Lunch Lesson Six - Researching the market

By Gillian Lacey-Solymar Consumer Affairs Correspondent

The endless supply of clothes, shoes, toys, TVs, gadgets and gifts seems to increase every year.

We're inundated with ever more ways in which to spend our money - new products, services, shops, hotels, clubs, bars and restaurants.

And they're all advertised in more and more innovative posters, TV slots and magazines. The choice at times seems endless.

Market researchers want to get inside your head...

But what lies behind our decisions? Why do we choose to buy one product rather than another? Why do we shop at one outlet rather than another?

These are crucial questions for a company's profitability.

The answers lie inside the customer's head.

To unlock the reasons, the decision makers need to access our thinking and really get inside our brains.

And the mechanism for getting in there? It's market research.

The industry in the UK is worth a staggering £1.2bn and, despite a tougher economic climate, is still growing by 2.5% a year.

Questionnaires

Around 15 million interviews are conducted each year, and 100 million questionnaires are mailed out, such is the enthusiasm for research.

The research pie can be cut any number of ways. For example, where does the information come from - is it primary or secondary?

Let's say my company was making cakes and I wanted to understand the cake market better.

I'd look first to see whether any data already existed on the market size, growth and the competition. This would be classed as secondary research because it has already been collated.

If I still had more queries about the market, I'd have to commission research myself. This would be primary research - completely new material.

So we end up with the paradox that secondary research tends to be what people look at first and primary research is the element that comes second!

No doubt, the most important two categories in market research are quantitative and qualitative research.

Quantitative
This is to do with large numbers. You ask a lot of people very simple questions and then analyse the answers statistically.

I might ask 300 customers what cake brands they buy and how often and from where. I could then segment the market into areas.

From this I might determine that young people on incomes of more than £20,000 like Brand X cakes while older people with incomes of below £20,000 prefer Brand Y.

You know what and how people buy, but you don't know why.

Qualitative
This is aimed at finding the reasons behind those cake buying decisions.

Focus groups are a way of gathering information

Focus groups are a key form of qualitative research.

The process involves getting together a group of people very informally. Over coffees or glasses of wine, honest and relaxed answers are coaxed out of the respondents.

"Respondents need to give their own views and not be influenced by the rest of the group," explains Tessa Clatworthy from market researchers NOP.

The aim is to find out who thinks what and, more crucially, why.

The next step is for the results to be collated - the people who commissioned the research should feel they managed to understand the motivations of a few very vocal consumers.

So which works better at really getting inside the consumer's brain - qualitative focus groups or quantitative surveys?

Representative

Cary Cooper, professor of organisational psychology at the University of Manchester Institute of Science and Technology, thinks he'd opt for quantitative.

"It would be more representative as it's larger scale, and you don't have to worry who you put into the focus groups," he explains.

Ideally though, Professor Cooper feels that if resources are available, both forms of research should be conducted.

Carrying out both, though, is obviously a luxury that not all organisations can afford.

But at times even vast amounts spent on research can yield information that's fundamentally flawed.

In 1985, Coca-Cola made a momentous announcement to launch a new product on to the market.

Coke carried out tastings on its new flavour

In its attempts to beat off the competition from the ever-strengthening Pepsi, Coke announced that: "The best has been made even better."

After 99 years, it decided to abandon its original formula in favor of a sweeter version it called New Coke.

Millions were spent on research with almost 200,000 people involved.

But less than three months later, the product was abondoned and the company forced to admit that it had got it very wrong.

The old Coke, under the name Coca-Cola Classic, was brought back.

The researchers had made a major miscalculation.

Despite New Coke being favoured by the majority in blind tests, even beating rival Pepsi, the public were not prepared to lose old Coke, America's drink of choice.

Protests

Tastes had been considered, emotions had not.

There were protests, letters and calls to the company to bring back the original formula.

Coca-Cola relented and in an embarrassing U- turn it abandoned the new hyped version and went back to the old favourite.

Looking into the future, with consumers becoming ever more media savvy, research is developing in two different ways.

Leigh: Put customers' lives in context

On the quantitative side, the web is being used to tap into ever larger surveys and in the qualitative area researchers are looking more into the minutiae of people's lives.

"We will tend to put brand managers into the context of customer's lives," explains Dr Leigh Morris of Research International.

"Recently we asked the manager of a nappy brand to spend a couple of days in the home of a mother of a three-month-old baby to understand her motivations and concerns."

So it seems that as the consumer becomes ever more canny the market research industry needs to come up with even more sophisticated techniques.

And yet when you boil it down, at the core of successful market research lies the age old adage of listening very hard to your customers.