When considering marketing research for your organization, you may not know how much to budget for it, or even how much a focus group costs. Because primary market research projects are designed around the needs and scope of the specific client’s situation, costs depend on many factors. So organizations that don’t have a long history of conducting research or have been doing it in-house and are newly considering bringing in professional vendors often don’t know what dollar amount to expect.
Upside and Downside Risk
Another thing that complicates the budgeting process is trying to figure out how valuable research will be before doing it. One way to think of its value is that marketing research protects against upside risk and downside risk. Upside risk in marketing is the risk that what you are choosing to do isn’t maximizing its revenue. So your new product, for example, may be effective and well received, but getting and using insights based on consumer research to improve your product could enable you to sell more units or to price it more aggressively. Therefore in this example, the upside risk is the difference between revenue based on the un-researched product and the improved version after using the results of consumer insights.
Downside marketing risk is the cost of spending money in unprofitable ways. Marketing expenses include media buying, writers and designers, sales promotions, public relations expenses, product development costs and the like. Testing these marketing items while they can still be changed will protect you against ineffective or even wasted marketing expenditures.
Marketing research generally costs far less than other major marketing budget items, and reduces both upside and downside risks.
Qualitative and Quantitative Research
Marketing research can be divided into qualitative and quantitative approaches. Qualitative research gives you a feel for the language, preferences, and lifestyles of your market participants and lets you delve into the reasons behind their answers. It includes focus groups, individual interviews, small groups, online and in-person approaches. Some online approaches are asynchronous like bulletin boards or communities, while online focus groups, webcam interviews, or survey intercepts happen in real time. Quantitative research helps you answer ‘how many’ and ‘how much’ questions, and generally involves surveying large numbers of people who represent a sample of the entire population you want to understand, asking each one the exact same questions, and then using statistics to project the answers to your whole population.
One classic qualitative research technique is the focus group. Key insights can be gained when the same idea, opinion or reaction happens in different groups, especially when it occurs spontaneously. For that reason, I recommend clients hold at least three groups per project. In order to price focus groups you need to discuss how you will handle the following parameters:
- Room rental or free location such as in a participant’s home
- Food for participants and clients
- Video and/or live streaming to communicate to people not at groups
These costs vary depending on how many groups, when they are held and how you need them recorded or streamed to clients.
Recruiting & stipends
- Costs to recruit participants
- Stipends to compensate participants for their time
These costs depend on number of participants, how difficult they are to find and incentivize.
- Planning & meeting time
- Screener Development
- Discussion Guide Development
- Moderating groups
- Topline report or full PowerPoint report
- In Person or Over the Phone Presentation of Report
Moderator fees depend on how many of these items you need to include, how experienced your moderator is and any multi-group discounts.
Some clients put together an RFP, others use word of mouth, online searches or LinkedIn connections. When discussing pricing with a possible vendor, remember that you aren’t paying merely for question asking, but for an intelligent, experienced, creative professional who should be able to understand your needs and goals, spend time getting up to speed on your market and company, quickly form a connection with your participants and deliver useful recommendations that reduce risk in the rest of your marketing budget.
Photo by DaMongMan.
Consumer Insights Consultant Jennifer Cooper heads BuyerSynthesis, where she helps food, restaurant & other consumer brands refine product strategies, test marketing communications & understand their buyers. She can be reached at email@example.com