8 tips to make the most of your market research budget

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Companies are often afraid of spending too much effort and money on market research, and that it might not provide enough value for how much they put into it. However, results from market research (if done right) are a powerful tool to improve packaging, products, brands and even the company as a whole. In this post, I want to show, from a psychologist’s perspective, a few easy ways to make the most of your market research budget and get the best value for money, whether you are able and willing to spend a lot or just a little on it.

1. Know exactly which questions you need answered

When spending money on market research, it can be tempting to try and find out as much as possible. However, this ‘fishing expedition’ approach may result in you spending more money than you should, and leave you with a large amount of results that aren’t particularly useful at this stage. Instead, take the time to separate out your questions into ones that would just be ‘nice to know’, and ones that are crucial to your company’s success. Then put your main efforts into finding the answers to your essential questions. Don’t try to fit too much into a single study.

2. Base your sample size on what you need to find out

Sample sizes and the statistical power associated with them depend largely on how many groups you want to compare. If you are just interested in responses from the market overall, you will need fewer participants than when you want to compare men and women. Regional comparisons will significantly increase the number of people that need to take part in your study in order to get meaningful results, and increase the cost of your research. Identify whether these comparisons matter to your research questions. There are plenty of cases where regional comparisons are important, for example when you want to find out why a product is performing well in one region but worse in another. There might however be other, more general questions that can be answered without having to use regional splits.

3. Know your target market and tailor your research to it

In order to get results that really matter to your company, it is helpful to use participants who are part of your target market. A lot of the time research is carried out with a wide range of participants, all age groups, both genders, income ranges etc., which can be the right approach. More often than not you will however benefit from using more specific samples. Separating people into groups such as age or location can often be a waste of time. A more pragmatic approach may be to separate according to lifestyle or personal tastes. If you know that your target market are people over 35 who do most of the shopping in their households, use this as a selection criterion. Narrowing down your participant groups can also help reduce costs – sometimes slightly smaller sample sizes can be used because there is less variation in the data, and fewer groups to compare.

4. Pick the right time to carry out your research

Often market research is carried out too late and seen as a confirmation of decisions rather than a tool that can help you make decisions. If you want to design new packaging, for example, market research can not only be used to compare several finalised designs but can already help you in the pre-design stage by letting you know which ideas are likely to work and which ones won’t. Neuromarketing is ideal for this sort of testing because it can be used to look into how people subconsciously feel towards concepts, colour schemes, words and just ideas in general, instead of presenting people with a final design and asking what they think about it. Similarly, when you notice problems such as decreasing sales don’t wait until these are more established, but use market research to counteract these quickly and effectively.

5. Don’t waste money on research that won’t give you the answers you need

This point cannot be repeated enough: Traditional ‘asking methods’ (such as surveys, focus groups and interviews) will give you answers to the questions you ask, but these explicit answers are not always the key to what people really think. A large amount of people’s decision-making processes are subconscious and your respondents will be unable to understand the factors influencing their decisions, let alone tell you about them. It is important to use the most effective research available to you, one that takes all factors influencing behaviour into account and gives you the answers you really need to hear. I’m not saying don’t ask people, don’t just ask people.

6. Make use of on-line tools

I have already pointed out that surveys are usually not the best way to find all the answers to your research questions, but there are plenty of implicit on-line tools that will. Neuromarketing does not necessarily mean that you have to wire people up and test their brain activity and biophysiological responses; rather, there are many tests that look at subconscious associations and reactions on-line. These tests are incredibly cost and time effective: Hundreds and thousands of specifically targeted people can be reached quickly and at a comparatively low cost. It’s important to note that measuring implicit attitudes is not the same as indirect questioning.

7. Make the most of your results by avoiding confirmation bias

It is easy to get results back, look through them and mainly focus on the insights that make the most sense to you, the parts that feel intuitively right and ignore the rest. We are all guilty of forming opinions and then picking out facts that confirm these exact opinions (confirmation bias). However, by using this approach you might miss important details in the results that are essential for you to move forward successfully. There are other ways in which expert opinions can help you make the right decisions based on your research. Often, people confuse correlation (A and B often occur together) with causation (A causes B), which can make them draw the wrong conclusions. Do not be afraid to go back to the people who carried out your research! Good reports already tend to include advice regarding what exactly individual results mean in relation to the company strategy and what good future research steps might be, but your researchers are always happy to clarify any details and point you in the right direction. This will help you use your results in the most effective way.

8. See market research as an investment

As I said in the beginning, many companies are worried that they will not get enough value out of their market research. You might have carried out research in the past and the results did not lead to the improvement you were hoping for, or you might not be sure if your funds should be spent on research or other important areas within your company. But it is important to understand that you can benefit tremendously from better understanding your customers, what they want, how they truly feel about your brands, products and advertising by using the best market research methods available. Understanding what truly drives your customers’ behaviour will help you become a more successful company, which is why you should see market research as an investment.


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An idiot’s guide to neuromarketing – Mental shortcuts

We all know that for certain behaviours, our brain more or less switches to ‘autopilot’. When walking from A to B, you don’t constantly think about every single step that you take, or about how you have to hold up your head, breathe, and balance your body. Similarly, you might remember that the first few times you drove a car, you had to pay close attention to every single action involved in it, while you probably barely remember your last trip home from work.

These behaviours are often explained by saying that ‘your body remembers how to do these things’, or using words such as ‘muscle memory’. So while we understand these shortcuts with physical examples, we often forget that our mind functions in a similar way.

 

Our mental shortcuts influence how we see and perceive the world, how we think and reason, and how we make decisions.

Our behaviours, as well as concepts that have an impact on us, are represented by neural activity in our brains. Every time two behaviours occur at the same time, or two concepts are encountered together, our neural connection between them becomes stronger. This is often described with the sentence ‘cells that fire together, wire together’. In reality, it’s a bit more complicated than that, but it is true that the connections we make between behaviours and/or concepts are reflected in neural networks, and grow stronger the more we encounter these links. This is why you press the clutch pedal and change gears without having to think about linking these behaviours, but also why you associate the taste of an orange with the colour orange.

 

Associations like these get built and used constantly, without us necessarily being aware of them. Dan Ariely believes we are the sum of our early decisions – the product of what he calls an arbitrary coherence of choices that we made long ago (or were made for us). As a result, in many cases, we make decisions that are simply the reflection of our initial choices.

These initial decisions become anchors that take root and resonate throughout our later lives much more than we would like to acknowledge. Our associations help us learn new concepts and avoid dangerous situations (e.g. walking through a dark alleyway or touching a hob), but are also what makes us prejudiced and jump to conclusions. They do however also help us make choices, and that’s where it gets interesting for market research. The vast amount of visual as well as factual information available to us when making pretty much any purchase decision is overwhelming, and we use the connections we have already established to help us make our choice. This can be reflected in the use of heuristics and biases, but even if the decision seems pretty rational to us (and we might be able to come up with an explanation for our choice afterwards), our behaviour is strongly influenced by these links and associations. It might be something as simple as picking one bottle over another because the label colour reminds us of our childhood home.

What does this mean for market research?

Traditional ‘asking methods’ such as surveys and focus groups require people to reflect on their behaviour, opinions and decisions as well as predict how they would act in the future. However, most of the time we don’t understand the associations and connections that underlie the decision-making processes. We still try to come up with explanations for our behaviour when asked to reflect on it, but the reasons we give often have little to do with what really drove our decision. In order to understand what drives behaviour, we need to understand what connections between concepts and associations are common. This means exploring and quantifying what concepts are connected with a brand or an advert, and how communications can be used to strengthen positive associations as well as weaken undesirable ones. Because these (often emotional) connections are what can make or break a purchase decision, it is important to explore them, rather than relying solely on the post-rationalisations people come up with when asked about their decision.


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The Scottish Referendum


 

Mindlab offers the most accurate and effective market research available because we don’t just ask people what they think, we find out how they feel.


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Focus groups

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If you have ever developed a new product, packaging design or advert, you will probably have at least considered using a focus group. And it seems to make sense, seeing that they give potential customers a chance to express their opinions in an open, non-constricted way. Or do they? Focus groups are sometimes criticised because important decisions are based on the voice of just a few, and some critics say they kill innovation. A lot of the time people express wanting for things that already exist, or to quote Henry ford,

If I had asked people what they wanted, they would have said faster horses.

But looking at it from a psychological perspective, there are other things that should make you reconsider using focus groups – They are likely to give you an answer, but not the one you need to hear! Here is why:

People don’t understand their own motivations

In focus groups, people are asked to engage with a product or an idea, express their opinions and tell you why exactly they feel this way. In real life, people will more often than not pick a product without really thinking too hard about why they are choosing it over the alternatives. If you ask them why they picked it, they will probably be able to come up with some reasons, but these ‘reasons’ are not what made them pick it in the first place. There are hundreds and thousands of factors influencing people’s purchasing decisions that they are not aware of, let alone able to explain to you. Tiny details such as font sizes, colour schemes, what they subconsciously associate with the imagery and even store lighting and music can steer people to be more likely to choose or reject a product. People also tend to be incredibly bad at predicting their future behaviour, which makes the question ‘Would you buy this product?’ borderline irrelevant. In order to find out what really makes a difference to people’s behaviour and what doesn’t, you might want to use other methods than focus groups. You could for example observe actual behaviour and see how small changes affect it. Or you can test what stands out to people and has an impact on their emotions at the point of sale. Both of these approaches will give you more accurate answers than focus groups.

Unnatural interactions

Focus groups interact with products for minutes, discuss them with others and focus on details they would have never noticed in a shop. To understand product selections (which for most things take place in seconds), it is not necessarily productive to force these long interactions, but you should rather focus on the emotional impact of the product. For this, either try to simulate purchase situations as close to real life as possible, or look at the subconscious opinions people form in (milli-) seconds, like they would if they were standing in front of a shelf. The actual environment of focus groups poses another problem: How often do you do your supermarket shopping sitting in a circle with a group of strangers? Speaking of which:

10 people – 1 opinion

Focus groups are based on the assumption that group discussions can provide many different points of view in a productive, straight-forward way. But this assumption completely underestimates the effect that people have on one another. Think about it: Group therapy sessions are built around the idea that interactions with others change you, but focus groups somehow assume that people don’t influence each other’s opinions?

There are plenty of ways people influence one another in focus groups. Social desirability gets individuals to conform to the group consensus, because we have the drive to appear likeable to others. You might not think that others strongly influence your behaviour, but think back to the style of clothing that you used to wear in the past. Would you still feel comfortable wearing the outfits you wore 10 years ago today? Similarly to society as a whole, focus groups can change your view on what is desirable and what isn’t, and our natural strive for harmony and avoidance of conflict lead us to try and come to a consensus decision, being unable to critically evaluate facts and ignoring minority viewpoints. It’s different if you have a really strong opinion on something, but new cereal flavours and slightly different packaging designs are usually not something people feel strongly enough about to be happy to get into an argument over. It’s not always the majority that sets the direction, either: Often, persuasive individuals voicing their opinion enough times can be just as influential as several people singing from the same hymn sheet.

Similarly, people in focus groups may make others aware of minor details that they wouldn’t have noticed themselves, and make them justify decisions and opinions they wouldn’t have chosen on their own. And just as persuasive members of the focus group can steer discussions into one direction, it can also be the discussion leader who influences the group’s responses by asking leading questions, guiding the focus to particular features and focusing on responses that confirm how he or she already feels about the product. This is not done deliberately, but something we are all guilty of (forming an opinion and then seeking evidence that supports it – confirmation bias). Interviewers also put a lot of effort into putting participants into a comfortable, happy frame of mind while discussing the products, which again can be seen as removed from real-life shopping experiences. This can have a strong influence on the responses participants give, as being in a positive mood will make them more likely to voice positive opinions (possibly leaving out criticism they might be expressing otherwise).

Additionally, groups have the natural tendency to overestimate how much the outside world agrees with the group consensus, which can lead to small focus groups voicing their opinions so certainly and convincingly that one might think they really are a good representation of the average buyer. This ‘groupthink’ mentality has in the past led to disastrous political decisions (such as the Pig Bay invasion), and means that groups do not always come to the right conclusion, but feel like they have.

Is it ever worth it using a focus group?

Asking people for their opinion is of course not a bad idea, it is just important to consider that their answers might not paint the whole picture. It Is also possible to reduce some of the focus group risks by using skilled psychologists as moderators and having several people (who have not been involved in the research process up to that point) interpret the group’s opinions and overall group dynamic.

There is no doubt that others influence our behaviour, and that our family and friends can have strong influences on what we like and what we don’t. Therefore, it may be worth looking at group behaviour when testing certain products, but this has to happen in a setting that’s closer to real life than what focus groups are able to provide. It may be beneficial to test real, already existing social groups in naturalistic settings to answer specific questions regarding how groups make purchase decisions. However, this insight might not help much when trying to find out which products individual people will go for when standing in a supermarket aisle.

In summary, focus groups are probably going to give you an answer to your question – but it is most likely not the answer you need to hear in order to make your product successful. To achieve this, start basing your decisions on insight that comes from looking at the actual drivers of consumer behaviour, instead of listening to rationalisations made up by a handful of people.

Juliane Schulz, Mindlab

Mindlab offers the most accurate and effective market research available because we don’t just ask people what they think, we find out how they feel.


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