Market research is a critical part of launching and running any business. Proper research can tell you who your customers are and what those customers want. It involves answering questions like “Who will buy my product?” and “Why will they buy it?”
But once you answer those questions, how do you organize the information so that it actually provides valuable insights?
Before that’s determined, it’s important to understand the two types of market research: quantitative research and qualitative research. Each type can generate very different kinds of information about customers, and in turn, they can lead you down different paths in your marketing strategy.
Let’s take a look at the two forms of market research and determine which one is best for your business.
Quantitative Research
Quantitative marketing research is more math-oriented than qualitative research. In general, the goal is to form and then test a hypothesis using data about your customers and your market. This will help you determine whether that hypothesis is true or false.
For example, let’s say you own a pizzeria and are considering raising the price of your large pizzas by $4. You hypothesize that the change in price will not result in fewer sales. To use quantitative research to test your hypothesis, you would raise your prizes at one store while keeping them the same at another.
If sales of the more-expensive pizzas go down by 20% but stay the same at the original price point, you might deduce that for every $1 increase in price, sales will drop 5%.
Market surveys are another common method of quantitative research. The survey answers provide numbered ratings, levels of satisfaction or other data that can be measured, quantified and applied to future marketing campaigns.
Qualitative Research
Qualitative marketing research focuses less on math and more on subjective aspects of your market. This includes things like how customers feel about your brand and its offerings.
In spite of its subjective nature, there is still data to collect, but it may be in the form of statements or surveys rather than numbers and statistics. Once you have your qualitative data, you can begin to look for patterns in behavior, opinions or reactions to your ideas.
Focus groups are a common method of qualitative research. In a focus group, moderators gather a group of customers or potential customers and interview them about a variety of topics that relate to the product. The moderator works to elicit opinions and explanations for the choices the interviewees might make about a product.
Choosing Research Methods: Quantitative vs. Qualitative
The decision to use qualitative or quantitative market research should be based on the type of data you want to obtain. It goes back to the questions that you want answered about your market, like “What price should I charge?” “Where should I sell the product?” or “What gets the highest response?”
While both quantitative and qualitative approaches have their advantages, they also have distinct disadvantages.
Quantitative research, for example, can encourage marketers to falsely assume there is a cause-and-effect relationship between two things. In our pizza example, quantitative research might lead us to assume that the $4 price increase is what caused the 20% decrease in sales. But the real cause might have been that sales were low across the board that week, or that a nearby competitor held a big sale and poached some of your customers. A narrow approach to quantitative research might miss wider reasons behind why a market operates the way it does.
One prominent disadvantage of qualitative research, on the other hand, is that it often involves small sample sizes. Focus groups and surveys simply don’t encompass the same number of people that a treasure trove of sales data can, which means that marketers could falsely assume that what applied in the focus groups applies to all customers. In this case, you should make sure your quantitative research is conducted using a suitable sample size.
Either way, market research can help businesses of all sizes make important decisions about products, pricing, placement and promotion. In turn, it can help businesses make smarter decisions that can improve their bottom line.