Any market research results should be treated with caution due to their limitations.
Undertaking research is important for gaining knowledge and aids marketing decision making. However, marketers must understand its limitations. Almost all types of research, whether it is for business, medical science, government, etc., contain the risk that results may be wrong.
There are many reasons why errors in market research occur. However, one key reason can be traced to the controls in place (or not) when data collection occurs. If research is collected without the necessary controls to insure it is done correctly, relying on results to make decisions could prove problematic, if not disastrous.
Thousands of examples exist of firms using faulty market research to make decisions.
Since many research studies are really only snapshots of something that is bigger, making sure research is done right is critical. Here are some specific problems with market research results in general:
- Methodology. Data and information are collected, analyzed and used for a reason other than what it was collected for. Good market research is produced when results of the research are strong indicators of what is happening now or might happen in the future. This means the results are relevant to a situation. Findings will always be as good as the research methodology used. Unreliable or inaccurate input data generates poor quality output. Being relevant means the probability is high that the research results reflect what is actually happening or what will happen.
- Accuracy of data. Data and information collected are inaccurate. Being relevant does not mean it is 100% correct. Seeking a high-level of relevant results requires instituting strict controls on how the information is collected. Many of these controls use a scientific approach meaning a research project becomes highly structured and is not very flexible once a study is underway. For instance, for research involving a sample of a large population of customers, certain controls must be in place to define how many are in the sample as well as how the research is carried out. For example, research design should be the same for all.
- Reliability of data. Data and information are not true or misleading. This also includes problems with human behavior because people do not always behave the way they say they do. Also, people change their mind all the time. Very often what people think, say and do is not aligned with one another.
- Timeliness of data. Data and information are out of date. As you might expect the tradeoff for getting more up-to-date results is the increase in cost and time needed to carry out the research. So, a big decision for marketers, when it comes to doing research, is to determine the balance between freshness of the information obtained and the costs involved to carry out the research.
- Sampling discrepancies. Very often sample is too small. Many companies survey a small percentage of their customers (called a sample) to see how satisfied they are with the company’s efforts. But, unless the company only has a few customers, the chances of surveying everyone (called a census) is unlikely. And, even if they could talk to everyone there is still a chance the information is not totally accurate, for example, customers may make errors when they fill out the survey.
- Bias. Data and information are unreliable due to prejudice and unfairness. This includes cultural bias, source bias, statistical bias and other biases.
- Cost of research. The cost of conducting high quality market research tends to be very high. Conducting face to face interviews or postal surveys can be very expensive. In addition, analyzing data takes time and money – either done by employees from the marketing department or an externally hired market research agency.
The results of market research can, therefore, have a great impact on decisions made in all areas of the marketing process. Market research is itself a growth industry as most research is undertaken by specialist market research agencies working for other businesses.
Why are firms prepared to spend so much on market research? What are the uses to which market research data can be put? Where can the data be obtained from? How should the results be presented? These are the important questions to be answered.
