At first glance, conducting market research in-house appears to be almost cost-free and produces better results. We are proposing to assess the feasibility of in-house market research and establish whether that is a solution or whether it is still better to contact a specialized agency and which option is cheaper and more efficient.
If your company has a large department dedicated to analytics, why spend money on an agency? Not only is it less cost-efficient, but there is undoubtedly a specialist within the business who is more aware of the company goals and objectives and it would be easier for them to conduct an in-depth analysis of the market. Third parties are not aware of internal problems/objectives.
However, these obvious arguments in favor of in-house solutions also have a downside. Being aware of internal issues and aims requires a certain level of engagement from staff members and in-house solutions do not allow for fresh eyes to examine the subject at hand. Therefore, it is unlikely that any breakthroughs or great advances can be made in-house. Furthermore, the real costs of independent research are likely to be high.
When participating or being involved in business processes, it is almost impossible to remain impartial. Therefore, it is possible that events, people or occurrences are not approached as objectively as possible.
According to Dmitry Pavlenko, Director for International Development at Scheduling Worldwide (4Service), the results of market research almost always affect the motivation levels of staff and the careers of top management, particularly operating and retail directors, and the average check indicators affect the retail Director.
Internal analysts and marketers are also not unaffected when considering market research. They too have interpersonal relations and views on the firm given their involvements in business processes. This, in turn, has an impact on data purity.
My experience of in-house research at a large retailer of household appliances showed that market research findings were dismissed given the company’s own personal working habits and opinions of implemented rules. For example, research found that it would be better and more efficient for customers if they purchased a hood and oven set from one collection was simply ignored. At a subsequent discussion, I gave an example from personal experience. While shopping for repairs, I bought a full set of kitchen appliances at a DIY store (NOT a profile store). As a customer, I liked the fact that I could take the hood, cooktop and oven in the same style and didn’t have to waste time searching for all parts of this set.
— Victoria Skorbota, Director of customer service for Ukraine at 4Service Group.
Every mistake in business costs money, and the bigger the business is, the more expensive the mistakes are. Before you decide what resources to conduct market research, calculate the costs of all options. It is necessary to take into account financial, human and technical resources, to find out the qualification of own personnel necessary for research, to compare the additional load with their daily main employment. In addition, staff will be needed to monitor and manage the research project. Then there’s the cost of the workplace, communications, software, transportation and other expenses.
It is generally assumed that research costs should not exceed 0.25-1.5% of the estimated profit received after the implementation of the solution based on the results of this market research.
According to Yevgenii Lobanov, 4Service Group’s Director for Central and Eastern Europe/Turkey, eventually, almost everyone comes to the conclusion that hiring a professional marketing agency is cheaper than conducting in-house research, following the necessary calculations, especially when considering quantitative research and fieldwork.
Dmitry Pavlenko also believes that research is the main activity of marketing agencies, and it is for this reason that costs are lower. “Take the production of sneakers,” he says, “the larger the volume of sneakers produced, the lower the cost of each individual pair.”
In order to best assess the expected quality of information received, its cost and speed of obtaining results from in-house research versus research conducted by an agency, we suggest reading the table below.
Specialists of 4Service Group unanimously believe that qualitative, in-depth interviews and focus groups can be carried out by the company’s own employees, with their awareness of company goals and engagement proving to be helpful.
Using the example of a telecommunications companies based in a country of the Commonwealth of Independent States, I can say that this approach is quite successful. 4Service Group conducted joint market research with them – we provided recruitment services and the company interviewed the candidates itself in-house. Deep knowledge of the moderator allowed to obtain the desired data,
Yevgenii Lobanov says.
If you decide to conduct qualitative research in-house, you need to choose a suitable candidate to do it. For example, choose an employee working in your training or HR department. We recommend that you create an in-house research role for an existing employee only if you can make it viable permanently.
Dmitry Pavlenko does not know any top-performing companies that would independently conduct complete market research in-house only across any sector. Almost every company has its own internal research department, while at the same time outsourcing various tasks to agencies. They do this in order to get impartial data. For example, the large media company StarLightMedia, that has both an advertising and analytics department at its disposal, also uses the services of third-party companies.
Internal research helps create a qualitative research brief and, as a result, collects the data that will become grounds for a breakthrough. The third-party agency provides the “outsiders” input, based on repeated experience of similar situations.
We have found that many big brands are often quite off the mark when it comes to their target market. For example, one sportswear brand we worked with was convinced that their target market was 19-25 year olds. However, our research found that young people often make a purchase accompanied by older customers – the younger one chooses it while the older one pays. Our market research, alongside fieldwork, concluded that the company needed to change its tactics to profit from this purchasing activity,
says Dmitry Pavlenko.
When tasked with hiring a third-party agency for market research, you should approach the task responsibly. It is necessary to take into account not only the cost of services, but also the agency’s name and its previous experience. The goal of the research is not simply to tick a box but to obtain qualitative data that will become the basis for decision-making.
For maximum synchronization of the customer and the agency, a test should be carried out before the start of any large-scale project. Our agency provides a sample file at the very first meeting. We believe this is the right to start any project and gives both parties the chance to see whether they are right for each other. The sample does not include any analytical skills but gives companies the chance to assess the quality of the information collected. And most importantly, companies can assess the communication style of our agency for potential joint activities. This is just one way we invest in our business relationships. We take risks to see if we’re right for each other,
says Dmitry Pavlenko.
Market research is conducted to prevent companies from making mistakes and also to get market insight. Given the peculiarities and rules of such research, some prefer to solve it in-house will other companies prefer to hire an agency to do it for them. By contacting 4Service Group, we guarantee that you will receive accurate data efficiently and effectively.
Our experts are on hand to provide free advice and support you through conducting a detailed analysis of your business.