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Marketing research process: Six stages

Article · April 2015

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 Business Outlook
April 2015 (Volume 13, Issue 4)

Marketing Research Process:

Six Stages 1
Dr. Michael R. Hyman, NMSU
Dr. Jeremy J. Sierra, Texas State University

Correctly conducted marketing research requires careful attention

to intricacies. Think of marketing research as a chain only as strong
as its weakest link, where those links are stages in a process.

A professional baseball player can slump for several weeks during

the season yet win the batting title if he hits .500 for a month.
Because their regular season lasts six months, players can
overcome a slow start and ‘play to the back of their baseball card’
by season’s end. Similarly, students who perform poorly on a first
exam still can earn a good grade by performing exceptionally on
subsequent exams. Baseball and school accomplishments are
compensatory; it is possible to recover from mistakes. Not so with
marketing research.

Once you have failed to identify the correct marketing research

problem, your subsequent research efforts are wasted. If you do not
know what you need to know, then you cannot uncover the answer
to your research problem. An improperly designed and fielded study
cannot provide trustworthy data for subsequent analyses. Faulty
data analysis is meaningless at best. An inability to communicate
study results clearly to decision makers—for example, possible
investors in your new business venture—greatly increases the
likelihood of a poor decision.

Research is a multi-stage and often somewhat iterative process—

conclusions from one stage can create new ideas for other stages
in the process, and the linkages are both forwards and backwards.
Also, stages can occur concurrently.

1Note: John Wiley & Sons, Inc. published Mike and Jeremy’s Marketing
Research Kit for Dummies. It is available in paperback [ISBN: 978-0-470-
52068-0] and Kindle [ASIM: B003CNQ4LG] versions. The following text is
based on Chapter 2 of that book.
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 Stage 1: Identifying the Problem

If you cannot define a problem properly, it is impossible to find an

appropriate solution. Unfortunately, a problem may not be obvious,
often because its cause is obscured. Hence, the ‘Iceberg Principle’
comes into play: The dangerous parts of many marketing problems
may be obscured because they are below the surface. Your job
(and that of a marketing researcher, if involved) is to identify the
appropriate problem despite its partial or total submersion.

Defining problems is a six-step process:

1. Ascertain your objectives. You and your business assoc-

iates—the loan officer at your friendly neighborhood bank,
for example—may have different yet equally reasonable
objectives. For example, you may be more interested in
growing your business, whereas your associates may want
immediate increases in sales or profits. Clearly, the goals
and types of marketing research projects may vary based
on whether a short-term or a long-term increase is sought.

Whatever the objectives, you must express them in

measureable terms. Otherwise, you cannot assess whether
the results are favorable. For example, the objective
‘improve customer attitudes’ is noble but fuzzy; in contrast,
the objective ‘increase profits by 20% in the next 24 months’
is definitive and easily monitored.

2. Understand the problem background. To avoid—or at least

minimize—that ‘iceberg’ problem we noted, you must step
back and gain perspective. An informal gathering of
background information about the environment in which
your business operates should help in that regard.

3. Isolate/identify the problem, not the symptoms. Symptoms

can be confusing; you may be so caught up in them that you
do not recognize the disease! Good marketing research can
help you structure and understand the true problem.

Consider the following example. A new cell phone with basic

computing and Internet capabilities is selling poorly.
Distributors claim competitors' lower prices for similar
products are causing poor sales. Based on the distributors'
beliefs, the company conducts a detailed analysis of
competitors' products, attending especially to pricing. In
fact, the analysis reveals the true problem is the distributors'
lack of product knowledge and concomitant inability to

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 explain the product's value to potential customers.

4. Determine the unit of analysis. Depending on the research

problem, the appropriate unit of analysis could be persons,
households, spouses, or organizations. Without identifying
the appropriate unit of analysis, you cannot draw a suitable
sample or perform suitable data analyses. In consumption
studies, for example, households rather than persons are
the appropriate unit of analysis. To understand major
purchases—an automobile or home—an examination of
spouses’ decision-making processes is critical. Marketers
who do not understand those processes are flying blind in
their efforts to provide the best possible product.

5. Determine relevant things to ask about. Although you may

want to learn about non-quantifiable matters, relevant
issues typically are quantifiable. In essence, this step of the
process entails determining what to measure and how to
measure it.

Your dependent and independent variables determine the

focus of your study, especially in forecasting contexts. As
the words denote, the dependent variable depends on one
or more independent variables. If you want to forecast next
month’s sales (the dependent variable), then you want to
identify factors that predict those sales accurately (the
independent variables). For example, realtors can predict
home-buying behavior during the next quarter or the next
year by looking at factors relating to future home-buying
behavior, such as growth in disposable income, growth in
investment income, and consumer sentiment.

6. Translate the marketing problem into researchable

objectives. Because researchers must create researchable
objectives concordant with their problem definition, often
they want to express those objectives in the most rigorous
terms—something called a hypothesis. A hypothesis is a
formal, testable statement refutable by empirical data.
Whereas you may have a hunch about your customers, a
hypothesis about your customers is a formal statement of
that hunch testable by marketing research. To generate one
or more hypotheses for formal testing, start with a purpose,
which helps generate research questions answerable by
exploratory research, your experience, and basic marketing
theory.

Exploratory research often is a necessary prelude to developing

hypotheses. Perhaps you do not understand the underlying
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 process sufficiently to develop a formalized, testable statement,
in which case exploratory research is a preliminary step. Types
of exploratory research include reviewing secondary data,
conducting pilot studies, doing in-depth interviews with people
who have requisite experience, and implementing case studies.

Turning Problems into Objectives: Examples

Marketing problem #1: Should a brick-and-mortar women's

clothing retailer create an Internet shopping site?

 Possible research question: Are current and potential new

customers comfortable shopping online for women's
apparel?

 Research objective: Assess current and potential new

customers' online shopping attitudes and behaviors for
women's apparel.

Marketing problem #2: Which group of potential customers

should this clothing retailer target?

 Possible research question: Which group of potential

customers spends the most on apparel each year?

 Research objective: Assess previous purchase behavior and

purchase intentions of different groups of potential customers.

Stage 2: Designing the Study

The research design is the master plan for the research that follows.
This stage specifies the methods you or the researcher will use to
conduct the study.

Here are several basic questions about research design:

 What types of questions need answering? You must decide

the questions needing answers and whether those answers
can be provided by some combination of surveys, experi-
ments, or analyses of secondary data. If you are uncertain
about those questions, preliminary exploratory research
may be necessary.

 What is the data source? If you conduct a survey, then your

initial design issues relate to your questionnaire and data
collection method, which are intertwined. For example,
complex questions and questionnaire structures are ill-
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 advised for surveys administered via telephone.

If secondary data are needed—for example, to conduct a

site location analysis—how timely and compatible are
existing sources? In essence, are the available data a
square peg you are trying to stuff into the round hole of your
research needs?

If you conduct an experiment, then you must ensure a

proper design with tight controls; otherwise, you cannot
know if your results are bogus or reflect the conditions to
which you exposed participants.

 Can you get objective answers by asking people? Often,

people are unaware of their reasons for doing things or are
incapable of responding meaningfully to questions about
their attitudes and behaviors. When these issues arise,
asking people directly will not work. Alternatively, you may
use observation to answer your research questions
indirectly.

 How quickly is information needed? You must decide how

quickly your research study must be completed. Marketing
research can be relatively accurate, relatively fast, and
relatively inexpensive, but it can only be two of those three
simultaneously. If you needed to know yesterday, then the
expense for a study of sufficient quality increases markedly.

 How should survey questions be worded? Wording survey

questions so answers accurately reflect people’s attitudes
and behaviors is both an art and a science.

 How many questions can you expect to ask respondents?

Respondents’ patience is finite, especially when you phone
them at home or intercept them at the mall. Thus, the survey
data collection method you choose depends on the number
of questions you need to ask.

 Are descriptive findings sufficient, or will an experiment be

necessary? Surveys are helpful for assessing people’s
attitudes and preferences for current products, and some-
what useful for self-reports about previous consumption, but
not especially good for predicting people’s reactions to new
products. For example, a survey about features for ebook
readers administered to people who have never used such
devices is unlikely to produce accurate forecasts of future
reader purchases. An experiment, in which different people
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 use different reader devices with different features, might
provide far more predictive data.

 If an experiment, what will be tested? If an experiment is

needed, what treatment or condition will the researcher
test? In what circumstance will you place one group of
people and how will you compare their responses to the
responses of a different group of people placed in a different
circumstance?

For example, if you want to identify the most effective among

several print ads you might run in a local newspaper, how
will you expose people to those ads? You want people to
respond naturally to these ads, yet to show them only the
ads and then ask them what they think is an artificial task
likely to produce untrustworthy results.

Stage 3: Selecting a Sample

If you have only 25 customers to whom you might offer a new

service, you can afford to survey all of them. However, if you have
100,000 customers, surveying all of them is neither cost effective
nor necessary. Instead, you can select a representative sample to
ask about this possible new service.

Here are several basic questions about sample selection:

 Is a sample necessary? If the population is small and

reasonably accessible, then you can query every person in
the population, in which case you are taking a census rather
than drawing a sample.

 Who or what is the data source? Is/are the group(s) of

interest—your sampling unit—individual consumers, house-
holds, or organizations? A scientific sample—one you can
comfortably generalize to the group(s) you want to query—
requires drawing respondents from a representative list (or
sample frame). Such lists are available from commercial
suppliers, but you will need to identify the supplier and the
characteristics of your respondent pool. Regardless, the
next step is to identify the unit of analysis and a sample
whose constituents are consistent with that unit of analysis.

 Can the target population be identified? Typically, there is

no single correct population to sample; sampling from any
of several alternative populations is acceptable. Suppose
you want to explore consumer preferences for a reformu-

Page | 6
 lated soft drink. You could sample from any population of
heavy soft drink consumers, such as high school students,
college students, or young professionals. In this case,
convenience and cost should dictate your population choice.

Perhaps your target population is ill-defined; for example,

the population of potential new customers for your store (if
you are a retailer). Even if you assume these customers are
similar to your ‘current customers’, it is silly to ask ‘current
customers’ what would cause them to switch to your store.
Instead, you could pay a commercial supplier for a list of
people with demographics similar to your ‘current
customers’ and then disqualify ‘current customers’ through
a filter question on your questionnaire. Alternatively, if you
also wish to survey ‘current customers’, then you would use
those filter question data to sort respondents into receivers
of your ‘current customer’ questionnaire and receivers of
your ‘potential new customer’ questionnaire.

 How accurate a sample is needed? Many questions about

sample size relate to accuracy and the way in which the
sample is drawn from a larger population. For many com-
mercial studies, researchers use commercially available
lists, yet those lists may be deeply flawed. For example, one
established commercial list of people who had recently
moved included people who had not moved in 57 years!

 Is a probability sample necessary? Researchers may need

to assess whether a probability/scientific sample is required.
For some research purposes, convenience sampling—a
type of non-probability sampling—is much less costly and
may be appropriate.

 Is a local sample sufficient? The need for only a local or

regional sample rather than a national sample may affect
the methodology you choose. For example, if your research
requires a national or international sample and you are
concerned about cost, you probably will opt to collect
respondent data via some social media community. For a
local sample, the phone or other data collection technology
may suffice.

 How large a sample is necessary? Knowing the scope of the

sample is useful, if only to keep data collection costs within
budget. Because the cost of data collection is a large share
of total study cost, staying within budget becomes
impossible once data collection costs soar.
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 Stage 4: Gathering the Data

When conducting research, arguably the most important stage is

the data collection stage. Research questions cannot be answered,
consumer needs cannot be met, and your business cannot benefit
from pertinent findings without data.

Here are several basic questions about data gathering:

 Who will collect the data? If it is an independent field

service, then you likely prefer some control over the way
interviewers query respondents, whether by phone or in-
person.

 How long will data collection take? You must decide on a

time horizon for completing your study, as that horizon may
dictate many aspects of your study, such as the data
collection method, sample size, extensiveness of pre-
liminary qualitative and secondary research, and so forth.

 How much supervision is needed? Such supervision

depends on the data collection method. For example, phone
surveys often are fielded by data collection services with
supervisors who monitor—some might say eavesdrop on—
many calls placed from extensive phone banks. Supervising
such fieldwork is straightforward. For personal interviews,
immediate oversight is impossible, so the type of super-
vision differs markedly. Supervising personal interviews
typically entails verifying at least 10-15% of interviews were
conducted as indicated by field service workers.

Stage 5: Analyzing the Results

Data without analysis is rubbish. Although universities offer

statistics courses where hand tabulation is required, the
available software trumps the use of such archaic computation
methods. Because good business decisions depend on
trustworthy empirical analyses, you should learn to use the
software needed to perform such analyses. Although advanced
statistical analysis software—such as Statistical Package for
the Social Sciences (SPSS) and Statistical Analysis Systems
(SAS)—is available, you can run many analyses on Excel.

Here are basic questions about data processing and analysis:

 Will standardized editing and coding procedures be used?

How will data be edited and coded? (For survey research,
Page | 8
 editing means clearing the data of impossible and incon-
sistent responses, and coding means creating a database in
which numbers rather than words represent respondents’
answers.) Expertise is required to edit and code open-ended
questions. Alternatively, if you are creating a database of
responses to close-ended questions—the type of questions
scaled 1 to 6 or 1 to 7—then minimal expertise is required.

 How will the data be categorized? The ability to analyze data

depends on the way they are grouped. Depending on the
type of data, the way they are categorized enables certain
types of statistical analyses. For example, nominal data like
‘sex’ or ‘ethnicity’ enables descriptive statistics like total
number and percentage in each group. Interval data—for
example, attitudes measured on a 1-to-7 scale—can be
grouped by their relationship to a calculated mean score.

Categorization in this context is more than a statistical

notion; it has practical implications. Perhaps you want to
compare current customers to non-customers. Alternatively,
you may want to compare frequent customers, infrequent
customers, and non-customers. Assessing differences
between groups of current customers may provide useful
marketing insights.

 What data analysis software will be used? Commercial

packages like SPSS and SAS enable almost any type of
statistical analyses. Prices for these packages, depending
on configuration, range from $500 to $2,000. Although they
are ideal for seasoned marketing researchers, you can run
worthwhile analyses with Excel for a far lesser price. For
example, you can run standard descriptive statistics, cross-
tabulations, correlations, and difference tests in Excel.

 What is the nature of the data? If the data are qualitative,

you are looking at people’s open-ended and rambling
responses to questions. If the data are quantitative, you are
looking at close-ended data, which are far easier and more
straightforward to analyze.

Stage 6: Communicating the Findings

and Their Implications

The value of a research study is only as good as the weakest link

in the process chain. Even the best conceived and conducted study
is useless if its results are not presented meaningfully.

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Understanding your audience is a good idea if you are required to
present your study. The following are some basic questions to ask
yourself about the type of report you should create:

 Who will read the report? Readership is critical because it

determines the amount of technical expertise. Marketing
jargon and statistical analyses decipherable to a venture
capitalist may be meaningless to your banker. Many
audiences prefer well-constructed graphical displays to
detailed tables and extensive exposition.

 Do you want/need managerial recommendations? If specific

recommendations are required, then they should be
included and justified in your report. If you merely are
providing information others will use to draw their own
conclusions, then providing recommendations is needless.

 Will presentations be required? If so, how many presenta-

tions and to whom (for example, possible lenders or
franchisees)? If presentations are required, you should
ascertain the audience for and number of those
presentations as part of the budgeting process.

 What format will the written report take? The degree to

which a written report should be formal or informal may
depend on corporate culture and the need to please the
people who will read it.

The more you understand such preferences and constraints, the

more likely your report will achieve its intended goals.

Anticipating Outcomes

Creating dummy tables—blank tables to be completed once data

analysis results are available—helps guarantee the most useable
report is created. By providing dummy tables to report readers, you
give them an opportunity to provide feedback about how helpful that
set of tables, once completed, would be to their decision-making
process.

Before beginning a study, consider these checklist-type questions

to confirm the wisdom of conducting it:

 How much will the study cost? You must confirm the study’s
cost because it is critical to assessing its value. If a study
costs more than the value of your reduced uncertainty about
the best course of action, then you should not conduct it.
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  Is the time frame acceptable? Studies inherently require
different times to complete, so you need to confirm the time
frame for completion is acceptable.

 Is outside help needed? If outside help is needed, you need

to identify that outside help and make certain it is available.

 Will the research attain your stated objectives? You must

confirm your research plan addresses your research
objectives. To do so, return to your research problem and
check your objectives are consistent with it. Ensure your
objectives, if attained, are actionable; leave research-for-
research-sake to academicians.

 When should research begin? Given budgetary and other

concerns, you must confirm a starting date for the research
commensurate with decision-making deadlines.

About the Authors

Dr. Michael R. Hyman is Distinguished Achievement Professor and

Ph.D. Coordinator of Marketing at NMSU. He is Executive Editor of
NMSU Business Outlook and Marketing Ethics Section Editor for
Journal of Business Ethics. Attesting to his writing compulsion are
80 academic journal articles, 45 conference papers (10 which won
a ‘best paper’ award), four co-authored/co-edited books, 25 other
academic contributions, and 30 non-academic works. He is known
for his collection of Looney Tunes shirts, inability to chip a golf ball
correctly, encyclopedic knowledge of classic Hollywood movies,
overly neat office, and loyalty to the New York Yankees.

An avid golfer and ardent Nebraska football fan, Dr. Jeremy J.

Sierra is Associate Professor of Marketing at Texas State
University. He serves on six editorial review boards, including
Journal of Marketing Theory and Practice, Journal of Services
Marketing, and Psychology & Marketing. He has published his
scholarly work in such outlets as International Journal of Market
Research, Journal of Advertising, Journal of Business Research,
Journal of Marketing Theory and Practice, Journal of Product &
Brand Management, Journal of Services Marketing, and
Psychology & Marketing. Dr. Sierra also has published, with
Michael R. Hyman (his mentor and long-lost golfing buddy),
Marketing Research Kit for Dummies. His research interests
include advertising effects, brand tribalism, dual-process theory,
and superstitious beliefs.

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