Observation Method in Marketing Research 📝
Ever wondered why businesses have a hard time analysing customer’s purchasing decisions? The answer lies in the observation method you use and how they are performed in marketing research. This article will help you implement the correct methods that strengthen your brand and improve products.
As a business, you must know that business market research methods shape the growth of any company. They are tools to let customers know how you are willing to listen to them. Did you know that 89% of customers appreciate being asked for feedback? This is according to a 2019 Microsoft report. Read on to know how to conduct a proper observation method in qualitative market research. It should help you define what customers really value in a product or service.
The challenge in doing the observation method in market research is how it yields better pricing and customer insights. Market research for sales improvement and pricing projects isn’t easy. This is because traditional market research methods only produce a superficial insight into marketing and pricing research. Since there is a gap in sales research, companies need structured methods to understand what customers truly value about products and services. So, here’s a guide to help you to the right marketing and pricing decisions.
A qualitative research method example
Did you know that only 9% of customers take their time to fully answer surveys? Also, 70% admit to ditching a survey even before finishing them. This is according to a Customer Thermometer report. Surveys as a form of observation method in market research help define customer satisfaction and expectations.
Did you know that marketing research methods are responsible for 80% of businesses growth? This is because qualitative research is an opportunity to build a relationship with your customers. It should be designed as an enjoyable experience for customers – not as an enforced transaction. Using the observation method in B2B companies for marketing research, highlights what customers value the most.
At Taylor Wells, we believe that the laddering technique is a powerful tool to uncover the real drivers of purchasing decisions in B2B marketing research.
Watch this to Improve your Pricing Capability.
Firstly, the handbook of observation method in marketing research will help you figure out what customers value the most. You can use it to cope with the constant changes in the marketplace. Second, executing a marketing research method will keep you up to date with competitors’ pricing actions. More importantly, it informs you what steps to take to adjust your pricing methods.
There are two observation methods in marketing research:
I. What is a laddering technique?
The Laddering Technique is an observational research method that helps understand people’s core values and beliefs. It reveals what is important to the customers and why. The technique is also commonly used in Psychology. It is meant to gather information that is otherwise difficult to acquire. These hard-to-reach data are valuable as you want to understand customer purchasing decisions. Lastly, the method is done using probes – and probing means to “peel back the layers” of the customer’s experience.
II. The Means-End Chain theory
Using the Means-End Chain Theory suggests that buying decisions are made based on a hierarchy of awareness. This refers to the factors during the interaction between the customer and the product. In the Means-End Chain theory, ACV stands for “Attributes”, “Consequences” and “Values”. The Means-End Chain theory describes the relationship between customers’ values and their overall buying behaviour. This theory gives a foundation for defining laddering research information. It helps evaluate a customer’s values and behaviours.
- An attribute is the most recognizable part of a product. It simply answers why a customer is attracted to a specific feature of a service or a product. For example, Customer A likes a certain brand of red lipstick because it is waterproof and the shade compliments her skin tone.
- For each attribute, there are consequences for the customer. It answers the question “what kind of impact does this product attribute give a customer?” For Customer A, the lipstick makes her feel worry-free about lipstick stains and smudge.
- For each consequence, there is a core value linked to every customer. So, being worry-free for customer A allows her to conveniently go through her busy days which are filled with social events.
In the Means-End Chain theory, it states the ranking of customers’ observations and product knowledge. It starts from “attributes” to consumption “consequences” to personal values. Therefore, in theory, an A-C-V sequence forms a ladder for each area of a product or service. It shows the direct relationship of the three ladders with the customer. With this, companies become more aware of what customers value the most and their ability to pay. That’s why this simple observation method in marketing research should guide you to the best pricing decisions.
III. Marketing research method as a means to establish what people value
To know exactly what people value, the laddering method encourages self-analysis of behaviour and motivations. So, asking “Why is a certain product attribute important?” and digging deeper with more “Why?” helps businesses to get to the core value of consumer behaviour. These “values” are the most beneficial tools in sales forecast and recognizing new opportunities. Most importantly, these tools guide you to dynamic pricing strategies.
Applying the laddering method to market and price research helps businesses gather a comprehensive list of customer “consequences.” It is meant to attain hard-to-reach “values”. As a result, the fate of a company’s growth largely depends on correct pricing decisions led by research methods.
Asking “Why” is the core of an observational research method in marketing.
When you ask a customer why he chose a certain sportswear item, he might say that he likes the shade of blue – and it is his favourite colour. He might also say that the fabric is waterproof, comfortable, breathable, and sourced from recycled materials. He could say that he always preferred this brand that creates designs especially for men of his size. These are the “attributes” of a product or simply the reasons why he bought the item. See, customers don’t go straight to the central values that attract them to a specific product. This is where an observation method in marketing research can help you.
If you ask him, “Why is the sportswear important to you?” He might say, “It makes me look good by highlighting my muscles. That makes me feel youthful and accomplished to know that my discipline and patience in exercise are paying off.” See, following a handbook of qualitative research method digs deeper with more Why? It reveals the consequences of a product in which answers are more elaborate. You actually get to hear more about the emotional connection between a customer and a product.
Ask “Why is it important to feel youthful and accomplished?” His answer might be “My friends and I are trying out this new fitness routine and I don’t want to miss out. Also, my family has a history of chronic illnesses and I want to be sure that I take care of myself to live long enough to see my grandchildren.”
The Purpose of a Qualitative Research Method
When conducting a Means-End chain, it shows that the core value of customers is the most influential role in their buying decisions. This is because it relates to their core beliefs and the emotional impact that a product creates for them. A customer’s core value can root from security, joy, enjoyment, or a sense of belonging and inclusivity.
So, if companies can discover the core values of customers about specific products, they can make informed decisions with effective product and pricing strategies. All of these factors can influence how they can successfully brand and market their products to connect with their customers.
IV. Advantages and Disadvantages of Laddering Technique as a Research Method
Advantages of Laddering Technique
- To improve product offers, launches, and overall business strategy – market researchers can gather qualitative data using this method.
- It helps businesses build a relationship with their customers. Through laddering, companies can gain insight into the customers’ values. With this, companies find ways to tailor products to customer needs.
- Using this method gives the reasoning behind particular behaviours and choices. It is effective in acquiring responses that might not be available with traditional business research methods. It gives direction to identify which pricing adjustments should be made. Also, finding out the why and how for products/services is just as important to each customer.
Disadvantages of Laddering Technique
- Repetitively asking the question “Why?” to a research participant can be tedious. It’s important to set expectations beforehand about the goal to avoid any tension.
- Some participants have a difficult time answering the “consequence” of an attribute once they’re familiar with the method. By rewording a question such as “What wouldn’t you look for in a product attribute or core value?” can help participants give honest and more specific responses.
- Laddering is not suitable for inquiring hypothetical decisions. Rather, it tends to reveal abstract responses instead of personally detailed experiences.
- It can be tiring and boring for the interviewee because the same methodical questions are asked over and over again.
Despite some limitations of the laddering technique, it remains a powerful tool. It helps unlock the real drivers behind buying decisions. Apart from that, laddering exposes the underlying values that guide business decisions. Meaning, a business can gain more insight into the market view.
While carrying out a laddering technique may be difficult, asking “Why?” isn’t that hard. Using essential tactics of qualitative marketing research methods uncovers customers’ root consequences and values. This can help you plan a pricing method using the information collected from a laddering research method.
Laddering is ideal for consumer and organizational research method. It highlights consumers’ preferences towards specific products or services. As a result, designing your future projects should come from the responses that are collected. Combine it with a smart pricing strategy and you are on the right path for long-term growth for your business.
For a comprehensive view on integrating a high-performing capability team in your company (a team capability of undertaking this kind of marketing research)
Are you a business in needs of help to align your pricing strategy, people and operations to deliver an immediate impact on profit?
If so, please call (+61) 2 9000 1115.
You can also email us at email@example.com if you have any further questions.
Make your pricing world class!
- marketing strategy (14)
- Organisational Design (14)
- Podcast (102)
- Pricing Capability (61)
- Pricing Career Advice (10)
- Pricing Recruitment (15)
- Pricing Strategy (115)
- Pricing Team Skills (10)
- Pricing Teams & Culture (15)
- Pricing Transformation (15)
- Revenue Model (7)
- Sales Effectiveness (14)
- Talent Management (5)
- Technical Pricing Skills (31)