How Levels of Analysis Affect Market Research Costs

Working Hard-1

Investing in market research is a major commitment for any organization. Access to hard data can even mean the difference between success and failure. Simply gathering data, however, will not automatically result in actionable results and, worse, it may send you down the wrong path entirely.

What information you collect and how you analyze the data is key.  For instance, we had a client who had been conducting a brief customer satisfaction study.  The ratings from past surveys looked good – solidly in the satisfaction range.  But when we designed a study that included customers who were also using competitors and segmented the data, it became clear that one of these companies had even higher satisfaction ratings.  Advanced analysis produced additional insights on what was driving that competitor’s superior performance.   

Another client, a city government, conducted a citizen study about budget priorities.  The overall data provided some helpful general insights, but it was only when we dug deeper with advanced analysis that we revealed three types of taxpayers, with very different priorities.  For example, in the overall results, it appeared that citizens had a low priority for funding parks and recreation.  Further analysis, however, identified one group that was highly interested in funding these programs. 

When big dollars are riding on how you apply your research findings, you want to be sure you are looking deeper with your analysis. How deep your analysis will affect market research cost. The main categories of analysis options include:

Level:  Overall, top-level analysis

This level includes how many people or what percentage of the sample chose each option available to them.  For example, in brand research for a bank, what percentage said they had heard of your institution.

Level:  Data segmentation

This level goes a little deeper into the data, cutting it by demographics or other questions from the survey.  For example, we could see the percentage of people who would consider using a specific bank by age group, gender or what their favorite TV show is.

Level:  Advanced analysis

Two examples of advanced analyses that we perform are conjoint and Kano.  Both ask simple questions on the surface, but then, after collecting the responses from many people, we are able to uncover key preferences that people are usually unable to articulate or even understand that they value. For more on these types of analysis, visit our Types of Studies page.

For our bank survey, we may use conjoint to examine aspects of a specific product, such as a mortgage.  We can test the various factors people consider when applying for a mortgage, including the brand of the institution, down-payment requirements, points, interest rate, closing costs and more.  The results would tell us, for each of those features, what people prefer and the importance of each of the features in comparison to each other.  We can also cut these results to compare them based on gender, income, etc.

Kano Analysis

Kano analysis would be helpful if we want to know what drives customer satisfaction and how to improve it. By asking about the importance of key features, and how satisfied they are with their particular bank on those key features, we can identify the places where the institution should focus its efforts.

Identifying the level of analysis required will also help you estimate costs.  In general, the deeper you want to analyze data, the greater the number of participants you need in your total sample and sub-samples.  This impacts costs by adding to data collection costs and analyst time, but the investment always pays off.  When launching a new product or entering a new market, wrong assumptions made at any point in the process can lead to huge miscalculations.

Take, for example, the story of Vizio’s 3-D television. Based on the success of 3D movies in commercial theaters, the company assumed there was a market for the same technology in the home entertainment realm. Had they done the research, they probably would have discovered that while many people enjoy 3D in a theater, the technology options and the content were most definitely not ready for prime time. Yes, Americans liked Avatar, but not enough to change their viewing habits at home.

Instead of doing market research, the company went straight to market and, after several years of disappointing sales and millions of dollars down the drain, the company quietly withdrew the offering from the marketplace. Proper market research and deeper analysis may have revealed the true underlying factors around 3-D television and prevented the loss of millions of dollars. This is a form of positioning research we conduct at Vernon.

For more information about your market research options,
contact Vernon Research Group at (319) 364-7278 or subscribe to our blog below.
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