Market research is at a crossroads. Understanding the consumer is more important than ever as behaviours evolve in a post-Covid world, but at the same time, cost pressures are driving budget cuts across the industry.
However, according to insight experts at brands including Aviva, PepsiCo and PZ Cussons, it’s more than possible for marketers to source quality insight with a tightened purse string, as long as they have a well planned strategy and are clear on the question that needs answering.
“Getting good insight on a small budget is eminently possible, but it needs really good planning,” Aviva’s head of marketing Rhea Fox said during a panel discussion at the Festival of Marketing: The Year Ahead this week.
That planning will require both a well thought out insight strategy which outlines what is important for the brand, as well as strategic investments into the tools that will enable capabilities in areas such as automation and data harvesting.
Investing in those tools and capabilities like sharing portals and customer communities will likely have a hefty upfront cost, but will generate savings and efficiencies over time, Fox said. Similarly, a great insight plan with a long-term outlook may lead to just a couple of big research projects throughout the year, which will be more expensive than smaller projects, but will “wrap more in”.
Honestly, social and some of those things have been so incredibly overhyped in the last five years as if they are the answer to everything.
Andrew Geoghegan, PZ Cussons
“So yes, it is eminently doable, but you have got to have a plan for the insight you need, clear prioritisation for where you need to invest, and then strategic investments in the things that make synthesis and delivery that much cheaper, quicker, faster and better.”
Agreeing, PepsiCo’s vice-president of insight and analytics across Europe, Monica Tenorio, added that evaluating the cost of insights is much like evaluating the cost of a television ad.
“We don’t need a million dollar budget to produce a phenomenal, effective TV ad, and I think it is similar for the insights function and the work we do,” she said. “That planning, those strategic choices, that ability to think upfront, and getting the right question with the right information sources and then the right business application is really the trick to it.”
Fox added that sometimes marketers conflate the idea of expensive research with better research. “Some of the best insights come from the cheapest activity that’s really well planned, timely, accurate and commercialised,” she said. “More expensive isn’t always better.”
However, that’s not to say that declining research budgets among brands isn’t a serious cause for concern. And research conducted by Marketing Week in November last year found market research is suffering from a long-term decline in investment, which was only heightened by the Covid-19 pandemic.
Using the IPA’s quarterly Bellwether report, the analysis showed market research had been on a resolutely downward trend for the previous five years. The last time more marketers planned to increase than decreased spend was back in the second quarter of 2015, when a net balance of just 0.6% said they would increase investment.
During the first quarter of 2020, a net balance of 21% of marketers said they planned to cut spend. By the second quarter this number had plummeted to a nadir of 42.2%, although in the third quarter it rebounded slightly to 32.6%. By the first quarter of 2021, a net balance of 17.8% of marketers were still planning cuts.Market research spend slumps as shift to digital and Covid hit
While unsurprised by this trend over the last year given the cost pressures a lot of businesses have been under due to the pandemic, Fox argued that cutting research budgets is “unwise”. “If there’s really any time to be understanding the customer, now is it,” she said.
However, Andrew Geoghegan, chief marketing transformation officer at FMCG business PZ Cussons, said he was both surprised and concerned.
“Given one of the core roles of marketing is about creating consumer centric growth and helping our business know where and how to play, it is concerning that spend is decreasing because frankly, that is one of the key roles that research plays,” he said.
Acknowledging that Covid-19 will have had an effect, Geoghegan is also concerned that marketers are becoming “more internally focused”.
“I think the capability of using and getting good value from research is a competency that’s actually being diminished over time. And I think probably there’s a little bit of a crisis among some research suppliers in their ability to shift from selling research products into actually adding value and delivering insight into businesses,” he said.
Choosing research methods
As a by-product of reduced budgets and increased pressure for cost-efficiency, many within the industry are thinking about online technology as the main framework for future research.
While in many ways online technology provides an effective toolkit for researchers, the danger seems to be that many companies are looking at data gathering from social and other online sources an an easily available and cheaper shortcut than old school methodologies.
However, Geoghegan warned these sources of data have been “overhyped”, with their actual value for marketers dubious when used in isolation.
“Honestly, social and some of those things have been so incredibly overhyped in the last five years as if they are the answer to everything,” Geoghegan said.
“They do have their place, they’re very useful, social particularly in finding trends that a brand which has a very well defined creative platform can leap on very quickly. But they’re not brilliant ways of understanding the why of what your consumer does and they do require the same level of analysis and insight to extract value from them.”
The quickest and least effective way to burn through a small budget is to take orders from a stakeholder.
Rhea Fox, Aviva
He also challenged the notion that old school methodologies like direct, structured conversations with the consumer are expensive, stating that in his team, he likes every marketer to be out spending time in the world with consumers and observing PZ Cusson’s customers, asking questions and going into their homes.
“These kinds of foundational insights and observations cost nothing or very little,” he pointed out. “And then when you really do need to call in the big guns, that’s when actually the value of those research agencies is not necessarily in the tool or technique, but it’s actually in their ability to extract insight into your brand or business questions.
“So I think the whole notion that we can bin the last 30 or 40 years of formal research and read a few social posts is a non-starter for me,” he added.
PepsiCo’s Tenorio agreed, adding that such sources of information on their own can even be “very dangerous” for brands, as they can “mislead” marketers into conclusions that are incorrect.
However, she clarified that technology can be a “great enabler” for research teams by allowing them to get into consumers’ homes and to observe in-store behaviour. “Getting that proximity and closeness with [customers] is critical,” she said.
Tenorio added that all insight methods are “fantastic”, but insights is about connecting the dots and understanding the “why”. Therefore, the most important thing to think about when devising an insight strategy is not the research methods you are going to use, but the question you are going to answer.
“If you have the wrong question then whatever you do, expensive or cheap, it’s not going to work,” she warned.Does market research need to ‘loosen up’?
The panel also warned against falling into the “trap” of conducting vanity research to please a business’s stakeholders. A member of the C-suite might pull out a report on their brand’s social presence and what customers are saying there, but it may only represent about 1% of customers, Fox pointed out.
“If we’re talking about how to maximise a small budget, the quickest and least effective way to burn through a small budget is to take orders when a stakeholder comes along and says, ‘I’d like four focus groups, please’. That’s a brilliant way to burn through a small budget really inefficiently and not see much of the back end,” she said.
Geoghegan added that he encourages the marketers and insight people on his team to “bat back” questions from colleagues who say they would like research using a specific methodology.
“That’s so we don’t fall into that trap of doing research that pleases stakeholders or just enables it to sell or push our ideas through the business. That objectivity and rigour is really important in this conversation,” he said.
Focus on the business need
Asked for their final words of advice for marketers managing a small research budget, the panellists agreed that the most important thing is to produce a “brilliant learning plan”.
“Be very clear about what the business challenges are and then translate those business challenges very clearly into the right business questions. And then you can define your learning plan, and by defining your learning plan you define the different set of inputs that you will require,” Tenorio advised.
“To me that’s the fundamental principle and that will radically change how the culture of an organisation actually evolves. If you focus on the tool, the method or the result by itself, it is not consequential enough. By focusing on what the business needs and delivering to that, that’s where you see the value of the function.”
A brilliant learning plan ensures “the least amount of the most powerful research”, Geoghegan added, while Fox concluded by advising marketers to invest in tools that enable the team to generate efficiencies.
“The budget that you have really has to be used to plan alongside the business, not in isolation,” she added.