Research is critical for innovation, positioning, and communication strategy, campaigns, and nearly all important consumer-facing decision of the business. They all represent a consumer base and thus it is wise to test your innovation or ad, with the consumer before developing your product or investing the whole media budget.

There are a whole lot of informed decisions and tweaks that you can do to your product or communication decisions basis market research.

One of the key problems while deciding whether to do or not to do market research is to estimate the potential cost of market research.

Unfortunately like all complex and bundled services, the cost of Market research is subjective.

The research cost is determined by several factors. It’s a good idea to develop an understanding of these factors that will shorten your Go Market time on market research. As we discuss the factors in more detail it will be still good to keep in mind that there isn’t a one size fits all solution on market research prize estimation yet.

At best, we can understand how those factors impact the cost of market research and thus the potential investment. Based on the need and budget balance the client can then choose to go for the best value option.

The options for Market research are wide and varied now, especially since the advent of the internet, giving rise to online tools and data collection methods. Given this wide range of methodologies, there are too many variables that go into covering them all.

They can be broadly classified as:

1.      Research scope as determined by the objectives and complexity of methodologies

2.      Data collection method. Data collection methods also heavily influence incentives to be offered to ensure participation of desired target audience

3.      The size or representativeness of the experiment – Sample Size or N

4.      Incidence Rate– the probability of finding your target audience in the current consumer universe.

But each project is unique as it is solving a unique problem, so need customization

Research scope

Defining research scope is one of the key factors affecting the cost of research. Based on your research scope, you can decide the type of research needed and further down the research methodology needed. The type of research and methodology also needs to be in alignment with the business objective (goals), the criticality of decisions that research with help with. As you define the research scope, you will also decide your target audience to research, the depth of insight needed, the speed of turnaround.

Before jumping on what research to be done and with whom, it is always wise to take a step back and decide what you are trying to achieve. A research scoping meeting with a research professional is a great way to build clarity. Scoping will help you decide which type of research to select, Quantitative, Qualitative, secondary or combined. The questions and resulting data and level of complexity needed, both in tools and data processing resources, the potential risks, market demand, or the topic of the research. For more complex research decisions you might also want the agency to recommend an approach.

Any existing know-how or knowledge of the market or buyer can eliminate the need for doing the research altogether or it can save cost by removing information requirements for which data is already known.

Data collection method

Choosing a data collection method is a subsequent step to deciding the research methodology. We usually choose qualitative for exploration and Quantitative for confirmation.

In secondary research, the client learns from already available sources in the public, published by other verified suppliers or competition or government/public sources of information. Basically, any data that is already available as an overall metric eliminates the need to do that in the quantitative phase.

Qualitative research reveals the unknown or the unexpected, to develop an idea. For a deeper dive into nuances of concept or problem. It is done using focus groups, triads, dyads, and in-depth interviews, which can be conducted in-person, via phone, or online. Shop along, ethnography, and consumer journey and experience are also often explored using Qualitative methodology.

Quantitative methods produce objective data collected through a systematic process. Data is collected through surveys, online, phone, F2F, home or store audits, points of purchase. The sample is generally large enough to be representative, such that the researcher can extrapolate for the whole population.

The other big decision that the organization needs to make is to decide whether the study should be conducted masked or unmasked. A masked study means the respondent will not know which organization is conducting. Conducting a study unmasked does increase the risk of bias in respondent opinion and usually, your research need and not the available budget should drive the decision of whether to conduct the study masked or unmasked.

Sample Size

Business managers need to be able to make data-driven decisions, as they show and explain their actions.

If the type of study that you need to do is Qualitative, the sample size is more driven by the level of representation needed and the information scope that we need to cover.

For Quantitative it is more important that research is scientifically valid and this validity is provided by the size of the quantitative sample. The more respondents there are, the deeper it can be designed for representativeness, and lower error rate in prediction or conversely high on confidence interval. So the sample size is decided on two factors, the intention or need from the insight and the level of error in prediction. Lower error is inversely proportional to sample size.

Some examples where we focus on lower error rates are new market entry, product, and pricing research, brand repositioning, whereas product promotion feedback can have a higher error rate, this lower sample is enough. A commonly-accepted sample margin of error for quantitative consumer studies is ±5.00%. A broad guideline is that; 377 N is enough for representing a population of 20,000 or more. Methods like segmentation need 600 N minimum and the smallest sample size, recommended for any Quantitative experiment is 30, where the statistical tests can verify the data for consistency or variance.

Incidence Rate.

Finding the desired profile of respondents and getting to participate in the survey is by far the single most expensive part of the total Market research budget. The cost per interview, at the end of the day, is dependent on how difficult is it to find a desired respondent and to get them to participate in the survey, which means, that for categories which are used by all, like toothpaste and soap will have high incidence rate around 90%, whereas those who own a car would be around only 10%. This is important because, for toothpaste one can find 90 users by sampling 100 people but to find 90 cars owners, the recruiter will have to sample 1000 houses.

The other critical factor that goes along with the incidence rate is incentives.

Incentives play a major in making consumers participate and actually finish the survey. These incentives differ by incidence rate and duration of engagement with the respondent. Basically, someone more difficult to find should be compensated with a higher incentive. And similarly, if you need the consumer to spend 30 minutes for research should be compensated at a higher rate compared to a 5 minutes engagement. Besides, B2B incentives are always higher than B2C. similarly, the incentive for qualitative and quantitative also vary widely. A quantitative incentive can be between $1 and $20 across countries whereas the minimum incentive for a qualitative FGD could be starting from 15 USD in some countries. If the study is decided to be done unmasked and if companies are surveying their own consumer they don’t offer then any incentive and thus saving on costs hugely. The mode of research can also affect the incentive expectation. Generally, respondents expect more incentive for F2F interaction compared to an online survey.

How to optimize your research costs?

With so many variables affecting so many factors of the several moving parts of your market research project, there are several opportunities to optimize the costs or reduce the costs.

1.      Decide how serious is the need of the business. One can use a cheaper online test for a print ad, which is part of a larger campaign but when it comes to the main TVC, the business might choose to do a full creative evaluation.

2.      First define who needs the information, which department, and which key stakeholders. This will help you decide on specific research needs. Identified stakeholders usually can give more specific inputs of what exactly needs to be done, saving time and effort.

3.      If the organization has several SBUs, try and design one survey that addresses needs of various stakeholders in the business.

4. With the advent of pandemics, we have moved a large portion of market research online. While online may not be always suitable for survey objectives, use online mode wherever possible both for Qualitative and Quantitative. There is a large cost deduction in conducting online surveys vis a vis face to face especially in Quantitative research.

5. Consider Social media advertising for suitable categories. Sometimes it can get enough qualified respondents at a much cheaper rate.

6. Organizations offer knowledge of results along or some non-cash incentives in a lot of B2B Scenarios. Offering survey results in knowledge fuels participation like anything. That’s the secret sauce behind huge participation in LinkedIn polls.

7. Offering non-cash incentives like discounts on future purchases is a great way to fuel future purchases as well as save research dollars.

8. Some companies often build core customer groups, who can brainstorm directly with marketing or branding teams. Harley Davidson has done this successfully and made several critical business decisions with help of their customer cohorts. This is also a great way to create a sense of co-creation within a set of customers.

9. Synthesize the information that you already have. Often there are past studies that cover good amount of information that needs to be covered.

10. Last but not the least, train your staff to do your own research or consumer visits. Consumer visits, consumer connect programs are great way to build a culture of consumer centric culture. Product teams may not be always have time and budget to do full fledge consumer research. Doing DIY research off course means your data collection can be biased and if not done correctly, faulty.

In conclusion, Market research costs only as much as you demand from it.

Remember, A detailed research covering all topics and all people will cost more and can be often generic  whereas an issue specific research done well, even with a small sample, at lower cost can give the insights needed to move the needle forward for making business decision.