough so meaningful research could be conducted. (Plus, the “residents,” or players, in Second Life have been known to protest corporations invading their world. When the German firm Komjuniti created an island in Second Life to conduct marketing research, the residents showed up waving signs and threatening to boycott the island.) (Wagner, 2007)

An experiment conducted in a natural setting such as a store is referred to as a field experiment. Companies sometimes do field experiments either because it is more convenient or because they want to see if buyers will behave the same way in the “real world” as in a laboratory or on a computer. The place the experiment is conducted or the demographic group of people the experiment is administered to is considered the test market. Before a large company rolls out a product to the entire marketplace, it will often place the offering in a test market to see how well it will be received. For example, to compete with MillerCoors’ sixty-four-calorie beer MGD 64, Anheuser-Busch  began testing its Select 55 beer in certain cities around the country (McWilliams, 2009).

Select 55 beer: Coming soon to a test market near you? (If you’re on a diet, you have to hope so!)

Martine –  Le champagne  – CC BY-NC 2.0.

Many companies use experiments to test all of their marketing communications. For example, the online discount retailer O.co (formerly called Overstock.com) carefully tests all of its marketing offers and tracks the results of each one. One study the company conducted combined twenty-six different variables related to offers e-mailed to several thousand customers. The study resulted in a decision to send a group of e-mails to different segments. The company then tracked the results of the sales generated to see if they were in line with the earlier experiment it had conducted that led it to make the offer.

You Try It!

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Chapter 6: Marketing Research

6.1 Steps in the Marketing Research Process

Learning Objectives

• Describe the basic steps in the marketing research process and the purpose of each step.

The basic steps used to conduct marketing research are shown in figure 6.1 . Next, we discuss each step.

Step 1: Define the Problem (or Opportunity)

There’s a saying in marketing research that a problem half defined is a problem half solved. Defining the “problem” of the research sounds simple, doesn’t it? Suppose your “product” is tutoring other students in a subject you enjoy. You have been tutoring for a while, and people have begun to realize you’re very good at it. Then, suddenly, your business declines. Or it explodes, and you can’t cope with the number of students you’re being asked to help. If the business has exploded, should you try to expand your services? Perhaps you should subcontract with some other smart students. You would send them students to be tutored, and they would give you a cut of their pay for each student you referred to them.

Both of these scenarios would be a problem for you, wouldn’t they? They are problems insofar as they cause you headaches. But are they really the problem? Or are they the symptoms of something bigger? For example, maybe your business has dropped off because your school is experiencing decreased enrollment so there are fewer total students on campus who need your services. Conversely, if you’re swamped with people who want you to tutor them, perhaps your school has increased enrollment so there are a greater number of students who need your services. Alternately, perhaps you posted your services on social media and that led to the influx of students wanting you to tutor them.

Businesses are in the same boat. They take a look at symptoms and try to narrow down the potential causes. If you approach a marketing research company with either scenario—either too much or too little business—the firm will seek more information from you such as the following:

• In what semester(s) did your tutoring revenues fall (or rise)?
• In what subject areas did your tutoring revenues fall (or rise)?
• In what sales channels did revenues fall (or rise): Were there fewer (or more) referrals from professors or other students? Did the social media post result in fewer (or more) referrals this month than in the past months?
• Among what demographic groups did your revenues fall (or rise)— people with certain majors, or first-year, second-, third-, or fourth-year students, local or international students?

The key is to look at all potential causes so as to narrow the parameters of the study to the information you actually need to make a good decision about how to fix your business if revenues have dropped or whether or not to expand it if your revenues have exploded.

The next task for the researcher is to put the research objective into writing. The research objective is the goal(s) the research is supposed to accomplish. The marketing research objective for your tutoring business might read as follows:

To survey university professors who teach 100- and 200-level math courses to determine why the number of students referred for tutoring dropped in the second semester.

This is admittedly a simple example designed to help you understand the basic concept. If you take a marketing research course, you will learn that research objectives get a lot more complicated than this. The following is an example:

“To gather information from a sample representative of the U.S. population among those who are ‘very likely’ to purchase an automobile within the next 6 months, which assesses preferences (measured on a 1–5 scale ranging from ‘very likely to buy’ to ‘not likely at all to buy’) for the model diesel at three different price levels. Such data would serve as input into a forecasting model that would forecast unit sales, by geographic regions of the country, for each combination of the model’s different prices and fuel configurations.” (Burns & Bush, 2010) [1]

Now do you understand why defining the problem is complicated and half the battle? Many a marketing research effort has been doomed from the start because the problem was improperly defined. Coke’s ill-fated decision to change the formula of Coca-Cola in 1985 is a case in point: Pepsi had been creeping up on Coke in terms of market share over the years as well as running a successful promotional campaign called the “Pepsi Challenge,” in which consumers were encouraged to do a blind taste test to see if they agreed that Pepsi was better. Coke spent four years researching “the problem.” Indeed, people seemed to like the taste of Pepsi better in blind taste tests. Thus, the formula for Coke was changed. But the outcry among the public was so great that the new formula didn’t last long—a matter of months—before the old formula was reinstated. Some marketing experts believe Coke incorrectly defined the problem as “How can we beat Pepsi in taste tests?” instead of “How can we gain market share against Pepsi?” (Burns & Bush, 2010) [2]

Video 6.1 documents the Coca-Cola Company’s ill-fated launch of New Coke in 1985.

Video 6.1. New Coke Is It! 1985. Source: The 1985 launch of New Coke on Christian Budtz .

Video 6.2 shows how Pepsi tried to capitalize on the mistake.

Video 6.2. 1985 Pepsi Commercial “They Changed My Coke”. Source: 1985 Pepsi commercial: They changed my Coke on eyeh8cbs .

Step 2: Design the Research

The next step in the marketing research process is to do a research design. The research design outlines what data you are going to gather and from whom, how and when you will collect the data, and how you will analyze them once they’ve been obtained. Let’s look at the data you’re going to gather first.

There are two basic types of data you can gather. The first is primary data. Primary data is information you collect yourself, using hands-on tools such as interviews or surveys, specifically for the research project you’re conducting. Secondary data are data that have already been collected by someone else, or data you have already collected for another purpose. Collecting primary data is more time-consuming, work-intensive, and expensive than collecting secondary data. Consequently, you should always try to collect secondary data first to solve your research problem, if you can. A great deal of research on a wide variety of topics already exists. If this research contains the answer to your question, there is no need for you to replicate it. Why reinvent the wheel?

Sources of Secondary Data

Your company’s internal records are a source of secondary data. So are any data you collect as part of your regular marketing intelligence-gathering efforts. You can also purchase syndicated research. Syndicated research is primary data that marketing research firms collect on a regular basis and sell to other companies. J.D. Power & Associates is a provider of syndicated research. The company conducts independent, unbiased surveys of customer satisfaction, product quality, and buyer behaviour for various industries. The company is best known for its research in the automobile sector. One of the best-known sellers of syndicated research is the Nielsen Company, which produces the Nielsen ratings. The Nielsen ratings measure the size of television, radio, and newspaper audiences in various markets. You have probably read or heard about TV shows that get the highest (Nielsen) ratings (Arbitron does the same thing for radio ratings). Nielsen, along with its main competitor, Information Resources, Inc. (IRI), also sells businesses scanner-based research . Scanner-based research is information collected by scanners at checkout stands in stores. Each week, Nielsen and IRI collect information on the millions of purchases made at stores. The companies then compile the information and sell it to firms in various industries that subscribe to their services. The Nielsen Company has also recently teamed up with Facebook to collect marketing research information. Via Facebook, users will see surveys in some of the spaces in which they used to see online ads (Rappeport & Gelles, 2009). [3]

By contrast, MarketResearch.com is an example of a marketing research aggregator. A marketing research aggregator is a marketing research company that doesn’t conduct its own research and sell it; instead, it buys research reports from other marketing research companies and then sells the reports in their entirety or in pieces to other firms. Check out MarketResearch.com’s website ( figure 6.2 ). As you will see, there are a huge number of studies in every category imaginable that you can buy for relatively small amounts of money.

Your school library is a good place to gather free secondary data. It has searchable databases as well as handbooks, dictionaries, and books, some of which you can access online. Government agencies also collect and report information on demographics, economic and employment data, health information, and balance-of-trade statistics, among a lot of other information. Statistics Canada collects census data every ten years to gather information about who lives where. Basic demographic information about sex, age, race, and types of housing in which people live in each province, metropolitan area, and rural area is gathered so that population shifts can be tracked for various purposes.

The World Bank and the United Nations are two international organizations that collect a great deal of information. Their websites contain many free research studies and data related to global markets. Table 6.1 shows some examples of primary versus secondary data sources.

Gauging the Quality of Secondary Data

When you are gathering secondary information, it’s always good to be a little skeptical. Sometimes, studies are commissioned to produce the result a client wants to hear—or wants the public to hear. For example, throughout the twentieth century, numerous studies found that smoking was good for people’s health. The problem was the studies were commissioned by the tobacco industry. Web research can also pose certain hazards. There are many biased sites that try to fool people into thinking they are providing good data. Often, the data are favourable to the products they are trying to sell. Beware of product reviews as well. Unscrupulous sellers sometimes get online and create bogus ratings for products. See below for questions you can ask to help gauge the credibility of secondary information.

Gauging the Credibility of Secondary Data: Questions to Ask

• Who gathered this information?
• For what purpose?
• What does the person or organization that gathered the information have to gain by doing so?
• Was the information gathered and reported in a systematic manner?
• Is the source of the information accepted as an authority by other experts in the field?
• Does the article provide objective evidence to support the position presented?

Types of Research Designs

Now let’s look at the most common type of research design: exploratory.

An exploratory research design is useful when you are initially investigating a problem but you haven’t defined it well enough to do an in-depth study of it. Perhaps via your regular market intelligence, you have spotted what appears to be a new opportunity in the marketplace. You would then do exploratory research to investigate it further. Exploratory research is less structured than other types of research, and secondary data are often utilized.

One form of exploratory research is qualitative research. Qualitative research is any form of research that includes gathering data that are not quantitative, and it often involves exploring questions such as why as much as what or how much . Different forms, such as in-depth interviews and focus group interviews, are common in marketing research.

Interviews —engaging in detailed, one-on-one, question-and-answer sessions with potential buyers—is an exploratory research technique. However, unlike surveys, the people being interviewed aren’t asked a series of standard questions. Instead, the interviewer is armed with some general topics and asks questions that are open ended, meaning that they allow the interviewee to elaborate. “How did you feel about the product after you purchased it?” is an example of a question that might be asked. An interview also allows a researcher to ask logical follow-up questions such as “Can you tell me what you mean when you say you felt uncomfortable using the service?” or “Can you give me some examples?” to help dig further and shed additional light on the research problem. Interviews can be conducted in person or over the phone. The interviewer either takes notes or records the interview.

Focus groups and case studies are often utilized for exploratory research as well. A focus group is a group of potential buyers who are brought together to discuss a marketing research topic with one another. A moderator is used to focus the discussion, the sessions are recorded, and the main points of consensus are later summarized by the market researcher. Textbook publishers often gather groups of professors at educational conferences to participate in focus groups. However, focus groups can also be conducted on the telephone or online using meeting software like Zoom. The basic steps of conducting a focus group are outlined below.

The Basic Steps of Conducting a Focus Group

• Establish the objectives of the focus group. What is its purpose?
• Identify the people who will participate in the focus group. What makes them qualified to participate? How many of them will you need and what they will be paid?
• Obtain contact information for the participants and send out invitations (e-mails are usually most efficient).
• Develop a list of questions.
• Choose a facilitator.
• Choose a location in which to hold the focus group and the method by which it will be recorded.
• Conduct the focus group. If the focus group is not conducted electronically, include name tags for the participants, pens and notepads, any materials the participants need to see, and refreshments. Record participants’ responses.
• Summarize the notes from the focus group and write a report for management.

A case study looks at how another company solved the problem that’s being researched. Sometimes, multiple cases, or companies, are used in a study. Case studies nonetheless have a mixed reputation. Some researchers believe it’s hard to generalize, or apply, the results of a case study to other companies. Nonetheless, collecting information about companies that encountered the same problems your firm is facing can give you a certain amount of insight about what direction you should take. In fact, one way to begin a research project is to carefully study a successful product or service.

Two other types of qualitative data used for exploratory research are ethnographies and projective techniques. In ethnography , researchers interview, observe, and often videotape people while they work, live, shop, and play. The Walt Disney Company has recently begun using ethnographers to uncover the likes and dislikes of boys aged six to fourteen, a financially attractive market segment for Disney, but one in which the company has been losing market share. The ethnographers visit the homes of boys, observe the things they have in their rooms to get a sense of their hobbies, and accompany them and their mothers when they shop to see where they go, what the boys are interested in, and what they ultimately buy (Barnes, 2009). [4]

Projective techniques are used to reveal information research respondents might not reveal by being asked directly. Asking a person to complete sentences such as the following is one technique:

People who buy Gucci handbags __________. (Will he or she reply with “are cool,” “are affluent,” or “are pretentious,” for example?)

KFC’s grilled chicken is ______.

Or the person might be asked to finish a story that presents a certain scenario. Word associations are also used to discern people’s underlying attitudes toward goods and services. When using a word-association technique, a market researcher asks a person to say or write the first word that comes to his or her mind in response to another word. If the initial word is “fast food,” what word does the person associate it with or respond with? Is it “McDonald’s”? If many people reply that way, and you’re conducting research for Burger King, that could indicate Burger King has a problem. However, if the research is being conducted for Wendy’s, which recently began running an advertising campaign with the message that Wendy’s offerings are “better than fast food,” it could indicate that the campaign is working.

In some cases, your research might end with exploratory research. Perhaps you have discovered your organization lacks the resources needed to produce the product. In other cases, you might decide you need more in-depth, quantitative research such as descriptive research or causal research, which are discussed next. Most marketing research professionals suggest using both types of research, if it’s feasible. On the one hand, the qualitative type of research used in exploratory research is often considered too “lightweight.” On the other hand, relying solely on quantitative information often results in market research that lacks ideas.

Watch video 6.3 to see a funny spoof on the usefulness—or lack of usefulness—of focus groups.

Video 6.3. The Stone Wheel: What One Focus Group Said. Source: stone and stone wheel on smack1313 .

Step 3: Design the Data-Collection Forms

If the behaviour of buyers is being formally observed and a number of different researchers are conducting observations, the data obviously need to be recorded on a standardized data-collection form that’s either paper or electronic; otherwise, the data collected will not be comparable. The items on the form could include a shopper’s sex; his or her approximate age; whether the person seemed hurried, moderately hurried, or unhurried; and whether or not he or she read the label on products, used coupons, and so forth.

The same is true when it comes to surveying people with questionnaires. Surveying people is one of the most commonly used techniques to collect quantitative data. Surveys are popular because they can be easily administered to large numbers of people fairly quickly. However, to produce the best results, the questionnaire for the survey needs to be carefully designed.

Questionnaire Design

Most questionnaires follow a similar format: They begin with an introduction describing what the study is for, followed by instructions for completing the questionnaire and, if necessary, returning it to the market researcher. The first few questions that appear on the questionnaire are usually basic, warm-up questions their respondent can readily answer, such as the respondent’s age, level of education, place of residence, and so forth. The warm-up questions are then followed by a logical progression of more detailed, in-depth questions that get to the heart of the question being researched. Lastly, the questionnaire wraps up with a statement that thanks the respondent for participating in the survey and providing information and explains when and how they will be paid for participating.

How the questions themselves are worded is extremely important. It’s human nature for respondents to want to provide the “correct” answers to the person administering the survey so as to seem agreeable. Therefore, there is always a hazard that people will try to tell you what you want to hear on a survey. Consequently, care needs to be taken that the survey questions are written in an unbiased, neutral way. In other words, they shouldn’t lead a person taking the questionnaire to answer a question one way or another by virtue of the way you have worded it. The following is an example of a leading question.

Do you agree that teachers should be paid more ?

The questions also need to be clear and unambiguous. Consider the following question:

Which brand of toothpaste do you use ?

The question sounds clear enough, but is it really? What if the respondent recently switched brands? What if she uses Crest at home, but while away from home or travelling she uses Colgate’s Wisp portable toothpaste-and-brush product? How will the respondent answer the question? Rewording the question as follows so it’s more specific will help make the question clearer:

Which brand of toothpaste have you used at home in the past six months? If you have used more than one brand, please list each of them (“Questionnaire Design,” n.d.). [5]

Sensitive questions have to be asked carefully. For example, asking a respondent, “Do you consider yourself a light, moderate, or heavy drinker?” can be tricky. Few people want to admit to being heavy drinkers. You can “soften” the question by including a range of answers, as the following example shows:

How many alcoholic beverages do you consume in a week ?

• __0–5 alcoholic beverages
• __5–10 alcoholic beverages
• __10–15 alcoholic beverages

Many people don’t like to answer questions about their income levels. Asking them to specify income ranges rather than divulge their actual incomes can help.

Other research question “don’ts” include using jargon and acronyms that could confuse people. “How often do you Snap?” is an example. Also, don’t confuse people by asking two questions in the same question, something researchers refer to as a double-barrelled question . “Do you think parents should spend more time with their children and/or their teachers?” is an example of a double-barrelled question.

Open-ended questions , or questions that ask respondents to elaborate, can be included. However, they are harder to tabulate than closed-ended questions , or questions that limit a respondent’s answers. Multiple-choice, true/false and yes/no questions are examples of closed-ended questions.

Testing the Questionnaire

If the questions are bad, the information gathered will also be bad. One way to avoid this is to test the questionnaire before sending it out to find out if there are any problems with it. Is there enough space for people to elaborate on open-ended questions? Is the font readable? To test the questionnaire, marketing research professionals first administer it to a number of respondents face to face. This gives the respondents the chance to ask the researcher about questions or instructions that are unclear or don’t make sense to them. The researcher then administers the questionnaire to a small subset of respondents in the actual way the survey is going to be disseminated, whether it’s delivered via phone, in person, by mail, or online.

Getting people to participate and complete questionnaires can be difficult. If the questionnaire is too long or hard to read, many people won’t complete it. So, by all means, eliminate any questions that aren’t necessary. Of course, including some sort of monetary incentive for completing the survey can increase the number of completed questionnaires a market researcher will receive.

Step 4: Specify the Sample

Once you have created your questionnaire or other marketing study, how do you figure out who should participate in it? Obviously, you can’t survey or observe all potential buyers in the marketplace; instead, you must choose a sample. A sample is a subset of potential buyers that are representative of your entire target market or population being studied. Sometimes market researchers refer to the population as the universe to reflect the fact that it includes the entire target market, whether it consists of a million people, a hundred thousand, a few hundred, or a dozen. “All single people over the age of eighteen who purchased an air fryer in Canada during 2020” is an example of a population that has been defined.

Obviously, the population has to be defined correctly. Otherwise, you will be studying the wrong group of people. Not defining the population correctly can result in flawed research or a sampling error. A sampling error is any type of marketing research mistake that occurs because a sample was utilized. One criticism of Internet surveys is that the people who take these surveys don’t really represent the overall population. On average, Internet survey takers tend to be more educated and tech savvy. Consequently, if they solely constitute your population, even if you screen them for certain criteria, the data you collect could end up being skewed.

There are two main categories of samples in terms of how they are drawn: probability samples and nonprobability samples. A probability sample is one in which each would-be participant has a known and equal chance of being selected. The chance is known because the total number of people in the sampling frame is known. For example, if every other person from the sampling frame were chosen, each person would have a 50 percent chance of being selected.

A nonprobability sample is any type of sample that’s not drawn in a systematic way, so the chances of each would-be participant being selected can’t be known. A convenience sample is one type of nonprobability sample. It is a sample a researcher draws because it’s readily available and convenient to do so. Surveying people on the street as they pass by is an example of a convenience sample. The question is, are these people representative of the target market?

Lastly, the size of the sample has an effect on sampling error. Larger samples generally produce more accurate results. The larger your sample is, the more data you will have, which will give you a more complete picture of what you’re studying. However, the more people surveyed or studied, the more costly the research becomes.

Statistics can be used to determine a sample’s optimal size. If you take a marketing research or statistics class, you will learn more about how to determine the optimal size.

Of course, if you hire a marketing research company, much of this work will be taken care of for you. Many marketing research companies maintain panels of prescreened people they draw upon for samples. In addition, the marketing research firm will be responsible for collecting the data or contracting with a company that specializes in data collection. Data collection is discussed next.

Step 5: Collect the Data

As we have explained, primary marketing research data can be gathered in a number of ways. Surveys, taking physical measurements, and observing people are just three of the ways we discussed. If you’re observing customers as part of gathering the data, keep in mind that if shoppers are aware of the fact, it can have an effect on their behaviour. For example, if a customer shopping for feminine hygiene products in a supermarket aisle realizes she is being watched, she could become embarrassed and leave the aisle, which would adversely affect your data. To get around problems such as these, some companies set up cameras or two-way mirrors to observe customers. Organizations also hire mystery shoppers to work around the problem. A mystery shopper is someone who is paid to shop at a firm’s establishment or one of its competitors to observe the level of service, cleanliness of the facility, and so forth and report his or her findings to the firm.

Watch the YouTube video 6.4 to get an idea of how mystery shopping works.

Video 6.4. Make Extra Money as a Mystery Shopper by KSSAyisha .

Survey data can be collected in many different ways and combinations of ways. The following are the basic methods used:

• Face-to-face (can be computer aided)
• Telephone (can be computer aided or completely automated)
• Mail and hand delivery
• E-mail and the Web

A face-to-face survey is, of course, administered by a person. The surveys are conducted in public places such as in shopping malls, on the street, or in people’s homes if they have agreed to it. In years past, it was common for researchers to knock on people’s doors to gather survey data. However, randomly collected door-to-door interviews are less common today, partly because people are afraid of crime and are reluctant to give information to strangers (McDaniel & Gates, 1998). [6]

Nonetheless, knocking on doors is still a legitimate way questionnaire data are collected. When Statistics Canada collects data on the nation’s population, it hand delivers questionnaires to rural households that do not have street-name and house-number addresses. And workers personally survey the homeless to collect information about their numbers. Face-to-face surveys are also commonly used in some countries to collect information from people who cannot read or lack phones and computers.

An advantage of face-to-face surveys is that they allow researchers to ask lengthier, more complex questions because the people being surveyed can see and read the questionnaires. The same is true when a computer is utilized. For example, the researcher might ask the respondent to look at a list of ten retail stores and rank the stores from best to worst. The same question wouldn’t work so well over the telephone because the person couldn’t see the list. The question would have to be rewritten. Another drawback with telephone surveys is that even though federal and state “do not call” laws generally don’t prohibit companies from gathering survey information over the phone, people often screen such calls using answering machines and caller ID.

Probably the biggest drawback of both surveys conducted face-to-face and administered over the phone by a person is that they are labour intensive and therefore costly. Mailing out questionnaires is costly, too, and the response rates can be rather low. Think about why that might be so: if you receive a questionnaire in the mail, it is easy to throw it in the trash; it’s harder to tell a market researcher who approaches you on the street that you don’t want to be interviewed.

By contrast, gathering survey data collected by a computer, either over the telephone or on the Internet, can be cost-effective and in some cases free. SurveyMonkey and Qualtrics are two websites that will allow you to create online questionnaires, e-mail them to up to one hundred people for free, and view the responses in real time as they come in. For larger surveys, you have to pay a subscription price of a few hundred dollars. But that still can be extremely cost-effective. See how easy it is to put together a survey in SurveyMonkey .

Like a face-to-face survey, an Internet survey can enable you to show buyers different visuals such as ads, pictures, and videos of products and their packaging. Web surveys are also fast, which is a major plus. While face-to-face and mailed surveys often take weeks to collect, you can conduct a web survey in a matter of days or even hours. And, of course, because the information is electronically gathered it can be automatically tabulated. You can also potentially reach a broader geographic group than you could if you had to personally interview people.

Another plus for web and computer surveys (and electronic phone surveys) is that there is less room for human error because the surveys are administered electronically. For instance, there’s no risk that the interviewer will ask a question wrong or use a tone of voice that could mislead the respondents. Respondents are also likely to feel more comfortable inputting the information into a computer if a question is sensitive than they would divulging the information to another person face to face or over the phone. Given all of these advantages, it’s not surprising that the Internet is quickly becoming the top way to collect primary data. However, like mail surveys, surveys sent to people over the Internet are easy to ignore.

Lastly, before the data collection process begins, the surveyors and observers need to be trained to look for the same things, ask questions the same way, and so forth. If they are using rankings or rating scales, they need to agree as to what constitutes a high ranking or a low ranking. The goal of training is to avoid a wide disparity between how different observers and interviewers record the data.

For example, if an observation form asks the observers to describe whether a shopper’s behaviour is hurried, moderately hurried, or unhurried, they should be given an idea of what defines each rating. Does it depend on how much time the person spends in the store or in the individual aisles? Is how fast they walk taken into account? In other words, the criteria and ratings need to be spelled out.

Step 6: Analyze the Data

Step 6 involves analyzing the data to ensure they’re as accurate as possible. If the research is collected by hand using a pen and pencil, it’s entered into a computer. Or respondents might have already entered the information directly into a computer. For example, when Toyota goes to an event such as a car show, the automaker’s marketing personnel ask would-be buyers to complete questionnaires directly on computers. Companies are also beginning to experiment with software that can be used to collect data using mobile phones.

The information generated by the programs can be used to draw conclusions, such as what all customers might like or not like about an offering based on what the sample group liked or did not like. The information can also be used to spot differences among groups of people. For example, the research might show that people in one area of the country like the product better than people in another area. Trends to predict what might happen in the future can also be spotted.

If there are any open-ended questions respondents have elaborated upon—for example, “Explain why you like the current brand you use better than any other brand”—the answers to each are pasted together, one on top of another, so researchers can compare and summarize the information. As we have explained, qualitative information such as this can give you a fuller picture of the results of the research.

Part of analyzing the data is to see if they seem sound. Does the way in which the research was conducted seem sound? Was the sample size large enough? Are the conclusions reached from it reasonable?

Step 7: Write the Research Report and Present Its Findings

If you end up becoming a marketing professional and conducting a research study after you graduate, hopefully you will do a great job putting the study together. You will have defined the problem correctly, chosen the right sample, collected the data accurately, analyzed them, and your findings will be sound. At that point, you will be required to write the research report and perhaps present it to an audience of decision makers. You will do so via a written report and, in some cases, a slide or PowerPoint presentation based on your written report.

The six basic elements of a research report are as follows.

• Title Page . The title page explains what the report is about, when it was conducted and by whom, and who requested it.
• Table of Contents . The table of contents outlines the major parts of the report as well as any graphs and charts and their page numbers.
• Executive Summary . The executive summary summarizes all the details in the report in a quick way. Many people who receive the report—both executives and nonexecutives—won’t have time to read the entire report. Instead, they will rely on the executive summary to quickly get an idea of the study’s results and what to do about those results.
• Methodology and Limitations . The methodology section of the report explains the technical details of how the research was designed and conducted. The section explains, for example, how the data were collected and by whom, the size of the sample, how it was chosen, and whom or what it consisted of (e.g., the number of women versus men or children versus adults). It also includes information about the statistical techniques used to analyze the data. Every study has errors—sampling errors, interviewer errors, and so forth. The methodology section should explain these details so decision makers can consider their overall impact. The margin of error is the overall tendency of the study to be off kilter—that is, how far it could have gone wrong in either direction. Remember how newscasters present the presidential polls before an election? They always say, “This candidate is ahead 48 to 44 percent, plus or minus 2 percent.” That “plus or minus” is the margin of error. The larger the margin of error is, the less likely the results of the study are accurate. The margin of error needs to be included in the methodology section.
• Findings . The findings section is a longer, fleshed-out version of the executive summary that goes into more detail about the statistics uncovered by the research that bolster the study’s findings. If you have related research or secondary data on hand that back up the findings, they can be included to help show the study did what it was designed to do.
• Recommendations . The recommendations section should outline the course of action you think should be taken based on the findings of the research and the purpose of the project. For example, if you conducted a global market research study to identify new locations for stores, make a recommendation for the locations (Mersdorf, 2009). [7]

As we have said, these are the basic sections of a marketing research report. However, additional sections can be added as needed. For example, you might need to add a section on the competition and each firm’s market share. If you’re trying to decide on different supply chain options, you will need to include a section on that topic.

As you write the research report, keep your audience in mind. Don’t use technical jargon decision makers and other people reading the report won’t understand. If technical terms must be used, explain them. Also, proofread the document to identify any grammatical errors and typos and ask a couple of other people to proofread it to catch any mistakes you might have missed. If your research report is riddled with errors, its credibility will be undermined, even if the findings and recommendations you make are extremely accurate.

Many research reports are presented via PowerPoint. If you’re asked to create a slideshow presentation from the report, don’t try to include every detail in the report on the slides. The information will be too long and tedious for people attending the presentation to read through. And if they do go to the trouble of reading all the information, they probably won’t be listening to the speaker who is making the presentation.

Instead of including all the information from the study in the slides, boil each section of the report down to key points and add some “talking points” only the presenter will see. After or during the presentation, you can give the attendees the longer, paper version of the report so they can read the details at a convenient time.

Key Takeaways

• Step 1 in the marketing research process is to define the problem. Businesses look at what they believe are symptoms and drill down to the potential causes so as to precisely define the problem. The next task for the researcher is to put into writing the research objective, or goal, the research is supposed to accomplish.
• Step 2 in the process is to design the research. The research design is the “plan of attack.” It outlines what data you are going to gather, from whom, how, and when, and how you’re going to analyze it once it has been obtained.
• Step 3 is to design the data-collection forms, which need to be standardized so the information gathered on each is comparable. Surveys are a popular way to gather data because they can be quickly and easily administered to large numbers of people. However, to produce the best results, survey questionnaires need to be carefully designed and pretested before they are used.
• Step 4 is drawing the sample, or a subset of potential buyers who are representative of your entire target market. If the sample is not correctly selected, the research will be flawed.
• Step 5 is to actually collect the data, whether they’re collected by a person face to face, over the phone, or with the help of computers or the Internet. The data-collection process is often different in foreign countries.
• Step 6 is to analyze the data collected for any obvious errors, tabulate the data, and then draw conclusions from them based on the results. The last step in the process,
• Step 7 is writing the research report and presenting the findings to decision makers.

Review and Reflect

• Explain why it’s important to carefully define the problem or opportunity a marketing research study is designed to investigate.
• Describe the different types of problems that can occur when marketing research professionals develop questions for surveys.
• What sections should be included in a marketing research report? What is each section designed to do?

Media Attributions

• Steps in the Marketing Research Process © University of Minnesota Libraries Publishing is licensed under a CC BY-NC-SA (Attribution NonCommercial ShareAlike) license
• Burns, A., & Bush, R. (2010). Marketing research (6th ed.). Prentice Hall. ↵
• Rappeport, A., & Gelles, D. (2009, September 23). Facebook to form alliance with Nielsen. Financial Times, 16 . ↵
• Barnes, B. (2009, April 15). Disney expert uses science to draw boy viewers . New York Times . Accessed December 14, 2009. ↵
• Questionnaire design . (n.d.). QuickMBA. Accessed December 14, 2009. ↵
• McDaniel, C. D., & Gates, R. H. (1998). Marketing research essentials (2nd ed.). South-Western College Publishing. ↵
• Mersdorf, S. (2009, August 24). How to organize your next survey report . Cvent. Accessed July 31, 2023). ↵

the goal(s) the research is supposed to accomplish

what data you are going to gather and from whom, how and when you will collect the data, and how you will analyze them once they’ve been obtained

information you collect yourself, using hands-on tools such as interviews or surveys, specifically for the research project you’re conducting

data that have already been collected by someone else, or data you have already collected for another purpose

primary data that marketing research firms collect on a regular basis and sell to other companies

information collected by scanners at checkout stands in stores

a marketing research company that buys research reports from other marketing research companies and then sells the reports in their entirety or in pieces to other firms

when you are initially investigating a problem but you haven’t defined it well enough to do an in-depth study of it

any form of research that includes gathering data that are not quantitative, and it often involves exploring questions such as why as much as what or how much

engaging in detailed, one-on-one, question-and-answer sessions with potential buyers

a group of potential buyers who are brought together to discuss a marketing research topic with one another

analyzes how another company solved the problem that’s being researched

researchers interview, observe, and often videotape people while they work, live, shop, and play

used to reveal information research respondents might not reveal by being asked directly

asking two questions in the same question

questions that ask respondents to elaborate

questions that limit a respondent’s answers

a subset of potential buyers that are representative of your entire target market

from which you derive your target market

any type of marketing research mistake that occurs because a sample was utilized

each would-be participant has a known and equal chance of being selected

any type of sample that’s not drawn in a systematic way

a sample a researcher draws because it’s readily available and convenient to do so

someone who is paid to shop at a firm’s establishment or one of its competitors to observe the level of service, cleanliness of the facility, and so forth and report his or her findings to the firm

the overall tendency of the study to be off kilter

Introduction to Marketing Copyright © 2024 by Pamela Ip is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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The 5 Steps of the Marketing Research Process ( + Infographic)

Think back to a time when you didn’t have all of your facts straight. Maybe it led to an awkward foot-in-mouth moment, an argument, or being late for an event.  

Life can be challenging when you don’t have all of the information that you need or aren’t prepared with all of the facts. The same is true when it comes to marketing. Yet how often do companies build their marketing decisions and strategies based on opinions and not facts? More often than they should.

Something is missing from their marketing plans: the research.

Why is marketing research important?

Even if you have a room full of marketing pros, they can’t sell or grow without a deep knowledge of their customers (current and potential). Without this research, you miss opportunities to understand why your customers buy your products and what they hope to accomplish. This knowledge can help you build brand messaging that uses their language. You might also uncover new insights or even customer segments! Walk through the steps with our infographic: 

Step 1: Identify the problem

First up, you have to start with the problem that you need to solve. Make sure your problem is well defined—otherwise you might end up going down a never-ending black hole of research only to find that you have no tangible results.

Example problem: A wide variety of people buy athletic shoes from Company X. But since it’s such a wide range, they have trouble crafting a powerful marketing message that will resonate with each customer. They want more information around what people hope to accomplish when they purchase these shoes.

Step 2: Build your research plan

Once you have determined the problem you’re trying to solve, start to build your research plan.

It starts with the research objective. Just knowing the problem you’re trying to solve isn’t enough. Start with the problem and build the objective, aka how your research will help you solve the problem.

Example research objective: To determine the various motivations of individuals purchasing athletic shoes from Company X in order to create messaging that clearly communications the value they find in the shoes.

This research objective can then lead to multiple hypotheses such as:

• When customers purchase shoes from Company X, their main goal is to use them practically, for running or other sports.
• When customers purchase shoes from Company X, their main goal is to make a fashion statement.

From there, you’ll also need to make decisions about the timeframe (when you need the research by), budget, and best research methods for your objective.  

Some of the most common research methods include:

• Focus Groups
• Online Forums
• Online Reviews
• Product testing

Determine which methods you have the resources and bandwidth for. From there, start formulating the questions, finding the lucky interviewees, and setting up the tools.

Step 3: Start researching

Once you’ve laid out your research plan, it’s time to start rolling with the research! This means scheduling interviews, sending out surveys, or doing online research. While the specifics will depend on the methods of research you’re using, here are a few tips to help you get started:

• Choose a leader. If you have multiple people involved in an interview or focus group, pick one person to lead the conversation. This makes it easier for interviewees to follow and guides the questions.
• Don’t ask leading questions. This can be one of the biggest challenges of the interview. Ask questions that open it up for the interviewee to share their thoughts without being guided into their answers.
• Offer an incentive. When we send out large surveys, we will often make it into a contest. “Fill out our survey for a chance to win an Amazon gift card!” Sometimes a little incentive is all it takes!

Step 4: Analyze and report what you find

This might be the most important step—but often the most overlooked. Especially if you are in a larger company where this data might be useful for more than one person, you need to make sure your findings can be accessed and used in a way that makes it easy to make decisions.

If you do all this research and 1) nobody knows where to find it or 2) nobody can read the information, you will have spent a lot of time and money for no good reason!  

This first step to handling this problem is posting your research somewhere that everyone has access to and looks on a regular basis. This might be an intra-web or even a physical bulletin board. Just make sure that your research doesn’t get lost in a dark hole, never to be seen again.

The next step is making sure your data is analyzed and easy to understand. A good way to do this is by creating a summary of your research, whether as a whole or by specific tactic. Try adding a first page of “findings” to some of your research so that, at a glance, someone can understand the main takeaways from that interview or study.

Again, don’t miss the opportunity within your research process to make sure the valuable research you’ve done doesn’t get lost in the chaos.

Step 5: Put it into practice

All this research holds no value if you don’t put it into practice. How will you shift your marketing campaigns based on what you learned about your customers—their likes, dislikes, and buying triggers?

Take your findings and build them into your campaigns and your tactics. If you learned that your customers rely on specific websites or newsletters for their information, then dig in! See how you can provide similar value. Or maybe some of your customers had similar goals. Tailor your messaging to your insights. It’s amazing the impact you can have when you build your marketing campaigns around your customers, using the research that you’ve conducted.

Rinse and Repeat

Because people (and the world) are always changing, research isn’t a one-and-done process. Make it a priority to talk to your customers on a regular basis, learn about their challenges and problems, and ask these same questions! A planned marketing research process is the key to unlocking the wealth of information about your customers and building effective marketing plans .

You’ll start to see a shift in the way that you make decisions, run your marketing campaigns, and talk about your customers in general. Research shows that research helps!

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The marketing research process explained in 6 steps.

If you operate a business, you likely already realize that constant change is something you need to be prepared for. This applies to most aspects of your business, but none more so than marketing.

Market research is a crucial tool for businesses to choose the best marketing strategies, and provides a way to evaluate those decisions by collecting hard data . However, it can seem a bit overwhelming when you’re getting started.

Just as you wouldn’t go on holiday without a plan, you shouldn’t kick off your marketing strategy journey without having data and research to guide you. A market research plan is an integral part of making the right business decisions - it ensures you can solve any problems and that you don’t waste valuable time and effort.

Did you realize that many businesses that need to reduce their marketing budget cut out market research first? This is a mistake you want to avoid, especially if you’re launching a new service or moving into a new market.

The good news is that, if you have a process in place, marketing research doesn’t have to be overly expensive or time-consuming.

In this blog post we’ll share the important steps of the marketing research process. You can follow this guide to cut costs, improve data collection, and create the perfect market research project for your company.

Define and identify the issue

The very first step in market research is identifying a problem your business is currently facing. It also happens to be the most important part of the entire process.

Most of the time this will be a large business opportunity, or an obvious issue that needs to be acted on (or even a charitable cause you want to fight for). However, sometimes there might not be enough information available to make a decision you’re comfortable with.

• That’s where a market researcher comes in. A market researcher is someone who digs into a problem and finds data that makes it easier to come up with a solution. For example, the problem might turn out to be ‘too few people are making purchases after receiving your emails’, or ‘some features of your app aren’t being used as expected,’, or 'the fluctuations in the global cotton market are affecting profit margins.'

Once you have an explanation for the business problem , you can then focus your efforts on that specific issue for the most effective results. This is also a good time to let your imagination run wild and consider what the final research report will look like. How will it help you improve?

If the answers you expect to receive will solve the problem, then you can move forward with obtaining the data. But if you’re unsure, keep refining your objective until you hit the sweet spot.

Consider the right type of research design

At this point, you’ve defined the issue and you know what types of answers you want to have by the end of the process. Now you’re ready to progress further into the marketing research process.

It’s time to choose your data collection method . This will influence everything from your research questions to the demographic you concentrate on. It’s normal for this step of the process to feel a bit overwhelming, because of all the research tools and methods available.

Don’t worry. Each different method offers a unique way to meet your research objectives and start growing your business. A few options that might work include:

Conducting surveys

Conducting a market research survey is an effective way to better understanding your target audience and their needs. There are a few different types of surveys you can use to help improve your business.

Since this step is so integral to creating a product or service that addresses a real problem, you want to make sure it's an interactive form that incites objective and accurate responses. Play around with our ready-made market research survey template below.

market research survey

Interviewing clients and prospects.

Qualitative data like interviews offer great feedback. They let you speak with the people who are going to be most affected by any marketing that you do. By taking the time to listen to their unique opinions, you’ll be able to decide on the right path of action.

A great way to do this would be to hold a Zoom interview with a large group, run an online webinar , or hold one on one sessions that are more intimate. If you’re unsure who to talk to, use the research issue to help you decide who to interview and what to ask them.

For example, if you were looking to undertake a massive marketing research project, it would make sense to talk to any marketers in your team, as well as other key decision makers.

Running user tests

This can be done on your landing page or another webpage. It’s cost effective and can provide tons of useful takeaways and insights on how current and potential customers react to a new product, different branding, or unique messaging.

An A/B test will work well to give you data on user behaviour. It’ll give you primary data that shows you things a questionnaire won’t. Heat Mapping tools are also an excellent way to get results based on the data you’re collecting.

In some cases this will be a lot of work, involving massive amounts of data. That doesn’t mean it isn’t worth it - even if someone has done similar research in the past. However, it’s a good idea to find out what results other companies have had. This can help tweak your data analysis strategy, so you can get the best results possible.

The three types of market research

Now is also the time to consider what kind of research is right for you based on the data you want to collect. There are three types of market research : causal, descriptive and exploratory.

• Causal - This research methodology is the most specific, and usually involves a field test or an experiment. This kind of research helps find a cause between two different things. For example, you might ask whether the placement of your call to action impacts how many sales you make.
• Descriptive - Do you need detailed information about a certain topic? If so, then descriptive research will be the right solution. This research helps measure topics of interest, usually in a quantitative manner. For example, you may use an online survey to gauge customer satisfaction.
• Exploratory - If your issue isn’t well understood or defined, you’ll need exploratory research. It helps narrow your focus, gain larger insights, and work through the basics before moving forward. Common exploratory market research techniques include interviews, secondary data and focus groups.

Prepare and create your research instrument

Now you have enough information to start designing a research tool. Maybe you want to create an online survey? In that case, it’s the time to start creating your questionnaire or selecting what kind kind of respondents you’re after.

product research survey

Feel like a focus group is a better option? Then you’ll have to come up with material for the moderator and prepare questions for the group interview. Think about the method you plan to use, and start getting things ready so you can progress.

But before you get off and running with your research, it’s good practice to test the tool using a small group first. This will give you additional insights into whether your choice of research fits well with the kind of results you’re after.

Once you have the sample data, place it in an Excel spreadsheet and look for anything that seems off. By doing this you can identify problems early, and guide your decision making before diving deeper into the market research process.

There are a few things to keep in mind when creating a research instrument, especially if it’s a survey. Follow the “rules” below for the best results:

• Make sure it’s simple for respondents to take part.
• Ensure each question is short and to the point.
• Offer instructions for each type of question you ask.
• Start with general questions and work towards specific queries.
• Ensure the questionnaire looks good and is easy to read.
• Pre-test it to check everything makes sense.

Start collecting relevant data

Most market research data you’ll be collecting will be numbers (quantitative) rather than observations (qualitative). However, doing both quantitative and qualitative research can be useful to get the most comprehensive results.

Sure, as a general rule quantitative data might be more practical, but combining the two gives you the best of both worlds. Then you can make sure your solution is flawless.

For example, if you’re considering new tiers of pricing for items on your website, an A/B test will give you sufficient data. But you could also interview customers to find out if a new pricing tier is something they would approve.

If your audience sample size is too small, or you don’t have enough customers to get useful data from an interview, an innovative technique is to use an influencer marketing campaign on social media for your market research.

Try to make sure that the data collected is unbiased and valid. Questions should be as neutral as possible, and incorporate both closed-ended and open-ended styles to get additional information. This can include yes or no questions, multiple-choice questions, and questions that customers can answer with contextual information.

Analyze the data and report the findings

Once you have all the information needed for your marketing research process, it’s time to analyze what that data means. While some data might immediately stand out, looking for trends is an important piece of the puzzle. Try to avoid looking for patterns based on your own assumptions - approach your research as objectively as possible.

It’s a good idea to create a research study summary explaining what process you used, the results you got, and what conclusions you came to. This can mean incorporating a written report outlining the steps that you plan to take based on the data you collected.

Even if this isn’t a formal requirement of your business, it’s a useful practice to ensure you review the results properly and can share which action should be taken and why.

Simply providing data and charts you gathered doesn’t create an action plan.

When you’re presenting your research, make sure to include answers, insights and any recommendations you have. Tables and charts can be included, but make sure there’s good reason for them to be there.

Take the time to add outcomes and suggestions on actions to take as a result of what you have learned. You could even create simple graphics with a free online tool. It makes your research feel more meaningful and makes the path to improvement much easier to visualize.

Take the research and move forward into action

The research is done. Now you can take some time to enjoy a well-deserved pat on the back. However, you’re not done working just yet. Once you have a solution to whatever issue you were dealing with, you have to take action to fix it.

Now is the time to start developing your marketing campaigns and strategies. Test each option and get started. And keep in mind that just because you’re done with this market research project, it doesn’t mean you won’t have to do more in the future.

As we mentioned earlier, the business world’s problems and trends change regularly. That’s why consistent research is so important. The data and insights you received in this phase of research will evolve as time goes on - it’s critical to constantly analyze data over time to continue improving.

The techniques at your disposal will evolve as you learn about the industry, your specific buyer personas, and your company as a whole. When you take all of these things into consideration, it should be clear why businesses should spend more money and time on market research, rather than cutting down when times get a little tough.

These six steps to building a successful marketing research process will set you on the right path to making the most of your business. Just remember that you can always dive deeper to improve your marketing campaigns.

Don’t be afraid to branch out and try new things as they become available. The most important thing is having a system that helps rather than hinders your company - so get out there and get started today.

Neal Schaffer is an authority on helping innovative businesses digitally transform their sales and marketing. Founder of the digital marketing consultancy PDCA Social, Neal also teaches at Rutgers Business School and the Irish Management Institute.

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Home Market Research

Marketing research: Definition, steps, uses & advantages

What is marketing research?

Marketing research is defined as any technique or a set of practices that companies use to collect information to understand their target market better. Organizations use this data to improve their products, enhance their UX, and offer a better product to their customers. Marketing research is used to determine what the customers want, and how they react to products or features of a product.

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Four standard marketing research methods

The four most common marketing research methods are surveys, interviews, customer observations, and focus groups. You can research various ways without limiting yourself to just one way. Let’s dive deeper into each of these marketing research techniques.

Researchers collect responses by deploying surveys and managing data via online questionnaires or on-screen surveys at the POS. These surveys contain closed-ended and open-ended questions. They are popular and are the most widely used research techniques.

Why are online surveys popular?

Surveys are inexpensive, simple to set-up, deploy, and gather responses. It gets easy to collect multiple answers from a tailored audience group using surveys. Researchers rely on quantitative data, and online surveys provide quick responses compared to the more traditional offline methods. You can collect large amounts of data within minutes from anywhere in the world.

2. Interviews

Face-to-face or personal interviews are a more traditional way of doing marketing research. It is a slow and more expensive way of collecting responses. Researchers doing large scale marketing research do not prefer this method to collect a large number of responses. Interviews are conducted both in-person and on the telephone (CATI). 

Why are interviews important?

Personal interviews may not be widely used but play a significant role in understanding precisely what the respondent feels. You can record more than just verbal responses and understand the customer better. Often, when two humans interact with each other, more information is shared because of the dialogue. Personal interviews are useful in small-scale studies, where the researcher wants to interview a specific group of local respondents. CATI’s are helpful when the respondent base is more expansive.

3. Focus groups

Focus groups or online focus groups involve several respondents who participate in discussions about a particular topic. A researcher conducts focus groups to obtain richer information. The main reason for a focus group is to hold a dialogue between various people on a particular topic of interest. Unlike interviews, focus group members are allowed to interact with each other and influence one another.

Why are focus groups impactful?

It is no secret that focus groups are hugely impactful in decision making. Researchers gain a lot of information by organizing focus groups. Often, focus groups bring up issues not foreseen by researchers. Online or video focus groups have a broad reach, and many organizations have now started creating and nurturing research communities for better respondent handling and data gathering. Direct interaction of business groups and customers positively impacts users because they feel that their voices are heard.

4. Observation

Observation, though not popular and widely used, gives intuitive feedback. Research companies organize customer observation sessions to gather information on how they engage with the product or service (or a similar competitor product or service). Feedback from people’s behavioral attitudes is a powerful tool for researchers looking to improve their products and services.

What makes observation so powerful?

Observational market research is an excellent alternative to focus groups. It’s not only an inexpensive research tool, but you will also witness people interacting with and using your product in a natural environment. The downside is that you will have to make inferences about their feelings and reactions.

LEARN ABOUT: market research trends

How to conduct marketing research

Follow these four marketing research steps to help you understand what your users think and feel about your product, service, or business.

LEARN ABOUT: Behavioral Research

1. Create simple user personas

A user persona is nothing more than a fictional character that represents a user or a customer. Understanding user personas will help you gauge how different persons react to other products and services to understand their needs. To create a persona, your questions must answer these types questions about the user or customer:

• Who are they?
• What’s their primary goal?
• What stops them from achieving that goal?

2. Conduct observational research

Use both overt and covert observation methods to observe and take notes while users use your products or a similar one.

Overt vs. covert observation

• Overt observation asks users if they will allow you to watch them use your product. 
• Covert observation studies users in a natural environment without them knowing. This type of observation generally works only if you sell a product that consumers buy and use regularly. It brings in the purest observational research data as people act naturally while using the products. 

3. Conduct personal interviews

One-on-one conversations with your target population allow you to explore and dig deep into their concerns, revealing answers to many questions. Here are a few tips for conducting personal interviews.

• Be a journalist and not a salesperson. Ask users about their frustrations, needs, and areas where they think they need an improvement in the product. 
• Pose the ‘why’ question to dig deeper. Dive into the details to know more about their past behavior.
• Recording the conversation helps you focus on it rather than take notes simultaneously.

4. Analyze the data

The idea of conducting lean marketing research is to receive quick, actionable insight data. Analyze the information you have collected using various techniques to draw patterns into what customers like and dislike, what they want, and what they do not need. Create a simple visual representation of how people will interact with each other and the product to assess their needs in a better way.

LEARN ABOUT: Marketing Insight

Why is research so valuable?

Without research, it is impossible to gauge and understand your customers. Of course, you will have an idea of what they need and who they are and, but you must dive deeper to win their loyalty. Here is why marketing research matters:

• Attract potential customers: The primary aim of marketing research is to find ways to attract potential customers. It also helps to keep current happy and coming back for more. Understanding your customers entirely is the only way to progress. You’ll lose potential customers if you stop caring about improving your user experience.
• Answer the why’s: Marketing research gives you the answer to the ‘why.’ Make use of user analytics, big data, and reporting dashboards in marketing research to tell you what your users are thinking and why they think and act that way. For example, only marketing research can explain why customers leave you.
• Data-backed decisions: Research beats trends, assumptions, and so-called best business practices. Bad decisions are often taken due to emotional reasoning and guesswork. Focusing on customer experience by listening to your customers directs you in the right direction.
• Better planning: Research keeps you from making absurd decisions by planning in a vacuum. You might not fully gauge what your customers experience and feel while using your product. Customers may use products in a way that surprises you, and they may get confused by features that seem obvious to you. Conducting too much planning but not testing your assumptions will waste your money, time, efforts, and resources. Research helps you save up on all these factors.

LEARN ABOUT: 12 Best Tools for Researchers

Advantages of MKT research

Marketing research and user experience (UX) design help you continuously improve your product by acting on your feedback. Here are the advantages of conducting marketing research:

• Improved efficiency: Efficiency draws you closer to your users. You can improve the efficiency of delivering the product to the market and also increase its usability.
• Cost-effective: Marketing research helps you make the right decisions based on consumer demand, thus saving you costs in creating something that customers do not like or want.

LEARN ABOUT:  Test Market Demand

• Competitive edge: Quicker, more robust insights can help you place your services and products strategically, gaining a competitive advantage over others.
• Build strategies: You can quickly build, alter, or design new approaches to attract your users and consumers.
• Improved communication: Bridge the communication gap by interacting with consumers and hearing them out. This helps consumers feel wanted and special.
• LEARN ABOUT: Market research vs marketing research

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6.3 Steps in a Successful Marketing Research Plan

Learning outcomes.

By the end of this section, you will be able to:

• 1 Identify and describe the steps in a marketing research plan.
• 2 Discuss the different types of data research.
• 3 Explain how data is analyzed.
• 4 Discuss the importance of effective research reports.

Define the Problem

There are seven steps to a successful marketing research project (see Figure 6.3 ). Each step will be explained as we investigate how a marketing research project is conducted.

The first step, defining the problem, is often a realization that more information is needed in order to make a data-driven decision. Problem definition is the realization that there is an issue that needs to be addressed. An entrepreneur may be interested in opening a small business but must first define the problem that is to be investigated. A marketing research problem in this example is to discover the needs of the community and also to identify a potentially successful business venture.

Many times, researchers define a research question or objectives in this first step. Objectives of this research study could include: identify a new business that would be successful in the community in question, determine the size and composition of a target market for the business venture, and collect any relevant primary and secondary data that would support such a venture. At this point, the definition of the problem may be “Why are cat owners not buying our new cat toy subscription service?”

Additionally, during this first step we would want to investigate our target population for research. This is similar to a target market, as it is the group that comprises the population of interest for the study. In order to have a successful research outcome, the researcher should start with an understanding of the problem in the current situational environment.

Develop the Research Plan

Step two is to develop the research plan. What type of research is necessary to meet the established objectives of the first step? How will this data be collected? Additionally, what is the time frame of the research and budget to consider? If you must have information in the next week, a different plan would be implemented than in a situation where several months were allowed. These are issues that a researcher should address in order to meet the needs identified.

Research is often classified as coming from one of two types of data: primary and secondary. Primary data is unique information that is collected by the specific researcher with the current project in mind. This type of research doesn’t currently exist until it is pulled together for the project. Examples of primary data collection include survey, observation, experiment, or focus group data that is gathered for the current project.

Secondary data is any research that was completed for another purpose but can be used to help inform the research process. Secondary data comes in many forms and includes census data, journal articles, previously collected survey or focus group data of related topics, and compiled company data. Secondary data may be internal, such as the company’s sales records for a previous quarter, or external, such as an industry report of all related product sales. Syndicated data , a type of external secondary data, is available through subscription services and is utilized by many marketers. As you can see in Table 6.1 , primary and secondary data features are often opposite—the positive aspects of primary data are the negative side of secondary data.

There are four research types that can be used: exploratory, descriptive, experimental, and ethnographic research designs (see Figure 6.4 ). Each type has specific formats of data that can be collected. Qualitative research can be shared through words, descriptions, and open-ended comments. Qualitative data gives context but cannot be reduced to a statistic. Qualitative data examples are categorical and include case studies, diary accounts, interviews, focus groups, and open-ended surveys. By comparison, quantitative data is data that can be reduced to number of responses. The number of responses to each answer on a multiple-choice question is quantitative data. Quantitative data is numerical and includes things like age, income, group size, and height.

Exploratory research is usually used when additional general information in desired about a topic. When in the initial steps of a new project, understanding the landscape is essential, so exploratory research helps the researcher to learn more about the general nature of the industry. Exploratory research can be collected through focus groups, interviews, and review of secondary data. When examining an exploratory research design, the best use is when your company hopes to collect data that is generally qualitative in nature. 7

For instance, if a company is considering a new service for registered users but is not quite sure how well the new service will be received or wants to gain clarity of exactly how customers may use a future service, the company can host a focus group. Focus groups and interviews will be examined later in the chapter. The insights collected during the focus group can assist the company when designing the service, help to inform promotional campaign options, and verify that the service is going to be a viable option for the company.

Descriptive research design takes a bigger step into collection of data through primary research complemented by secondary data. Descriptive research helps explain the market situation and define an “opinion, attitude, or behavior” of a group of consumers, employees, or other interested groups. 8 The most common method of deploying a descriptive research design is through the use of a survey. Several types of surveys will be defined later in this chapter. Descriptive data is quantitative in nature, meaning the data can be distilled into a statistic, such as in a table or chart.

Again, descriptive data is helpful in explaining the current situation. In the opening example of LEGO , the company wanted to describe the situation regarding children’s use of its product. In order to gather a large group of opinions, a survey was created. The data that was collected through this survey allowed the company to measure the existing perceptions of parents so that alterations could be made to future plans for the company.

Experimental research , also known as causal research , helps to define a cause-and-effect relationship between two or more factors. This type of research goes beyond a correlation to determine which feature caused the reaction. Researchers generally use some type of experimental design to determine a causal relationship. An example is A/B testing, a situation where one group of research participants, group A, is exposed to one treatment and then compared to the group B participants, who experience a different situation. An example might be showing two different television commercials to a panel of consumers and then measuring the difference in perception of the product. Another example would be to have two separate packaging options available in different markets. This research would answer the question “Does one design sell better than the other?” Comparing that to the sales in each market would be part of a causal research study. 9

The final method of collecting data is through an ethnographic design. Ethnographic research is conducted in the field by watching people interact in their natural environment. For marketing research, ethnographic designs help to identify how a product is used, what actions are included in a selection, or how the consumer interacts with the product. 10

Examples of ethnographic research would be to observe how a consumer uses a particular product, such as baking soda. Although many people buy baking soda, its uses are vast. So are they using it as a refrigerator deodorizer, a toothpaste, to polish a belt buckle, or to use in baking a cake?

Select the Data Collection Method

Data collection is the systematic gathering of information that addresses the identified problem. What is the best method to do that? Picking the right method of collecting data requires that the researcher understand the target population and the design picked in the previous step. There is no perfect method; each method has both advantages and disadvantages, so it’s essential that the researcher understand the target population of the research and the research objectives in order to pick the best option.

Sometimes the data desired is best collected by watching the actions of consumers. For instance, how many cars pass a specific billboard in a day? What website led a potential customer to the company’s website? When are consumers most likely to use the snack vending machines at work? What time of day has the highest traffic on a social media post? What is the most streamed television program this week? Observational research is the collecting of data based on actions taken by those observed. Many data observations do not require the researched individuals to participate in the data collection effort to be highly valuable. Some observation requires an individual to watch and record the activities of the target population through personal observations .

Unobtrusive observation happens when those being observed aren’t aware that they are being watched. An example of an unobtrusive observation would be to watch how shoppers interact with a new stuffed animal display by using a one-way mirror. Marketers can identify which products were handled more often while also determining which were ignored.

Other methods can use technology to collect the data instead. Instances of mechanical observation include the use of vehicle recorders, which count the number of vehicles that pass a specific location. Computers can also assess the number of shoppers who enter a store, the most popular entry point for train station commuters, or the peak time for cars to park in a parking garage.

When you want to get a more in-depth response from research participants, one method is to complete a one-on-one interview . One-on-one interviews allow the researcher to ask specific questions that match the respondent’s unique perspective as well as follow-up questions that piggyback on responses already completed. An interview allows the researcher to have a deeper understanding of the needs of the respondent, which is another strength of this type of data collection. The downside of personal interviews it that a discussion can be very time-consuming and results in only one respondent’s answers. Therefore, in order to get a large sample of respondents, the interview method may not be the most efficient method.

Taking the benefits of an interview and applying them to a small group of people is the design of a focus group . A focus group is a small number of people, usually 8 to 12, who meet the sample requirements. These individuals together are asked a series of questions where they are encouraged to build upon each other’s responses, either by agreeing or disagreeing with the other group members. Focus groups are similar to interviews in that they allow the researcher, through a moderator, to get more detailed information from a small group of potential customers (see Figure 6.5 ).

Link to Learning

Focus groups.

Focus groups are a common method for gathering insights into consumer thinking and habits. Companies will use this information to develop or shift their initiatives. The best way to understand a focus group is to watch a few examples or explanations. TED-Ed has this video that explains how focus groups work.

You might be asking when it is best to use a focus group or a survey. Learn the differences, the pros and cons of each, and the specific types of questions you ask in both situations in this article .

Preparing for a focus group is critical to success. It requires knowing the material and questions while also managing the group of people. Watch this video to learn more about how to prepare for a focus group and the types of things to be aware of.

One of the benefits of a focus group over individual interviews is that synergy can be generated when a participant builds on another’s ideas. Additionally, for the same amount of time, a researcher can hear from multiple respondents instead of just one. 11 Of course, as with every method of data collection, there are downsides to a focus group as well. Focus groups have the potential to be overwhelmed by one or two aggressive personalities, and the format can discourage more reserved individuals from speaking up. Finally, like interviews, the responses in a focus group are qualitative in nature and are difficult to distill into an easy statistic or two.

Combining a variety of questions on one instrument is called a survey or questionnaire . Collecting primary data is commonly done through surveys due to their versatility. A survey allows the researcher to ask the same set of questions of a large group of respondents. Response rates of surveys are calculated by dividing the number of surveys completed by the total number attempted. Surveys are flexible and can collect a variety of quantitative and qualitative data. Questions can include simplified yes or no questions, select all that apply, questions that are on a scale, or a variety of open-ended types of questions. There are four types of surveys (see Table 6.2 ) we will cover, each with strengths and weaknesses defined.

Let’s start off with mailed surveys —surveys that are sent to potential respondents through a mail service. Mailed surveys used to be more commonly used due to the ability to reach every household. In some instances, a mailed survey is still the best way to collect data. For example, every 10 years the United States conducts a census of its population (see Figure 6.6 ). The first step in that data collection is to send every household a survey through the US Postal Service (USPS). The benefit is that respondents can complete and return the survey at their convenience. The downside of mailed surveys are expense and timeliness of responses. A mailed survey requires postage, both when it is sent to the recipient and when it is returned. That, along with the cost of printing, paper, and both sending and return envelopes, adds up quickly. Additionally, physically mailing surveys takes time. One method of reducing cost is to send with bulk-rate postage, but that slows down the delivery of the survey. Also, because of the convenience to the respondent, completed surveys may be returned several weeks after being sent. Finally, some mailed survey data must be manually entered into the analysis software, which can cause delays or issues due to entry errors.

Phone surveys are completed during a phone conversation with the respondent. Although the traditional phone survey requires a data collector to talk with the participant, current technology allows for computer-assisted voice surveys or surveys to be completed by asking the respondent to push a specific button for each potential answer. Phone surveys are time intensive but allow the respondent to ask questions and the surveyor to request additional information or clarification on a question if warranted. Phone surveys require the respondent to complete the survey simultaneously with the collector, which is a limitation as there are restrictions for when phone calls are allowed. According to Telephone Consumer Protection Act , approved by Congress in 1991, no calls can be made prior to 8:00 a.m. or after 9:00 p.m. in the recipient’s time zone. 12 Many restrictions are outlined in this original legislation and have been added to since due to ever-changing technology.

In-person surveys are when the respondent and data collector are physically in the same location. In-person surveys allow the respondent to share specific information, ask questions of the surveyor, and follow up on previous answers. Surveys collected through this method can take place in a variety of ways: through door-to-door collection, in a public location, or at a person’s workplace. Although in-person surveys are time intensive and require more labor to collect data than some other methods, in some cases it’s the best way to collect the required data. In-person surveys conducted through a door-to-door method is the follow-up used for the census if respondents do not complete the mailed survey. One of the downsides of in-person surveys is the reluctance of potential respondents to stop their current activity and answer questions. Furthermore, people may not feel comfortable sharing private or personal information during a face-to-face conversation.

Electronic surveys are sent or collected through digital means and is an opportunity that can be added to any of the above methods as well as some new delivery options. Surveys can be sent through email, and respondents can either reply to the email or open a hyperlink to an online survey (see Figure 6.7 ). Additionally, a letter can be mailed that asks members of the survey sample to log in to a website rather than to return a mailed response. Many marketers now use links, QR codes, or electronic devices to easily connect to a survey. Digitally collected data has the benefit of being less time intensive and is often a more economical way to gather and input responses than more manual methods. A survey that could take months to collect through the mail can be completed within a week through digital means.

Design the Sample

Although you might want to include every possible person who matches your target market in your research, it’s often not a feasible option, nor is it of value. If you did decide to include everyone, you would be completing a census of the population. Getting everyone to participate would be time-consuming and highly expensive, so instead marketers use a sample , whereby a portion of the whole is included in the research. It’s similar to the samples you might receive at the grocery store or ice cream shop; it isn’t a full serving, but it does give you a good taste of what the whole would be like.

So how do you know who should be included in the sample? Researchers identify parameters for their studies, called sample frames . A sample frame for one study may be college students who live on campus; for another study, it may be retired people in Dallas, Texas, or small-business owners who have fewer than 10 employees. The individual entities within the sampling frame would be considered a sampling unit . A sampling unit is each individual respondent that would be considered as matching the sample frame established by the research. If a researcher wants businesses to participate in a study, then businesses would be the sampling unit in that case.

The number of sampling units included in the research is the sample size . Many calculations can be conducted to indicate what the correct size of the sample should be. Issues to consider are the size of the population, the confidence level that the data represents the entire population, the ease of accessing the units in the frame, and the budget allocated for the research.

There are two main categories of samples: probability and nonprobability (see Figure 6.8 ). Probability samples are those in which every member of the sample has an identified likelihood of being selected. Several probability sample methods can be utilized. One probability sampling technique is called a simple random sample , where not only does every person have an identified likelihood of being selected to be in the sample, but every person also has an equal chance of exclusion. An example of a simple random sample would be to put the names of all members of a group into a hat and simply draw out a specific number to be included. You could say a raffle would be a good example of a simple random sample.

Another probability sample type is a stratified random sample , where the population is divided into groups by category and then a random sample of each category is selected to participate. For instance, if you were conducting a study of college students from your school and wanted to make sure you had all grade levels included, you might take the names of all students and split them into different groups by grade level—freshman, sophomore, junior, and senior. Then, from those categories, you would draw names out of each of the pools, or strata.

A nonprobability sample is a situation in which each potential member of the sample has an unknown likelihood of being selected in the sample. Research findings that are from a nonprobability sample cannot be applied beyond the sample. Several examples of nonprobability sampling are available to researchers and include two that we will look at more closely: convenience sampling and judgment sampling.

The first nonprobability sampling technique is a convenience sample . Just like it sounds, a convenience sample is when the researcher finds a group through a nonscientific method by picking potential research participants in a convenient manner. An example might be to ask other students in a class you are taking to complete a survey that you are doing for a class assignment or passing out surveys at a basketball game or theater performance.

A judgment sample is a type of nonprobability sample that allows the researcher to determine if they believe the individual meets the criteria set for the sample frame to complete the research. For instance, you may be interested in researching mothers, so you sit outside a toy store and ask an individual who is carrying a baby to participate.

Collect the Data

Now that all the plans have been established, the instrument has been created, and the group of participants has been identified, it is time to start collecting data. As explained earlier in this chapter, data collection is the process of gathering information from a variety of sources that will satisfy the research objectives defined in step one. Data collection can be as simple as sending out an email with a survey link enclosed or as complex as an experiment with hundreds of consumers. The method of collection directly influences the length of this process. Conducting personal interviews or completing an experiment, as previously mentioned, can add weeks or months to the research process, whereas sending out an electronic survey may allow a researcher to collect the necessary data in a few days. 13

Analyze and Interpret the Data

Once the data has been collected, the process of analyzing it may begin. Data analysis is the distillation of the information into a more understandable and actionable format. The analysis itself can take many forms, from the use of basic statistics to a more comprehensive data visualization process. First, let’s discuss some basic statistics that can be used to represent data.

The first is the mean of quantitative data. A mean is often defined as the arithmetic average of values. The formula is:

A common use of the mean calculation is with exam scores. Say, for example, you have earned the following scores on your marketing exams: 72, 85, 68, and 77. To find the mean, you would add up the four scores for a total of 302. Then, in order to generate a mean, that number needs to be divided by the number of exam scores included, which is 4. The mean would be 302 divided by 4, for a mean test score of 75.5. Understanding the mean can help to determine, with one number, the weight of a particular value.

Another commonly used statistic is median. The median is often referred to as the middle number. To generate a median, all the numeric answers are placed in order, and the middle number is the median. Median is a common statistic when identifying the income level of a specific geographic region. 14 For instance, the median household income for Albuquerque, New Mexico, between 2015 and 2019 was $52,911. 15 In this case, there are just as many people with an income above the amount as there are below.

Mode is another statistic that is used to represent data of all types, as it can be used with quantitative or qualitative data and represents the most frequent answer. Eye color, hair color, and vehicle color can all be presented with a mode statistic. Additionally, some researchers expand on the concept of mode and present the frequency of all responses, not just identifying the most common response. Data such as this can easily be presented in a frequency graph, 16 such as the one in Figure 6.9 .

Additionally, researchers use other analyses to represent the data rather than to present the entirety of each response. For example, maybe the relationship between two values is important to understand. In this case, the researcher may share the data as a cross tabulation (see Figure 6.10 ). Below is the same data as above regarding social media use cross tabulated with gender—as you can see, the data is more descriptive when you can distinguish between the gender identifiers and how much time is spent per day on social media.

Not all data can be presented in a graphical format due to the nature of the information. Sometimes with qualitative methods of data collection, the responses cannot be distilled into a simple statistic or graph. In that case, the use of quotations, otherwise known as verbatims , can be used. These are direct statements presented by the respondents. Often you will see a verbatim statement when reading a movie or book review. The critic’s statements are used in part or in whole to represent their feelings about the newly released item.

Infographics

As they say, a picture is worth a thousand words. For this reason, research results are often shown in a graphical format in which data can be taken in quickly, called an infographic .

Check out this infographic on what components make for a good infographic. As you can see, a good infographic needs four components: data, design, a story, and the ability to share it with others. Without all four pieces, it is not as valuable a resource as it could be. The ultimate infographic is represented as the intersection of all four.

Infographics are particularly advantageous online. Refer to this infographic on why they are beneficial to use online .

Prepare the Research Report

The marketing research process concludes by sharing the generated data and makes recommendations for future actions. What starts as simple data must be interpreted into an analysis. All information gathered should be conveyed in order to make decisions for future marketing actions. One item that is often part of the final step is to discuss areas that may have been missed with the current project or any area of further study identified while completing it. Without the final step of the marketing research project, the first six steps are without value. It is only after the information is shared, through a formal presentation or report, that those recommendations can be implemented and improvements made. The first six steps are used to generate information, while the last is to initiate action. During this last step is also when an evaluation of the process is conducted. If this research were to be completed again, how would we do it differently? Did the right questions get answered with the survey questions posed to the respondents? Follow-up on some of these key questions can lead to additional research, a different study, or further analysis of data collected.

Methods of Quantifying Marketing Research

One of the ways of sharing information gained through marketing research is to quantify the research . Quantifying the research means to take a variety of data and compile into a quantity that is more easily understood. This is a simple process if you want to know how many people attended a basketball game, but if you want to quantify the number of students who made a positive comment on a questionnaire, it can be a little more complicated. Researchers have a variety of methods to collect and then share these different scores. Below are some of the most common types used in business.

Is a customer aware of a product, brand, or company? What is meant by awareness? Awareness in the context of marketing research is when a consumer is familiar with the product, brand, or company. It does not assume that the consumer has tried the product or has purchased it. Consumers are just aware. That is a measure that many businesses find valuable. There are several ways to measure awareness. For instance, the first type of awareness is unaided awareness . This type of awareness is when no prompts for a product, brand, or company are given. If you were collecting information on fast-food restaurants, you might ask a respondent to list all the fast-food restaurants that serve a chicken sandwich. Aided awareness would be providing a list of products, brands, or companies and the respondent selects from the list. For instance, if you give a respondent a list of fast-food restaurants and ask them to mark all the locations with a chicken sandwich, you are collecting data through an aided method. Collecting these answers helps a company determine how the business location compares to those of its competitors. 17

Customer Satisfaction (CSAT)

Have you ever been asked to complete a survey at the end of a purchase? Many businesses complete research on buying, returning, or other customer service processes. A customer satisfaction score , also known as CSAT, is a measure of how satisfied customers are with the product, brand, or service. A CSAT score is usually on a scale of 0 to 100 percent. 18 But what constitutes a “good” CSAT score? Although what is identified as good can vary by industry, normally anything in the range from 75 to 85 would be considered good. Of course, a number higher than 85 would be considered exceptional. 19

Customer Acquisition Cost (CAC) and Customer Effort Score (CES)

Other metrics often used are a customer acquisition cost (CAC) and customer effort score (CES). How much does it cost a company to gain customers? That’s the purpose of calculating the customer acquisition cost. To calculate the customer acquisition cost , a company would need to total all expenses that were accrued to gain new customers. This would include any advertising, public relations, social media postings, etc. When a total cost is determined, it is divided by the number of new customers gained through this campaign.

The final score to discuss is the customer effort score , also known as a CES. The CES is a “survey used to measure the ease of service experience with an organization.” 20 Companies that are easy to work with have a better CES than a company that is notorious for being difficult. An example would be to ask a consumer about the ease of making a purchase online by incorporating a one-question survey after a purchase is confirmed. If a number of responses come back negative or slightly negative, the company will realize that it needs to investigate and develop a more user-friendly process.

Knowledge Check

It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.

• Defining the problem
• Developing the research plan
• Selecting a data collection method
• Designing the sample
• you are able to send it to all households in an area
• it is inexpensive
• responses are automatically loaded into the software
• the data comes in quickly
• Primary data
• Secondary data
• Secondary and primary data
• Professional data
• It shows how respondents answered two variables in relation to each other and can help determine patterns by different groups of respondents.
• By presenting the data in the form of a picture, the information is easier for the reader to understand.
• It is an easy way to see how often one answer is selected by the respondents.
• This analysis can used to present interview or focus group data.

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What Is Market Research?

• How It Works
• Primary vs. Secondary
• How to Conduct Research

The Bottom Line

• Marketing Essentials

How to Do Market Research, Types, and Example

Joules Garcia / Investopedia

Market research examines consumer behavior and trends in the economy to help a business develop and fine-tune its business idea and strategy. It helps a business understand its target market by gathering and analyzing data.

Market research is the process of evaluating the viability of a new service or product through research conducted directly with potential customers. It allows a company to define its target market and get opinions and other feedback from consumers about their interest in a product or service.

Research may be conducted in-house or by a third party that specializes in market research. It can be done through surveys and focus groups, among other ways. Test subjects are usually compensated with product samples or a small stipend for their time.

Key Takeaways

• Companies conduct market research before introducing new products to determine their appeal to potential customers.
• Tools include focus groups, telephone interviews, and questionnaires.
• The results of market research inform the final design of the product and determine how it will be positioned in the marketplace.
• Market research usually combines primary information, gathered directly from consumers, and secondary information, which is data available from external sources.

Market Research

How market research works.

Market research is used to determine the viability of a new product or service. The results may be used to revise the product design and fine-tune the strategy for introducing it to the public. This can include information gathered for the purpose of determining market segmentation . It also informs product differentiation , which is used to tailor advertising.

A business engages in various tasks to complete the market research process. It gathers information based on the market sector being targeted by the product. This information is then analyzed and relevant data points are interpreted to draw conclusions about how the product may be optimally designed and marketed to the market segment for which it is intended.

It is a critical component in the research and development (R&D) phase of a new product or service introduction. Market research can be conducted in many different ways, including surveys, product testing, interviews, and focus groups.

Market research is a critical tool that companies use to understand what consumers want, develop products that those consumers will use, and maintain a competitive advantage over other companies in their industry.

Primary Market Research vs. Secondary Market Research

Market research usually consists of a combination of:

• Primary research, gathered by the company or by an outside company that it hires
• Secondary research, which draws on external sources of data

Primary Market Research

Primary research generally falls into two categories: exploratory and specific research.

• Exploratory research is less structured and functions via open-ended questions. The questions may be posed in a focus group setting, telephone interviews, or questionnaires. It results in questions or issues that the company needs to address about a product that it has under development.
• Specific research delves more deeply into the problems or issues identified in exploratory research.

Secondary Market Research

All market research is informed by the findings of other researchers about the needs and wants of consumers. Today, much of this research can be found online.

Secondary research can include population information from government census data , trade association research reports , polling results, and research from other businesses operating in the same market sector.

History of Market Research

Formal market research began in Germany during the 1920s. In the United States, it soon took off with the advent of the Golden Age of Radio.

Companies that created advertisements for this new entertainment medium began to look at the demographics of the audiences who listened to each of the radio plays, music programs, and comedy skits that were presented.

They had once tried to reach the widest possible audience by placing their messages on billboards or in the most popular magazines. With radio programming, they had the chance to target rural or urban consumers, teenagers or families, and judge the results by the sales numbers that followed.

Types of Market Research

Face-to-face interviews.

From their earliest days, market research companies would interview people on the street about the newspapers and magazines that they read regularly and ask whether they recalled any of the ads or brands that were published in them. Data collected from these interviews were compared to the circulation of the publication to determine the effectiveness of those ads.

Market research and surveys were adapted from these early techniques.

To get a strong understanding of your market, it’s essential to understand demand, market size, economic indicators, location, market saturation, and pricing.

Focus Groups

A focus group is a small number of representative consumers chosen to try a product or watch an advertisement.

Afterward, the group is asked for feedback on their perceptions of the product, the company’s brand, or competing products. The company then takes that information and makes decisions about what to do with the product or service, whether that's releasing it, making changes, or abandoning it altogether.

Phone Research

The man-on-the-street interview technique soon gave way to the telephone interview. A telephone interviewer could collect information in a more efficient and cost-effective fashion.

Telephone research was a preferred tactic of market researchers for many years. It has become much more difficult in recent years as landline phone service dwindles and is replaced by less accessible mobile phones.

Survey Research

As an alternative to focus groups, surveys represent a cost-effective way to determine consumer attitudes without having to interview anyone in person. Consumers are sent surveys in the mail, usually with a coupon or voucher to incentivize participation. These surveys help determine how consumers feel about the product, brand, and price point.

Online Market Research

With people spending more time online, market research activities have shifted online as well. Data collection still uses a survey-style form. But instead of companies actively seeking participants by finding them on the street or cold calling them on the phone, people can choose to sign up, take surveys, and offer opinions when they have time.

This makes the process far less intrusive and less rushed, since people can participate on their own time and of their own volition.

How to Conduct Market Research

The first step to effective market research is to determine the goals of the study. Each study should seek to answer a clear, well-defined problem. For example, a company might seek to identify consumer preferences, brand recognition, or the comparative effectiveness of different types of ad campaigns.

After that, the next step is to determine who will be included in the research. Market research is an expensive process, and a company cannot waste resources collecting unnecessary data. The firm should decide in advance which types of consumers will be included in the research, and how the data will be collected. They should also account for the probability of statistical errors or sampling bias .

The next step is to collect the data and analyze the results. If the two previous steps have been completed accurately, this should be straightforward. The researchers will collect the results of their study, keeping track of the ages, gender, and other relevant data of each respondent. This is then analyzed in a marketing report that explains the results of their research.

The last step is for company executives to use their market research to make business decisions. Depending on the results of their research, they may choose to target a different group of consumers, or they may change their price point or some product features.

The results of these changes may eventually be measured in further market research, and the process will begin all over again.

Benefits of Market Research

Market research is essential for developing brand loyalty and customer satisfaction. Since it is unlikely for a product to appeal equally to every consumer, a strong market research program can help identify the key demographics and market segments that are most likely to use a given product.

Market research is also important for developing a company’s advertising efforts. For example, if a company’s market research determines that its consumers are more likely to use Facebook than X (formerly Twitter), it can then target its advertisements to one platform instead of another. Or, if they determine that their target market is value-sensitive rather than price-sensitive, they can work on improving the product rather than reducing their prices.

Market research only works when subjects are honest and open to participating.

Example of Market Research

Many companies use market research to test new products or get information from consumers about what kinds of products or services they need and don’t currently have.

For example, a company that’s considering starting a business might conduct market research to test the viability of its product or service. If the market research confirms consumer interest, the business can proceed confidently with its business plan . If not, the company can use the results of the market research to make adjustments to the product to bring it in line with customer desires.

What Are the Main Types of Market Research?

The main types of market research are primary research and secondary research. Primary research includes focus groups, polls, and surveys. Secondary research includes academic articles, infographics, and white papers.

Qualitative research gives insights into how customers feel and think. Quantitative research uses data and statistics such as website views, social media engagement, and subscriber numbers.

What Is Online Market Research?

Online market research uses the same strategies and techniques as traditional primary and secondary market research, but it is conducted on the Internet. Potential customers may be asked to participate in a survey or give feedback on a product. The responses may help the researchers create a profile of the likely customer for a new product.

What Are Paid Market Research Surveys?

Paid market research involves rewarding individuals who agree to participate in a study. They may be offered a small payment for their time or a discount coupon in return for filling out a questionnaire or participating in a focus group.

What Is a Market Study?

A market study is an analysis of consumer demand for a product or service. It looks at all of the factors that influence demand for a product or service. These include the product’s price, location, competition, and substitutes as well as general economic factors that could influence the new product’s adoption, for better or worse.

Market research is a key component of a company’s research and development (R&D) stage. It helps companies understand in advance the viability of a new product that they have in development and to see how it might perform in the real world.

Britannica Money. “ Market Research .”

U.S. Small Business Administration. “ Market Research and Competitive Analysis .”

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The 5-Step Marketing Research Process

March 14, 2023

By Sandy Moore

With constant change being the norm in marketing and business, one thing remains the same: the need for marketing research. Marketing research is a helpful tool for organizations to better identify marketing strategies and evaluate business decisions using data. Just as you wouldn’t go on vacation without making any plans, you shouldn’t design marketing strategies without backing them with research and data. In short, the marketing research process is the backbone of informed business and marketing decisions. 

You might be surprised to hear that marketing research is one of the first things that organizations cut from their marketing budgets because of the high time (and sometimes monetary) investment. This is not the best decision, especially when your company is planning to launch a new product or venturing into a new market. As some savvy startups have learned, marketing research doesn't have to be expensive if you do it right and follow the right process. 

Let’s review best practices when going through the five-step marketing research process:

1. Define the Problem or Opportunity

The most important part of the marketing research process is defining the problem. In order to do any research and collect data, you have to know what you are trying to learn from the research. In marketing research, defining the problem you need to solve will determine what information you need and how you can get that information. This will help your organization clarify the overarching problem or opportunity, such as how to best address the loss of market share or how to launch a new product to a specific demographic. 

Develop questions that will allow you to define your problem (or opportunity), and examine all potential causes so that the research can be whittled down to the information you actually need to solve that problem or determine what action to take regarding an opportunity. Oftentimes, these are questions about who your target market or ideal buyer persona is (for example: “What does our ideal customer look like?”). These might include questions about demographics, what their occupation is, what they like to do in their spare time—anything to help you get a clearer picture of who your ideal buyer persona is. Consider as many variables and potential causes as possible.

2. Develop Your Marketing Research Plan

After you’ve examined all potential causes of the problem and have used those questions to boil down exactly what you’re trying to solve, it’s time to build the research plan. Your research plan can be overwhelming to create because it can include any method that will help you answer the research problem or explore an opportunity identified in step one. 

To help you develop the research plan, let’s review a few techniques for conducting research:

• I nterview prospects and customers . Oftentimes, you get the best feedback by using this tactic because you’re going straight to the source. This might take the form of a focus group or one-on-one interviews. Use your defined research problem to help select the right people to interview.
• Conduct a survey using SurveyMonkey or another tool.
• Run user tests on your website or landing page(s). This is a cost-effective approach that can provide a lot of insight and data on how your customers or potential customers behave or respond to something, whether it’s new messaging or branding or a modified product or service you are thinking about offering. Simple A/B tests can go a long way in discovering user behavior. Use heatmapping tools, such as Hotjar or Lucky Orange, and website analytics tools , such as Google Analytics or HubSpot analytics , to track results depending on what data you need to collect.

Oftentimes, we do all of this work and gather all of the data—only to realize that we didn’t have to reinvent the wheel because someone had already run a similar, credible study or solved the same problem. That doesn’t mean you don’t need to do any research, but learning about what other organizations have done to solve a problem or seize an opportunity can help you tweak your research study and save you time when considering all of the research options. In marketing research, this is called secondary data because it has been collected by someone else, versus the primary data that you would collect through your own research study.

3. Collect Relevant Data and Information

In marketing research, most of the data you collect will be quantitative (numbers or data) versus qualitative, which is descriptive and observational. Ideally, you will gather a mix of the two types of data. For example, you might run an A/B test on your website to see if a new pricing tier would bring in more business. In that research study, you might also interview several customers about whether or not the new pricing tier would appeal to them. This way, you’re receiving hard data and qualitative data that provide more color and insight.

When collecting data, make sure it's valid and unbiased. You should never ask a research interviewee, “You think that we should offer a higher pricing tier with additional services, correct?” This type of question is clearly designed to influence the way the person responds. Try asking both open-ended and closed-ended questions (for instance, a multiple-choice question asking what income range best describes you).

4. Analyze Data and Report Findings

Now that you’ve gathered all of the information you need, it’s time for the fun part: analyzing the data. Although one piece of information or data might jump out at you, it’s important to look for trends as opposed to specific pieces of information. As you're analyzing your data, don't try to find patterns based on your assumptions prior to collecting the data. 

Sometimes, it’s important to write up a summary of the study, including the process that you followed, the results, conclusions, and what steps you recommend taking based on those results. Even if you don’t need a formal marketing research report, be sure that you review the study and results so that you can articulate the recommended course of action. Sharing the charts and data you collected is pointless if it doesn’t lead to action. Tools like HubSpot's free blog maker can help you publish the results in an easy way.

Was your hypothesis proven wrong? Great—that's why you do testing and don't run with assumptions when making decisions that could have a major impact on your organization. It’s always better to take the results as they are than to twist the data to prove yourself right.

5. Put Your Research into Action

Your research is complete. It's time to present your findings and take action. Start developing your inbound marketing strategies and campaigns. Put your findings to the test and get going! The biggest takeaway here is that, although this round of research is complete, it's not over.

The problems, business environment, and trends are constantly changing, which means that your research is never over. The trends you discovered through your research are evolving. You should be analyzing your data on a regular basis to see where you can improve. The more you know about your buyer personas, industry, and company, the more successful your marketing efforts and company will be. When you look at it that way, you should start to wonder why so many organizations don’t budget time and resources for marketing research. 

Of course, there is a lot more to the marketing research process than these five core steps, but these are enough to get you started. Good luck, and be sure to share any tips you have discovered for conducting marketing research!

Frequently Asked Questions 

Faq #1: how many steps are in the marketing research process, faq #2: what is the purpose of the five-step marketing research process, faq #3: what are the steps in the marketing research process, faq #4: what is the first step in the marketing research process, faq #5: what is the final step in the marketing research process, faq #6: why is the marketing research process important.

This post was originally published in June 2016 and has been updated since.

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About the author

Sandy Moore Sandy Moore is a Senior Director, Marketing Strategy at SmartBug Media. She has more than 20 years of experience in marketing with extensive knowledge in outbound and inbound marketing, advertising sales, promotions, public relations, and sales enablement. Read more articles by Sandy Moore .

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McKinsey Global Private Markets Review 2024: Private markets in a slower era

At a glance, macroeconomic challenges continued.

McKinsey Global Private Markets Review 2024: Private markets: A slower era

If 2022 was a tale of two halves, with robust fundraising and deal activity in the first six months followed by a slowdown in the second half, then 2023 might be considered a tale of one whole. Macroeconomic headwinds persisted throughout the year, with rising financing costs, and an uncertain growth outlook taking a toll on private markets. Full-year fundraising continued to decline from 2021’s lofty peak, weighed down by the “denominator effect” that persisted in part due to a less active deal market. Managers largely held onto assets to avoid selling in a lower-multiple environment, fueling an activity-dampening cycle in which distribution-starved limited partners (LPs) reined in new commitments.

About the authors

This article is a summary of a larger report, available as a PDF, that is a collaborative effort by Fredrik Dahlqvist , Alastair Green , Paul Maia, Alexandra Nee , David Quigley , Aditya Sanghvi , Connor Mangan, John Spivey, Rahel Schneider, and Brian Vickery , representing views from McKinsey’s Private Equity & Principal Investors Practice.

Performance in most private asset classes remained below historical averages for a second consecutive year. Decade-long tailwinds from low and falling interest rates and consistently expanding multiples seem to be things of the past. As private market managers look to boost performance in this new era of investing, a deeper focus on revenue growth and margin expansion will be needed now more than ever.

Perspectives on a slower era in private markets

Global fundraising contracted.

Fundraising fell 22 percent across private market asset classes globally to just over $1 trillion, as of year-end reported data—the lowest total since 2017. Fundraising in North America, a rare bright spot in 2022, declined in line with global totals, while in Europe, fundraising proved most resilient, falling just 3 percent. In Asia, fundraising fell precipitously and now sits 72 percent below the region’s 2018 peak.

Despite difficult fundraising conditions, headwinds did not affect all strategies or managers equally. Private equity (PE) buyout strategies posted their best fundraising year ever, and larger managers and vehicles also fared well, continuing the prior year’s trend toward greater fundraising concentration.

The numerator effect persisted

Despite a marked recovery in the denominator—the 1,000 largest US retirement funds grew 7 percent in the year ending September 2023, after falling 14 percent the prior year, for example 1 “U.S. retirement plans recover half of 2022 losses amid no-show recession,” Pensions and Investments , February 12, 2024. —many LPs remain overexposed to private markets relative to their target allocations. LPs started 2023 overweight: according to analysis from CEM Benchmarking, average allocations across PE, infrastructure, and real estate were at or above target allocations as of the beginning of the year. And the numerator grew throughout the year, as a lack of exits and rebounding valuations drove net asset values (NAVs) higher. While not all LPs strictly follow asset allocation targets, our analysis in partnership with global private markets firm StepStone Group suggests that an overallocation of just one percentage point can reduce planned commitments by as much as 10 to 12 percent per year for five years or more.

Despite these headwinds, recent surveys indicate that LPs remain broadly committed to private markets. In fact, the majority plan to maintain or increase allocations over the medium to long term.

Investors fled to known names and larger funds

Fundraising concentration reached its highest level in over a decade, as investors continued to shift new commitments in favor of the largest fund managers. The 25 most successful fundraisers collected 41 percent of aggregate commitments to closed-end funds (with the top five managers accounting for nearly half that total). Closed-end fundraising totals may understate the extent of concentration in the industry overall, as the largest managers also tend to be more successful in raising non-institutional capital.

While the largest funds grew even larger—the largest vehicles on record were raised in buyout, real estate, infrastructure, and private debt in 2023—smaller and newer funds struggled. Fewer than 1,700 funds of less than $1 billion were closed during the year, half as many as closed in 2022 and the fewest of any year since 2012. New manager formation also fell to the lowest level since 2012, with just 651 new firms launched in 2023.

Whether recent fundraising concentration and a spate of M&A activity signals the beginning of oft-rumored consolidation in the private markets remains uncertain, as a similar pattern developed in each of the last two fundraising downturns before giving way to renewed entrepreneurialism among general partners (GPs) and commitment diversification among LPs. Compared with how things played out in the last two downturns, perhaps this movie really is different, or perhaps we’re watching a trilogy reusing a familiar plotline.

Dry powder inventory spiked (again)

Private markets assets under management totaled $13.1 trillion as of June 30, 2023, and have grown nearly 20 percent per annum since 2018. Dry powder reserves—the amount of capital committed but not yet deployed—increased to $3.7 trillion, marking the ninth consecutive year of growth. Dry powder inventory—the amount of capital available to GPs expressed as a multiple of annual deployment—increased for the second consecutive year in PE, as new commitments continued to outpace deal activity. Inventory sat at 1.6 years in 2023, up markedly from the 0.9 years recorded at the end of 2021 but still within the historical range. NAV grew as well, largely driven by the reluctance of managers to exit positions and crystallize returns in a depressed multiple environment.

Private equity strategies diverged

Buyout and venture capital, the two largest PE sub-asset classes, charted wildly different courses over the past 18 months. Buyout notched its highest fundraising year ever in 2023, and its performance improved, with funds posting a (still paltry) 5 percent net internal rate of return through September 30. And although buyout deal volumes declined by 19 percent, 2023 was still the third-most-active year on record. In contrast, venture capital (VC) fundraising declined by nearly 60 percent, equaling its lowest total since 2015, and deal volume fell by 36 percent to the lowest level since 2019. VC funds returned –3 percent through September, posting negative returns for seven consecutive quarters. VC was the fastest-growing—as well as the highest-performing—PE strategy by a significant margin from 2010 to 2022, but investors appear to be reevaluating their approach in the current environment.

Private equity entry multiples contracted

PE buyout entry multiples declined by roughly one turn from 11.9 to 11.0 times EBITDA, slightly outpacing the decline in public market multiples (down from 12.1 to 11.3 times EBITDA), through the first nine months of 2023. For nearly a decade leading up to 2022, managers consistently sold assets into a higher-multiple environment than that in which they had bought those assets, providing a substantial performance tailwind for the industry. Nowhere has this been truer than in technology. After experiencing more than eight turns of multiple expansion from 2009 to 2021 (the most of any sector), technology multiples have declined by nearly three turns in the past two years, 50 percent more than in any other sector. Overall, roughly two-thirds of the total return for buyout deals that were entered in 2010 or later and exited in 2021 or before can be attributed to market multiple expansion and leverage. Now, with falling multiples and higher financing costs, revenue growth and margin expansion are taking center stage for GPs.

Real estate receded

Demand uncertainty, slowing rent growth, and elevated financing costs drove cap rates higher and made price discovery challenging, all of which weighed on deal volume, fundraising, and investment performance. Global closed-end fundraising declined 34 percent year over year, and funds returned −4 percent in the first nine months of the year, losing money for the first time since the 2007–08 global financial crisis. Capital shifted away from core and core-plus strategies as investors sought liquidity via redemptions in open-end vehicles, from which net outflows reached their highest level in at least two decades. Opportunistic strategies benefited from this shift, with investors focusing on capital appreciation over income generation in a market where alternative sources of yield have grown more attractive. Rising interest rates widened bid–ask spreads and impaired deal volume across food groups, including in what were formerly hot sectors: multifamily and industrial.

Private debt pays dividends

Debt again proved to be the most resilient private asset class against a turbulent market backdrop. Fundraising declined just 13 percent, largely driven by lower commitments to direct lending strategies, for which a slower PE deal environment has made capital deployment challenging. The asset class also posted the highest returns among all private asset classes through September 30. Many private debt securities are tied to floating rates, which enhance returns in a rising-rate environment. Thus far, managers appear to have successfully navigated the rising incidence of default and distress exhibited across the broader leveraged-lending market. Although direct lending deal volume declined from 2022, private lenders financed an all-time high 59 percent of leveraged buyout transactions last year and are now expanding into additional strategies to drive the next era of growth.

Infrastructure took a detour

After several years of robust growth and strong performance, infrastructure and natural resources fundraising declined by 53 percent to the lowest total since 2013. Supply-side timing is partially to blame: five of the seven largest infrastructure managers closed a flagship vehicle in 2021 or 2022, and none of those five held a final close last year. As in real estate, investors shied away from core and core-plus investments in a higher-yield environment. Yet there are reasons to believe infrastructure’s growth will bounce back. Limited partners (LPs) surveyed by McKinsey remain bullish on their deployment to the asset class, and at least a dozen vehicles targeting more than $10 billion were actively fundraising as of the end of 2023. Multiple recent acquisitions of large infrastructure GPs by global multi-asset-class managers also indicate marketwide conviction in the asset class’s potential.

Private markets still have work to do on diversity

Private markets firms are slowly improving their representation of females (up two percentage points over the prior year) and ethnic and racial minorities (up one percentage point). On some diversity metrics, including entry-level representation of women, private markets now compare favorably with corporate America. Yet broad-based parity remains elusive and too slow in the making. Ethnic, racial, and gender imbalances are particularly stark across more influential investing roles and senior positions. In fact, McKinsey’s research  reveals that at the current pace, it would take several decades for private markets firms to reach gender parity at senior levels. Increasing representation across all levels will require managers to take fresh approaches to hiring, retention, and promotion.

Artificial intelligence generating excitement

The transformative potential of generative AI was perhaps 2023’s hottest topic (beyond Taylor Swift). Private markets players are excited about the potential for the technology to optimize their approach to thesis generation, deal sourcing, investment due diligence, and portfolio performance, among other areas. While the technology is still nascent and few GPs can boast scaled implementations, pilot programs are already in flight across the industry, particularly within portfolio companies. Adoption seems nearly certain to accelerate throughout 2024.

Private markets in a slower era

If private markets investors entered 2023 hoping for a return to the heady days of 2021, they likely left the year disappointed. Many of the headwinds that emerged in the latter half of 2022 persisted throughout the year, pressuring fundraising, dealmaking, and performance. Inflation moderated somewhat over the course of the year but remained stubbornly elevated by recent historical standards. Interest rates started high and rose higher, increasing the cost of financing. A reinvigorated public equity market recovered most of 2022’s losses but did little to resolve the valuation uncertainty private market investors have faced for the past 18 months.

Within private markets, the denominator effect remained in play, despite the public market recovery, as the numerator continued to expand. An activity-dampening cycle emerged: higher cost of capital and lower multiples limited the ability or willingness of general partners (GPs) to exit positions; fewer exits, coupled with continuing capital calls, pushed LP allocations higher, thereby limiting their ability or willingness to make new commitments. These conditions weighed on managers’ ability to fundraise. Based on data reported as of year-end 2023, private markets fundraising fell 22 percent from the prior year to just over $1 trillion, the largest such drop since 2009 (Exhibit 1).

The impact of the fundraising environment was not felt equally among GPs. Continuing a trend that emerged in 2022, and consistent with prior downturns in fundraising, LPs favored larger vehicles and the scaled GPs that typically manage them. Smaller and newer managers struggled, and the number of sub–$1 billion vehicles and new firm launches each declined to its lowest level in more than a decade.

Despite the decline in fundraising, private markets assets under management (AUM) continued to grow, increasing 12 percent to $13.1 trillion as of June 30, 2023. 2023 fundraising was still the sixth-highest annual haul on record, pushing dry powder higher, while the slowdown in deal making limited distributions.

Investment performance across private market asset classes fell short of historical averages. Private equity (PE) got back in the black but generated the lowest annual performance in the past 15 years, excluding 2022. Closed-end real estate produced negative returns for the first time since 2009, as capitalization (cap) rates expanded across sectors and rent growth dissipated in formerly hot sectors, including multifamily and industrial. The performance of infrastructure funds was less than half of its long-term average and even further below the double-digit returns generated in 2021 and 2022. Private debt was the standout performer (if there was one), outperforming all other private asset classes and illustrating the asset class’s countercyclical appeal.

Private equity down but not out

Higher financing costs, lower multiples, and an uncertain macroeconomic environment created a challenging backdrop for private equity managers in 2023. Fundraising declined for the second year in a row, falling 15 percent to $649 billion, as LPs grappled with the denominator effect and a slowdown in distributions. Managers were on the fundraising trail longer to raise this capital: funds that closed in 2023 were open for a record-high average of 20.1 months, notably longer than 18.7 months in 2022 and 14.1 months in 2018. VC and growth equity strategies led the decline, dropping to their lowest level of cumulative capital raised since 2015. Fundraising in Asia fell for the fourth year of the last five, with the greatest decline in China.

Despite the difficult fundraising context, a subset of strategies and managers prevailed. Buyout managers collectively had their best fundraising year on record, raising more than $400 billion. Fundraising in Europe surged by more than 50 percent, resulting in the region’s biggest haul ever. The largest managers raised an outsized share of the total for a second consecutive year, making 2023 the most concentrated fundraising year of the last decade (Exhibit 2).

Despite the drop in aggregate fundraising, PE assets under management increased 8 percent to $8.2 trillion. Only a small part of this growth was performance driven: PE funds produced a net IRR of just 2.5 percent through September 30, 2023. Buyouts and growth equity generated positive returns, while VC lost money. PE performance, dating back to the beginning of 2022, remains negative, highlighting the difficulty of generating attractive investment returns in a higher interest rate and lower multiple environment. As PE managers devise value creation strategies to improve performance, their focus includes ensuring operating efficiency and profitability of their portfolio companies.

Deal activity volume and count fell sharply, by 21 percent and 24 percent, respectively, which continued the slower pace set in the second half of 2022. Sponsors largely opted to hold assets longer rather than lock in underwhelming returns. While higher financing costs and valuation mismatches weighed on overall deal activity, certain types of M&A gained share. Add-on deals, for example, accounted for a record 46 percent of total buyout deal volume last year.

Real estate recedes

For real estate, 2023 was a year of transition, characterized by a litany of new and familiar challenges. Pandemic-driven demand issues continued, while elevated financing costs, expanding cap rates, and valuation uncertainty weighed on commercial real estate deal volumes, fundraising, and investment performance.

Managers faced one of the toughest fundraising environments in many years. Global closed-end fundraising declined 34 percent to $125 billion. While fundraising challenges were widespread, they were not ubiquitous across strategies. Dollars continued to shift to large, multi-asset class platforms, with the top five managers accounting for 37 percent of aggregate closed-end real estate fundraising. In April, the largest real estate fund ever raised closed on a record $30 billion.

Capital shifted away from core and core-plus strategies as investors sought liquidity through redemptions in open-end vehicles and reduced gross contributions to the lowest level since 2009. Opportunistic strategies benefited from this shift, as investors turned their attention toward capital appreciation over income generation in a market where alternative sources of yield have grown more attractive.

In the United States, for instance, open-end funds, as represented by the National Council of Real Estate Investment Fiduciaries Fund Index—Open-End Equity (NFI-OE), recorded $13 billion in net outflows in 2023, reversing the trend of positive net inflows throughout the 2010s. The negative flows mainly reflected $9 billion in core outflows, with core-plus funds accounting for the remaining outflows, which reversed a 20-year run of net inflows.

As a result, the NAV in US open-end funds fell roughly 16 percent year over year. Meanwhile, global assets under management in closed-end funds reached a new peak of $1.7 trillion as of June 2023, growing 14 percent between June 2022 and June 2023.

Real estate underperformed historical averages in 2023, as previously high-performing multifamily and industrial sectors joined office in producing negative returns caused by slowing demand growth and cap rate expansion. Closed-end funds generated a pooled net IRR of −3.5 percent in the first nine months of 2023, losing money for the first time since the global financial crisis. The lone bright spot among major sectors was hospitality, which—thanks to a rush of postpandemic travel—returned 10.3 percent in 2023. 2 Based on NCREIFs NPI index. Hotels represent 1 percent of total properties in the index. As a whole, the average pooled lifetime net IRRs for closed-end real estate funds from 2011–20 vintages remained around historical levels (9.8 percent).

Global deal volume declined 47 percent in 2023 to reach a ten-year low of $650 billion, driven by widening bid–ask spreads amid valuation uncertainty and higher costs of financing (Exhibit 3). 3 CBRE, Real Capital Analytics Deal flow in the office sector remained depressed, partly as a result of continued uncertainty in the demand for space in a hybrid working world.

During a turbulent year for private markets, private debt was a relative bright spot, topping private markets asset classes in terms of fundraising growth, AUM growth, and performance.

Fundraising for private debt declined just 13 percent year over year, nearly ten percentage points less than the private markets overall. Despite the decline in fundraising, AUM surged 27 percent to $1.7 trillion. And private debt posted the highest investment returns of any private asset class through the first three quarters of 2023.

Private debt’s risk/return characteristics are well suited to the current environment. With interest rates at their highest in more than a decade, current yields in the asset class have grown more attractive on both an absolute and relative basis, particularly if higher rates sustain and put downward pressure on equity returns (Exhibit 4). The built-in security derived from debt’s privileged position in the capital structure, moreover, appeals to investors that are wary of market volatility and valuation uncertainty.

Direct lending continued to be the largest strategy in 2023, with fundraising for the mostly-senior-debt strategy accounting for almost half of the asset class’s total haul (despite declining from the previous year). Separately, mezzanine debt fundraising hit a new high, thanks to the closings of three of the largest funds ever raised in the strategy.

Over the longer term, growth in private debt has largely been driven by institutional investors rotating out of traditional fixed income in favor of private alternatives. Despite this growth in commitments, LPs remain underweight in this asset class relative to their targets. In fact, the allocation gap has only grown wider in recent years, a sharp contrast to other private asset classes, for which LPs’ current allocations exceed their targets on average. According to data from CEM Benchmarking, the private debt allocation gap now stands at 1.4 percent, which means that, in aggregate, investors must commit hundreds of billions in net new capital to the asset class just to reach current targets.

Private debt was not completely immune to the macroeconomic conditions last year, however. Fundraising declined for the second consecutive year and now sits 23 percent below 2021’s peak. Furthermore, though private lenders took share in 2023 from other capital sources, overall deal volumes also declined for the second year in a row. The drop was largely driven by a less active PE deal environment: private debt is predominantly used to finance PE-backed companies, though managers are increasingly diversifying their origination capabilities to include a broad new range of companies and asset types.

Infrastructure and natural resources take a detour

For infrastructure and natural resources fundraising, 2023 was an exceptionally challenging year. Aggregate capital raised declined 53 percent year over year to $82 billion, the lowest annual total since 2013. The size of the drop is particularly surprising in light of infrastructure’s recent momentum. The asset class had set fundraising records in four of the previous five years, and infrastructure is often considered an attractive investment in uncertain markets.

While there is little doubt that the broader fundraising headwinds discussed elsewhere in this report affected infrastructure and natural resources fundraising last year, dynamics specific to the asset class were at play as well. One issue was supply-side timing: nine of the ten largest infrastructure GPs did not close a flagship fund in 2023. Second was the migration of investor dollars away from core and core-plus investments, which have historically accounted for the bulk of infrastructure fundraising, in a higher rate environment.

The asset class had some notable bright spots last year. Fundraising for higher-returning opportunistic strategies more than doubled the prior year’s total (Exhibit 5). AUM grew 18 percent, reaching a new high of $1.5 trillion. Infrastructure funds returned a net IRR of 3.4 percent in 2023; this was below historical averages but still the second-best return among private asset classes. And as was the case in other asset classes, investors concentrated commitments in larger funds and managers in 2023, including in the largest infrastructure fund ever raised.

The outlook for the asset class, moreover, remains positive. Funds targeting a record amount of capital were in the market at year-end, providing a robust foundation for fundraising in 2024 and 2025. A recent spate of infrastructure GP acquisitions signal multi-asset managers’ long-term conviction in the asset class, despite short-term headwinds. Global megatrends like decarbonization and digitization, as well as revolutions in energy and mobility, have spurred new infrastructure investment opportunities around the world, particularly for value-oriented investors that are willing to take on more risk.

Private markets make measured progress in DEI

Diversity, equity, and inclusion (DEI) has become an important part of the fundraising, talent, and investing landscape for private market participants. Encouragingly, incremental progress has been made in recent years, including more diverse talent being brought to entry-level positions, investing roles, and investment committees. The scope of DEI metrics provided to institutional investors during fundraising has also increased in recent years: more than half of PE firms now provide data across investing teams, portfolio company boards, and portfolio company management (versus investment team data only). 4 “ The state of diversity in global private markets: 2023 ,” McKinsey, August 22, 2023.

In 2023, McKinsey surveyed 66 global private markets firms that collectively employ more than 60,000 people for the second annual State of diversity in global private markets report. 5 “ The state of diversity in global private markets: 2023 ,” McKinsey, August 22, 2023. The research offers insight into the representation of women and ethnic and racial minorities in private investing as of year-end 2022. In this chapter, we discuss where the numbers stand and how firms can bring a more diverse set of perspectives to the table.

The statistics indicate signs of modest advancement. Overall representation of women in private markets increased two percentage points to 35 percent, and ethnic and racial minorities increased one percentage point to 30 percent (Exhibit 6). Entry-level positions have nearly reached gender parity, with female representation at 48 percent. The share of women holding C-suite roles globally increased 3 percentage points, while the share of people from ethnic and racial minorities in investment committees increased 9 percentage points. There is growing evidence that external hiring is gradually helping close the diversity gap, especially at senior levels. For example, 33 percent of external hires at the managing director level were ethnic or racial minorities, higher than their existing representation level (19 percent).

Yet, the scope of the challenge remains substantial. Women and minorities continue to be underrepresented in senior positions and investing roles. They also experience uneven rates of progress due to lower promotion and higher attrition rates, particularly at smaller firms. Firms are also navigating an increasingly polarized workplace today, with additional scrutiny and a growing number of lawsuits against corporate diversity and inclusion programs, particularly in the US, which threatens to impact the industry’s pace of progress.

Fredrik Dahlqvist is a senior partner in McKinsey’s Stockholm office; Alastair Green  is a senior partner in the Washington, DC, office, where Paul Maia and Alexandra Nee  are partners; David Quigley  is a senior partner in the New York office, where Connor Mangan is an associate partner and Aditya Sanghvi  is a senior partner; Rahel Schneider is an associate partner in the Bay Area office; John Spivey is a partner in the Charlotte office; and Brian Vickery  is a partner in the Boston office.

The authors wish to thank Jonathan Christy, Louis Dufau, Vaibhav Gujral, Graham Healy-Day, Laura Johnson, Ryan Luby, Tripp Norton, Alastair Rami, Henri Torbey, and Alex Wolkomir for their contributions

The authors would also like to thank CEM Benchmarking and the StepStone Group for their partnership in this year's report.

This article was edited by Arshiya Khullar, an editor in the Gurugram office.

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