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The Birth (And Death) of Market Research: Why Design Research Will Prevail

by Sam Ladner on January 28, 2010 · 17 comments

in Blog, Qualitative Research & Design, Research Methods, design, ethnography, home, market research, product design, qualitative research, quantitative research, survey, surveys

Few would disagree that fundamental economic change is upon us. Business models are crumbling daily. From the auto industry to the banking industry, it is clear that old ways of doing things are no longer working. The market research industry is just as vulnerable to this shift, yet, like the auto industry before it, it is hardly aware of how deeply its business model is threatened.

The Long Disruption

The market research industry is built for the 20th Century mass production model, which is rapidly disappearing. The “mass audience” is gone and a fragmented diverse populace has taken its place. This new “audience” defies the easy aggregation of summary statistics on which market research so often relies.  Chris Anderson of Wired figured this out long ago with his book The Long Tail.

The Long Tail

The Economic Disruption of The Long Tail -- Anderson, Wired Magazine

He argued that technology lowered the cost of providing services to ever-smaller niches of people, making it possible to sell profitably goods and services that were once too specialized.

This technological shift also means the end of “appointment television.” Digital video recorders allow individuals to time shift their programming to suite them, and not the program executives at television networks.

The Birth (And Death) of Market Research

What does this all have to do with market research? Full-service market research firms are built for the blockbuster era, not for the time of the long tail.

Market research was heavily influenced by the school of “applied sociology,” lead by Paul Lazarsfeld. While at Columbia, Lazarsfeld pioneered many statistical techniques we use today, including the cross tabulation (Babbie and Benaquisto 2002) and the Lazarsfeld-Stanton Analyzer, a machine that records audience reaction to programming in real time (Mattlerart 1996).

The Lazarsfeld-Stanton Analyzer summarizing "the public"

CNN used a variant of this machine for the recent State of The Union address, showing real-time reactions from Democrats in blue, Republicans in red, and Independents in yellow.

The Lazarsfeld brand of insight is based on a fundamental assumption: that the “average” means something. An entry-level statistics course will teach you that average is dragged up or down by extreme values, and the long tail is nothing if not a collection of many extreme values. There is nothing meaningful about knowing that the “average American” rented 30 digital movies a month if, in fact, there were many thousands of Americans who rented none and a many tiny segments that rented somewhere between zero and 40 movies. The “average” is meaningless in this example, yet this ham-fisted approach to summarizing “the public” is what the market research industry is built upon.

Design Research for The Long Tail

Market researchers may argue that with proper segmentation, you can understand every niche within the long tail. This may be true, but to truly understand the diversity between people, your task is not simply to “summarize” the audience, but to delve deeply into the dynamics of what makes them different.

This is why design research is a better fit for today’s long-tail economic model. Context matters. Design research is all about understanding the context because it is rooted in qualitative methodologies, and ethnography in particular. Designers solve contextual problems. The award-winning Braille watch, for example, allows its users to check the time surreptitiously and quickly, something that is both polite and useful. A Lazarsfeld approach would not uncover the social subtleties of checking one’s watch, and certainly could not uncover the specific needs of the blind.

The Braille Watch by David Chavez

Dan Formosa details this limitation of market research in his insightful article in Interactions magazine. He argues that market research should focus on consumer response — after a product is designed. Design research, on the other hand, is about evaluating a product as it is being developed. I would go further; design research is about knowing what to build as well as evaluating the prototype.

Design research uncovers how long-tail niches develop and what differentiates them. It is not the equivalent to “market segments” because it provides specific direction on how to apply research findings. What are the dynamics of renting a movie? What motivates the “heavy renter”? What is it about her television or home that supports heavy renting? You cannot know the answer to these questions by simply providing a laundry list of demographic characteristics and psychographic survey results. You must know the context in which the long tail emerges.

Some may say that good quality market research would not make these kinds of mistakes. And they are right. Highly skilled social scientists are method-agnostic; they choose the right method for the right research question. However, full-service market research firms have become the GM of the industry — they keep building Hummers instead of Priuses. Focus groups don’t uncover contextual nuances, but they’re cheap and profitable. Surveys don’t get to the heart of why a product doesn’t work. Design research, using an ethnographic approach, provides “thick description” of the entire phenomenon of renting movies.

This is where market research cannot go. And this is where market research will fail, unless it rejects the “build another Hummer” mentality.

References

Babbie, E. and L. Benaquisto (2002). Fundamentals of Social Research. Scarborough, Thomson Nelson.

Mattlerart, A. (1996). The Invention of Communication. Minneapolis, University of Minnesota Press.

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Categories: Blog · Qualitative Research & Design · Research Methods · design · ethnography · home · market research · product design · qualitative research · quantitative research · survey · surveys

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{ 10 comments… read them below or add one }

1 David Atkins February 19, 2010 at 5:24 pm

Niching is extremely important, to be sure–but the trend is not so dominant that traditional brand strategies with overarching demographics don’t apply in most cases. The more specialized and pop-culture focused the product, the more niching will be critical: this is particularly true in the case of, say, music subscription services. Even then, however, platform, price and general “rent vs. own” persuasion are still the key factors.

Apple Computer, for instance hasn’t succeed through niche microtargeting, but through general brand appeal with a particular set of “perceived cool” and first-adopter demographics, as well as through strategic platform dominance in certain sectors.

Most focus groups today focus less on actual product design, and more on advertising concepts related to overall brand appeal. And that’s not going away anytime soon in a global branding marketplace.

Reply

2 Sam Ladner February 19, 2010 at 6:02 pm

Hi David,
You may be right — focus groups may not be going anywhere soon. But let’s face it: mass market advertising is dying. And right quick! It’s true that focus groups still are used for overall branding and advertising concepts. But I argue that we are moving into a more interactive (some may say “dialogic”) mode. The mass market advertising model still is big and still exists. But our media landscape (and our product landscape) is fragmenting. That is where the niche model is taking root.

I could go on about Fordist mass production equalling “appointment television” or 20th century production models being blown apart. But I think the essential point is that more detail is required to speak to consumers in interactive ways. Broad-brush demographics don’t convey deep meaning and we now need deep meaning in such a fragmented reality.

Reply

3 Burak BABACAN March 9, 2010 at 5:10 am

Hi Sam,

Great article. I guess you will find the following train of tought very familiar :

How about designing for “emotional subtelities”
What do we need to uncover an emotional NEED and address it through a specific design idea ?
This question really bothers me for a long time as emotions are the ultimate LONG TAIL.
Observing ones life to get the clues (basic etnography) may end up in finding the needs of a segment of ONE. As I am still working for a 20th century Fordist factory, I have to know that I am able to generalize such findings to a substantial number of people. Through averaging ?
This brings me to a point that product itself may have no importance as I am averaging the emotional needs in fact. Find an average product, shower it with some emotional clues, there you got a winner. Or not ?

Do we buy Prius because of hard data or the emotional need ? Same is true for Hummer too.

Reply

4 Sam Ladner March 9, 2010 at 9:47 am

My condolences, Burak, on working in the 20th Century.

Does the product have “no point”? Hmm. Even in the 20th century, I think it does. New Coke anyone? “Hard data” isn’t available. Ever. Call me a cynic. No wait, call me an interpretivist. I don’t believe in empirical data on sociological phenomena or even on some psychological data. Sure we can generate it. But is it meaningful? How can subjective experiences be represented?

A segment of one. That’s poetry, man.

Reply

5 burak babacan March 9, 2010 at 11:22 pm

Thanks for sharing my grief Sam, it could have been 19th century as well depending on my luck.

Actually, and most possibly, product has a point as long as it satisfies the minimum requirements. (let’s say biological constants) But rest is up to “emotional benefit” that segment of ONE individual will get from by using it. So how to uncover it ? Ethnography ?
You wrote :
“How can subjective experiences be represented ?”
That’s my question. How do we know what we know about the subjective experience of an individual ? Do you know FOR SURE any other individual’s subjective emotions other than YOURSELF ?
I think the only way to succeed in this realm is to BE your design subject. Kind of method acting. I am sure you know what I mean. By the way, I like poetry.

Reply

6 Burak BABACAN March 10, 2010 at 1:37 am

just a small revision :
I think the only way to succeed in this realm is to BE your OWN design subject. Kind of method acting.

Reply

7 leorayman October 13, 2011 at 4:46 pm

It all makes sense.
Except if you’re trying to sell sliced white bread to millions and millions of people.
We’re still more of a We species than a Me species, even if we don’t realise it.
And despite all the media on offer, people still hone-in on, and talk about the same TV, even if they watch it at different times.
This stuff is cool. But microresearch = micromarketing.

Reply

8 Sam Ladner October 13, 2011 at 6:03 pm

Of course you’re right; there is still a “mass market.” But the market research way of knowing this mass market isn’t going to help people innovate or come up with new products. They will get more…white bread. As it were. The idea of the “typical” or “average” person/voter/mom-on-the-go is almost unusable for the innovation process. it’s much more fruitful if you start looking at difference — not similarity.

Do we still have to know the “mass audience”? Of course. But I’m arguing that it’s outlived its ability to give us insight.

Reply

9 Gene Moy October 14, 2011 at 8:40 am

Difficult to follow the line of reasoning here, but the problem for me is that “selling to everyone” requires a marshalling of markets and resources that is simply impossible for the mom and pop or generally speaking the small business owner to do. It is OK for Amazon and eBay, these are market aggregators, but, if the Long Tail tells you anything it is that the implication for the small biz owner is to specialize not in a product, but diversify offerings within a category or range of products, like appliance parts or baking supplies.

Reply

10 Sam Ladner October 14, 2011 at 8:43 am

Thanks for taking the time to comment, Gene!

Reply

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