August 2019
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Qualitative research: profit formula

Marta

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What do your customers want? How do you attract their attention? Market research can help companies satisfy customer needs by examining their purchasing habits and their feedback on products, including perceptions about value. One way to do this is to bring together a focus group of customers willing to provide their suggestions.

The profit formula in the context of quality research is the revision and strengthening of existing products and, as a result, the updating and improvement of quality, which will inevitably lead to an increase in consumer loyalty.

Qualitative research is a kind of investment, which, with skillful and systematic work, will allow a business to lead the client.

Marina Harchenko, Head of Qualitative Research, 4Service Group:
“In the process of conducting the study, we not only record the actions of consumers. Our task is to find the true motive behind the action in order to answer the question: why does a person do this? ”

Here are some circumstances in which it makes sense to choose a focus group:

  • When you need to brainstorm ideas. Focus groups are a terrific strategy for broad, exploratory topics, such as imagining new product features or working through ideas for your next ad campaign. Anytime you are in the initial stages of a concept or topic (the what if…? phase), choose a focus group to assist with idea-generation and discovery.
  • When you’re about to go live. This might mean just before you launch that ad campaign, or before that concept goes to market, or before you turn that prototype into The Real Deal and release it into the world. This is especially the case if you relied on secondary research to create that ad, concept, or prototype. The numbers might back you up… but you also want subjective, affective “data” describing why those numbers work. Refine before you release.
  • When you want multiple perspectives, or to explore disparate views. You might be at a point in your decision-making process where two very different options seem feasible, and you want to hear representatives from your target market debate the pros and cons of each. Let your market generate the arguments for you. They might make a case for something you’d never considered before.
  • When you want to better understand the complexities of your target market. While a single interviewee might give you great insights, they won’t be representative of your target market. Granted, focus groups won’t be either… but they will offer a broader range of representation. Collectively, the group can also help you understand the motivations behind more complex behaviors. Did your market say they wanted a product—but now they’re not buying? Focus groups can help you explore the apparent disconnect between declared desire and action.
  • When you want to know more about your brand perception. Focus groups are great for brand insights. After all, it’s consumers who create your brand perception through shared experience (what they imagine about your business and how they speak about it); it’s not something your business makes. So go directly to the source of this intelligence.
  • When you want to evaluate reactions. Have a new campaign ad to run by consumers? A new food product to test? These aren’t the “isolated user experiences” we discussed above, and the feedback is best collected through group discussion.

If you’re still unsure which method is best for your market research question, ask yourself: “How (or what) will group dynamics contribute to my findings?”

How to make a profit
Profit is measured by the willingness to influence loyalty and quality of the product: by improving the product, rebranding, changing the communication strategy with customers, revising prices, etc.

Surface or primary information is easy to analyze – obtained, for example, in the course of quantitative research or Mystery Shopping. In qualitative research, it is important to pay attention to social characteristics (gender, class, cultural differences), individual preferences (brand opinion, opinion about a niche, attitude to a product), as well as the sincerity of questions asked and answers received.

Do it yourself or contact the agency?
We will give you an answer. Therefore, we invite each reader to conduct a qualitative study.

Let’s have a look at a simple example:
Objective: Your company sells Product “A” and you need to understand how to increase company profits and brand recognition.
Question: If we are talking about attracting new customers, how do you understand why they choose or do not choose your brand? What will affect which company they choose to purchase this product from? How to influence this choice?

Your actions:

FALSE SOLUTION: First of all, look at the numbers. Carry out a market analysis, study the demands, position, and distribution of competitors.
But what practical conclusions will you get when you find out, for example, that your Product “A” is purchased by fewer consumers than the identical product of your competitors? Probably Product “A” needs some changes.

RIGHT SOLUTION: When conducting quality research, you select several customers and ask their honest opinion about the main disadvantages of the product. The dialogue with the consumer will allow you to understand the underlying motives that determine the behavior of the entire audience. Any metric investigation is not capable to provide you with that information. 

The key objective of quality research is to identify factors that prevent a company from increasing conversion and retaining customers. To correctly determine these factors, you need to look at the product/service through the eyes of the client.

Conducting a quality study and not using its results is like not using a detailed map with a marked treasure. Therefore, the customer should have a clear understanding of the action plan at the end of the study. This is a delicate and systematic work of the customer and the research company.

The benefits of focus groups, international cases
Here are some major companies who have utilized focus groups in ways that had a big impact on their business.

Twitter

Today’s Twitter is a big pivot from what was originally a platform for sharing podcasts. Founders Biz Stone and Evan Williams recognized the potential of podcasts to take off in popularity and wanted to build a platform that revolves around them. They were beaten to the market by Apple, which released podcast capability through iTunes that same year, but they refused to give up.

Stone and Williams engaged in market research to find out what tech users were looking for in social networks.1 They began by using focus groups to find out what Facebook users were dissatisfied with when using the platform. They discovered that the number one complaint was that the news feed was too cluttered and difficult to keep up with. Using this feedback, they came up with the idea behind Twitter – a streamlined platform for people to share articles, entertainment, news, and opinions.

Disney

Disney has established regular “kid-centric” focus groups consisting of pre-school and young children. They accomplished this by partnering with preschools and primary schools near the company headquarters in Los Angeles. In exchange, the schools receive donations and the children get Disney stickers for their participation.

The goal of these focus groups is to discover what kind of character the “toddler-to-kindergartner crowd” likes. In addition, Disney also gets feedback about ongoing TV series and opinions on the “after-marketing”, or the sale of Disney-themed toys and videos. The children’s reactions and comments about the merchandise provide invaluable help in making marketing decisions.

Kraft Foods

Big companies like Kraft Foods have tapped their large pool of employees to create focus groups designed to improve their marketing. Like most Americans, employees are well-aware of the Kraft Foods brand (even before becoming workers), giving the company a valuable starting point. In the past, employees were encouraged to use Kraft’s own social networking platform, Big Talk Online, to share in the decision making of the company through moderated group discussions.

Today, 2,000 employees use an app called FOODii that allows them to input ideas for new Kraft products. Besides giving the company valuable marketing research results, the initiative enables employees to make a difference with their opinions. Kraft also utilizes consumer focus groups such as the “Idea Café” that gathers 50 customers at a time to work with moderators to develop and fine-tune marketing for the company.

Southwest Airlines

Southwest holds regular focus groups with employees to find out what their customers seem to like and what their top complaints are. They go even further than Kraft in terms of tapping the potential of employees, by using them in advertisements. Flight attendants have starred in Southwest commercials over the years, and recent TV commercials have featured baggage handlers as well.

The airline uses technology to filter the suggestions and advice of their employees. The company intranet, SWALife, previews ad campaigns before they go live, in order to collect employee input. A Southwest representative was quoted as saying that their employees: “…are delivering the message for Southwest on the ground. They are our best advocates.”

Frito-Lay

Frito-Lay, a PepsiCo company, wanted to increase its market share, so they decided to hold a contest for its customers. People were asked to send in their ideas for the best new potato chip flavor to compete for a million-dollar prize6. This innovative way of conducting research provided the company with valuable feedback about what customers wanted in a potato chip.

Frito-Lay named the contest, “Do Us a Flavor”, and marketed it toward youth using social media, adding an extra “cool factor” to its potato chips. On the company’s Facebook page, anyone could enter their suggestions for a new flavor and get rewarded with a shareable image of their own personal potato chip bag. The “like” button on each photo was turned into an “I’d Eat That” button. In essence, Frito-Lay created an online focus group in which consumers were happy to participate. A fringe benefit is that it served as a running advertisement for the product.

In Conclusion

Every product and service has its own niche, or place in the market, and there are reasons why certain customers are attracted to certain products. The goal of every company is to find out what those reasons are so that they can access their customers better, thereby increasing sales. When they understand why customers are, or are not, using their products, they then have the tools to grow their customer base. Marketing research arms businesses with the information they need to deliver on what consumers want and the case studies above are examples of just that.

Summing up, we will approve several recommendations for you right now:

  • Conducting any marketing research on your own is an expensive risk.
  • The ultimate goal is not the results of the study. The result of the study is one of the stages.
  • You will need expert help to understand how and what you need to implement for maximum efficiency.
  • Choose a contractor not only with a marketing tool but with an understanding of how to use it to benefit your business.
  • The imperative for a quality study is a sincere desire to solve the problems of consumers.
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