Last week, I received the following email from Facebook:
This made me think: if Facebook, one of the world’s fastest-growing tech giants, has a dedicated research team, this must mean that proactive market research has a real place in global businesses?
But why? Don’t they already collect tons of data (so much so that they get in trouble for it)? Also, are there not better ways than emails to collect data?
But Facebook aren’t the only ones. Google invests heavily on research, as does Hubspot. Consumer giants like Lego and McDonald’s rely heavily on market research to improve their product and marketing strategy.
In this post, we’re going to explore why and how global companies continue to invest in market research, the different approaches they take to do it, and the pros and cons of each.
Why are businesses investing in market research?
A deep understanding of the market is now more important than ever, for two reasons:
1. Competition is fierce. Your competitors are often just a click away. Customers won’t hesitate to switch to an alternative if they aren’t happy with your offering. Staying on top of your market means staying in touch with what customers think.
2. Customers have very high expectations. Because there are so many options available, customers expect high-quality services and products. And brands need to keep up with these expectations by better understanding what customers want.
Concretely, traditional market research allows businesses to track:
- The perception of their brand over time.
- The trends and market segments affecting their products.
- The impact of their advertising campaigns and social media marketing.
- The preferences of their customer communities.
- The distinguishing values associated with each of their brands.
Basically, brands can use market research to steer their marketing and product strategy - to acquire new customers, and also build better relationships with existing customers.
As keeping customers are just as important as acquiring new customers, businesses need to keep up with ever-changing customer expectations and buying behaviors to stay ahead.
Or, simply avoiding PR blunders like Pepsi:
This helps explain why companies like Facebook have steadily increased their marketing spend over recent years.
Just take a look at these figures:
This spend includes an ongoing commitment to classic market research methods.
But what do we mean when we use this term?
Common approaches within market research
When we talk about traditional market research methods, we’re talking about:
- Focus groups: Groups of people assembled to discuss an existing product or provide feedback to inform the development or launch of a new product.
- Surveys: Questions and prompts provided to a predetermined set of people to gain information and insight on products and services.
- Questionnaires: A series of questions designed to capture customer feedback either online or in person.
We can see these techniques at work in Facebook’s approach to user experience research. At Facebook, “user experience research managers” focus on the following five types of research to take a product from an early idea to something ready for launch:
- Foundational Research to understand the needs of users and customers.
- Contextual Inquiry to focus on how users engage with technology, including spending more time with real users.
- Descriptive Research allowing Facebook to get feedback on what exactly its users would want a new feature to do.
- Participatory Design where users are given different design elements and asked what an ideal interaction with the product would be like.
- Product Research where Facebook observes people interacting with a specific product in order to make final tweaks before product launch.
Now we’ve covered the basics, let’s take a look at some of the things holding traditional market research back.
The limits of classic market research approaches
Companies have long relied on traditional research to help identify market opportunities and determine how their products are viewed.
These trusty methods have their strengths, but also have major limitations:
- Customers need to participate. These days, everyone is stretched for time, and filling out a survey or questionnaire just isn’t high on the list of priorities. (I didn’t reply to Facebook’s email to participate in their research, for example.)
- Surveys and questionnaires focus on past experience. Data can go out of date as soon as there are updates or changes to the product.
- Observer bias can lead researchers to alter results to reflect preconceived beliefs.
- Market research can be time-consuming, especially when analyzing lots of data. This can push up the price of research significantly. Not only that, but too much surveying can be a deterrent for customers.
- True representativeness can be hard to achieve. Getting a large enough sample size is a real challenge, as customers willing to complete a questionnaire or survey may have too much time on their hands.
- Finally, these traditional methods don’t provide enough flexibility - by focusing on pre-determined questions, these methods are only as good as the questions asked.
So, what options do brands have to work around these limitations?
Alternatives to classic market research approaches
Historically, consumer giants such as Coca-Cola and Pepsi relied solely on traditional market research, as did luxury brands like Dior or L’Oreal.
And focus groups and surveys are still relevant and useful. However, brands are seeing the limitations of these methods.
Most brands are now addressing these limitations by taking diverse approaches to market research; combining traditional approaches with AI and other data sources, like social media.
For example, artificial intelligence lets questionnaires formulate “intelligent” questions based on the content of users’ previous responses. This gets around the static nature of the questions asked, helping brands capture customer feedback in greater depth.
Social data research: a new alternative
In particular, brands are turning towards social media as a data source.
And this number is only going up:
With social data research, brands can tap into this vast web of opinions and put this to use in marketing and product development.
How Danone uses social data
Linkfluence long-time customer, Danone, uses social listening to fuel their product and marketing strategies. A great example is when they used social listening to identify a gap in the Spanish market. Realising the demand for lactose-free products, Danone developed and promoted the Activia lactose-free yoghurt.
But Danone doesn’t just use social listening to find out what products their customers want; they also leverage data to fuel ideas for product packaging.
For example, in response to social media commentary, Danone developed the four-pack option for its A tu gusto yoghurt line in addition to the single-cup serving.
“Feedback on social media helps us stay aware of what people are saying, feeling and asking of us,” says Isabel María Gonzalez, CRM and digital manager, marketing, at Danone. “It gives us the ability to react.”
Rather than waiting for months to get consumer insights from traditional research methods, Danone tap into tweets, snaps, Insta-stories and other online data for instant feedback.
How social data research fills the gaps of traditional market research
There are a couple of ways social data research addresses the limitations of traditional market research:
Social listening tools assemble brand information in real time, and in a way that avoids bias. With real-time market research, brands can analyze thousands of references to products, while still catching individual conversations and unexpected points of view.
Large-scale, high-quality research
With billions of social media users tweeting and posting what they think and feel every day, brands can access customer insights on a massive scale, while still asking tightly defined questions.
Capturing the wider context
Social data research lets you analyze huge volumes of online discussions. But you can also contextualize this analysis with an understanding of real-world events.
For example, a brand might see a spike in conversations following an event, or a mention from a celebrity or public figure.
As McKinsey identified in 2014, social listening allows companies and brands to identify valuable signals in social media data: “As information thunders through the digital economy, it’s easy to miss valuable ‘weak signals’ often hidden amid the noise. These signals can help companies to figure out what customers want, and to spot looming industry and market disruptions before competitors do.”
Social listening is key for brands and businesses looking for deep and nuanced assessments of their online perception. When combined with more traditional market research approaches, social data research gives brands a 360-view of what consumers think and expect.
Consider a diverse approach to market research
As we’ve seen, market research brings incredible insights to brands. From product to marketing strategy, brands need research to better understand and serve their customers.
The great news is there are more and more options for brands to conduct market research.
Of course, there’s still a place for traditional research approaches such as focus groups, surveys, and questionnaires.
But with the rise of social media and artificial intelligence technologies, brands can now collect and access consumer insights in a larger scale, in real time.
Want to learn more about social data research? Get in touch.