Market Research, how do they do it?

[Rich_P]

I have just seen it mentioned that 18,000 orders have already been placed for the Evoque? Obviously we always hear about how a company spends thousands or millions on market research, but erm, how is this research conducted? It's not like the product market research you often get harrassed about on the phone or through the post is it? So how do they do it, and more importantly, get it right?

[dailysleaze]

One method is to interview a few hundred people in the street and then extrapolate the demographic of that sample over the whole population. It's similar to TV viewing figures where they don't exactly know how many people watched Eastenders, they just know how many of their sample size did and then multiply up: Guardian article on calculating TV viewing figures

[simonr]

You have to find a group of people to interview. If you know (or think you know) your target market, you can use companies who will sell you lists of people who fall in to specific socio-economic or demographic groups, people who have previously bought something similar etc. This is generally the most cost effective - but if you have misunderstood your target market, can easily yield false results.

If you don't know and/or you want to find out, you mix up the questions with those to determine the demographic profile of the person. So, the first question might be "For your next car, is it more likely to be 2 or 4 wheel drive?" and the next question "How many Microwave Ovens do you have in your household".

By 'engineering' the questions and asking the same question a number of different ways (to see how certain you are), you can build up useful data about what types of products will sell to different audiences. If you survey a large enough sample, you can extrapolate to work out the size of your market.

In the old days, this type of research was carried out by people wandering round shopping centres with clip-boards. More recently however, they have become more clever. Many of the quiz type things on Facebook and the like are actually conducting market research. On facebook, you get messages like: "Sven Stoatgobbler has just completed the 'Do I have a BIG nose' challenge. Click here to see how big YOURS is". Something like that could be researching men's cosmetics, or plastic surgery for example.

These type of 'fun' quiz/surveys have become enormous. Though each does not yield much data on it's own, the shear number of people completing them makes them valuable. Combine them with the demographic data Facebook, Google etc has collected about you and the questions can be targeted at your group without you knowing - increasing the value of the data.

It means that if, as a company, you have the money to spend on research, you can taylor a product to the biggest market. I'm sure that is how the Evoke came into being. Many elements are a huge departure for Land Rover - but they seem to have got it spot on for the market. I suspect that market is also different to their current ones.

From a consumer point of view, I think this is mainly good as consumer products will increasingly be exactly what we want and won't need as much advertising to persuade us that they are what we always wanted, but didn't know it. The down side is we'll see less quirky, fun products which over time people have come to love - like Defenders!

Si