What Is the Price of Market Research, and What Does It Include?
If you are a business owner you are probably wondering how much market research costs and why should you invest in it. Throughout this article, we help you get the answers.
But have you ever analyzed why some products, which are supposed to win the hearts of consumers, fail?
The answer is simple: because they don’t know their market. They have not taken the time to understand what their consumer habits are or what their expectations and needs are. Nor have they studied the trends or changes taking place in their industry.
For example, Google Glass. The company announced with great fanfare a new technology that was going to “work for the consumer”. But, after two years, they had to stop production and withdraw them from the market. Sales never came close to the levels they had hoped for.
Read on to find out more about market research and how much it costs to do it. Be warned, there is no standard figure. The price varies depending on the audience you are going to study, the type of study you are going to conduct, the duration, and the number of participants.
What Does Market Research Cost Depend On?
Defining market research costs is a complex task. There is no fixed price that fits the needs of all companies or projects. The truth is that the cost is determined by a number of factors ranging from what you want to achieve to who and how the research is done.
Let’s review each of these elements in detail so that you can begin to define what service you will require and what information you are looking to collect.
Type of target audience
In this case, the target audience refers to the group of people you are interested in researching.
Keep in mind that, due to time, logistics, and budget limitations, it is impossible for the study to analyze the entire population. Therefore, you should dedicate the necessary time to define the target very well and estimate what percentage represents a significant sample.
By B2C, we refer to market research aimed at the end consumer. That is the person who buys your products or services and whom you need to know in detail. Here you must define their sociodemographic characteristics: gender, age, socioeconomic index, location, educational level, etc.
On the other hand, if you are looking for research where the final client is a company, you must define characteristics such as the number of employees, turnover, industry, and sector, location, etc. Remember, the more information you give to the agency in charge of doing the market research, the better results you will achieve.
The cost of your market research depends mainly on the type of research you need to do. Here are some questions that can help you define whether you need a quantitative or a qualitative analysis:
- What business objectives do you want to achieve?
- What decisions do you need to make?
- What audience are you trying to reach?
- How specific should the data be?
- How fast do you need the results?
- What information do you have that may be relevant to this research?
The results here are presented in the form of statistical data that allows you to know your market better. Usually, this type of study is done through surveys:
- By e-mail
- By telephone
Each option has a series of limitations and associated costs. For example, in the case of online surveys, it is essential that you have a database that corresponds to the characteristics of the target you defined before. While in the other cases, you must take into account the cost of the pollster’s man-hour and the associated difficulties to locate each person.
For this type of study, you can estimate a budget of around 12,000 dollars. Remember, this is only a benchmark market research cost. The size of the sample and the type of survey play a key role in defining the cost.
Many companies decide to turn to marketing research agencies to conduct their projects. This helps them ensure that their expenses are put to good use and that they will receive viable results in return.
In this case, the aim is to know the motivations why the target buys your product or service. Do not expect statistical results, but much richer information on who your target audience is, their motivations, needs, and interests. This scenario is ideal if you are looking to test a new concept, product, or marketing strategy.
Focus group sessions or in-depth interviews are used to gather the data. For both scenarios, you must stipulate a budget item for professional fees, location, transportation, etc.
In the case of focus groups, you can estimate prices of around 4,000 dollars for sessions with 8 people. The higher the number of participants, the higher the price of the market research will increase. While face-to-face interviews can cost around 8,000 dollars.
Duration of the study
As is logical, the hours of dedication to the collection of information, analysis, and presentation of results are not the same for all market research projects. Depending on the type of analysis and the size of the sample, more or fewer hours will be required.
For example, a focus group may take about 2 or 3 hours for the conversation. You then need to spend some additional time reviewing notes and drawing conclusions. Whereas face-to-face interviews can take about 6 hours per person, taking into account the conversation, transcription and analysis.
Number of participants
In line with the previous point, the number of participants in the study affects the final price. As you can imagine, it will never be the same to conduct and code 10 cases than 30 or 100. Therefore, we insist that you spend the necessary time to estimate the size of the sample to be evaluated.
In the case of qualitative studies, a good sample can be between 5 and 10 participants for each demographic group you want to analyze. While in the case of quantitative research you should have a much larger representation that is in accordance with the total of your target population.
A final factor to take into account is the fact that incentives are often offered to study participants. It can be anything from an Amazon gift card, to products of your brand, or any other option that you can think of and that your audience likes.
A market research project is a considerable investment. Anything that allows you to get more and better responses should be considered. You don’t want to spend money to get an unrepresentative sample of your market.
Cost of Various Types of Market Research
There are different market analyses you can do. Each one serves a different purpose. It is important that, before deciding which project to start, you are clear about what information you are looking for and for what purpose. Only then will you be able to make the right choice.
The PESTEL analysis focuses on studying the company’s environment with the objective of having enough knowledge to build strategies for the short, medium, and long term. As part of this effort, the political, economic, sociocultural, technological, environmental, and legal factors where the business is developed are reviewed.
On average, this study can take 1 or 2 days of work. In which the situation within each of these factors will be identified and a complete report will be prepared.
If you are looking to carry out a PESTEL analysis you can estimate that you will invest around 7,500 dollars.
This consists of identifying your brand’s main competitors and revealing what their strengths and weaknesses are compared to yours. Keep in mind that by competition we mean businesses that offer the same product as you or provide similar solutions.
This type of market research is key if you are looking to launch a new product or service to the market. In addition, it helps you to monitor how other companies in the sector are performing. That said, the investment is around 12,000 dollars. But, you could reduce the budget a bit if you eliminate field research and limit yourself to reviewing documents, reports, websites, social networks of your competitors.
Before launching a product on the market, it is recommended that you do a test of this type. Basically, it is about offering your new solution to a certain group of people and gathering information about their reactions and comments. This way you can refine any details before offering it to the public.
The average cost is 9,000 dollars. But of course, the number of participants directly influences the final amount.
In this case, the analysis is done to measure the reactions and emotions evoked by the packaging of your product. The idea is to understand if the messages you want to convey are getting through in the right way and if they encourage the purchase of the product.
Remember, the packaging is responsible for convincing the consumer to make the purchase. Not surprisingly, this type of test has an average cost of 9,000 dollars. The techniques used and the size of the sample can increase or reduce the final price.
This market research model is based on a questionnaire that seeks to understand what your target needs, wants, or is looking for and what problems it has in achieving it. This information helps you to make strategic decisions about product offerings, marketing efforts, and marketing channels for your business.
Keep in mind that, for this type of research, the price is calculated per participant. On average, the cost is 8 or 9 dollars per person. The size of your sample is the main determinant of how much money you will invest.
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As we said above, face-to-face interviews allow you to know in more detail how your audience feels about your product, project, or communication. In fact, this is the suggested method for those who do not know where to start or what exactly they want to achieve when doing a market research study.
On average you may need between 15 and 30 interviews. The exact number will depend on the topic to be evaluated and the overall sample size. Assuming you go for the lower limit of interviewees, you can expect the market research budget to be around 8,000 dollars.
Keep in mind, the work goes far beyond sitting down for a conversation. You need to identify people, create a questionnaire, do each interview, transcribe, code, and analyze. It is an ambitious and quality job.
Focus groups are especially useful when you need to confirm or reject, an intuition or assumption. On average, this type of activity takes between 2 and 3 hours and seeks to get a group of people to discuss a particular topic. It can be the quality of a product, the level of knowledge about a brand, etc.
These types of studies require an investment in a moderator with knowledge in the area and in your industry, a group of 6 to 10 participants, a room, or space, and more. Depending on the decisions you make, the cost can be around 4,000 dollars.
It’s not as expensive a session as the rest of the studies, but it doesn’t fit all scenarios either.
Customer behavior study
If you want to know what motivates your consumers to buy your products, this is the ideal market research study for you. With this methodology, you will obtain information on how, when, where, and why your customer makes the purchase decision. Each of these points is valuable for you to create effective sales, marketing, and commercial strategies.
Being a study that involves a number of disciplines such as psychology, sociology, anthropology, and others, it tends to be much more expensive than others. The price is in the range of 20,000 dollars. But, a good definition of the volume of participants is key to adjusting the cost well.
Finally, you can do a location study to define the ideal location for your product or project. With this information, you will be able to discover all the requirements to improve performanceand minimize costs.
The price can range from 2,000 to 6,000 dollars. It depends mainly on the level of depth and detail you require.
Benefits of market research
So far we have made it clear what costs you can expect for a market research project. But what kind of businesses benefit from a market study, and can entrepreneurs benefit from them as well?
The answer is yes, every business, regardless of its size, can enjoy the multiple benefits of traditional market research. In general, we can mention that market research:
- Provides objective information on which you can make decisions for the development of a new product, the branding of your business, your marketing campaigns, and even on the possibility of expansion to new markets and frontiers.
- It allows you to know in detail who your customers and prospects are so you can manage your marketing and sales efforts in the best possible way. The more you know about your stakeholders, the better your chances of success.
- It provides enough information so that you can justify, before investors or the board of directors, actions and strategies oriented to improve each stage of the sales process of your products and services.
- Save time and money invested in product development or projects that are not in tune with the interests or needs of your customers.
Beyond the price of quality market research, you should focus on the different benefits it brings to your organization. The return on investment is incalculable, especially when it allows you to realize that perhaps the idea you had in mind is not in tune with the demand of your customers.
We recommend you work hand in hand with real specialists. You do not want to waste time and money in studios that do not work with the necessary tools and knowledge.