How to conduct market research during consulting projects

The most important piece of advice to all management consultants was given by Dr. House in the famous TV show:

Yes. Everybody lies. They do it to save their position or to seem in control. Quite often they simply don’t know. If you want to be a true badass consultant you cannot let lies slow you down. You have to deliver great product regardless of the quality of data given by the customer. In other words you have to rely on independent research done by you or your team. Today I will show you what should be in your toolbox. So let’s get started:

  1. Bottom-up approach. I will start with the a few methods that are great bullshit detectors and help you check, using simple numbers and even simpler math, whether people are lying to you. The idea of bottom-up approach is to estimate the size of something bigger by simply looking at how one representative element behaves and just counting the number of elements. You can for examples estimate revenues of a retailer by looking at the average revenues of a store or estimate the size of the market by looking at the average consumption of a typical customer and potential number of customers. The main advantage of this method is that you can literally do it in 5 minutes and with as little as some general data on your hands. This is the cornerstone not only of consulting but also economics as well. Below a more detailed examples
  2. Top-down approach is the twin of bottom-up approach. In this method you know how big the whole market is but you want to estimate one segment. In other words you start with general data and try to go deeper, more granular to find the needle in the haystack. Below a nice movie with an example of applying this method.
  3. Backward reasoning. The last method extremely useful for checking what you are dealing with is the backward reasoning / backward logic. In this method you have the end result and you want to see what it means for your estimations. This is a great method to check data consistency or estimate something using proxy data. Below an example showing this method in action
  4. Similarweb. During a consulting project you will have to be creative when it comes to finding out what the competition (of your customer) does. For this we have plenty of interesting methods and tools. One of the great tools I definitely recommend using is SimilarWeb that you can use to research the website of the competitors you are trying to analyze. This tool will allow you to see what traffic they got, from what source, how long do visitors stay on the page etc.? Below example of how it works in practice.
  5. Store Checks. If your competitors have offline presence you can find loads of useful information from their stores / saloons etc. This will enable you to define the selling point, value proposition, estimate sales, check their product range etc. This is very powerful source of information, especially when it comes to finding the difference in the business model. You will be surprise how much can be noticed during a short visit. Below example of how it works in practice
  6. Mystery Shopping. Similar to store checks you can carry out mystery shopping visits. You again have to visit the stores of your competitors but this time around you want to find out what is the customer experience, how do they sell the product to customers. The easiest way is to pretend that you are a customer and that you want to buy a product. You will witness the customer journey at first hand. There are variations of this method for the online businesses such as e-commerce, marketplaces, SaaS products. In these cases you simply buy a product using their channels and make notes of all the steps, messages you get, you can also observe the customer onboarding process along with all the frictions you will manage to identify. This will allow you later on to analyze and compare your customers business to the businesses of his competitors.
  7. Investor Relations. If you are lucky you will have some competitors quoted on the stock exchange. If this is the case check investor relations. You will find in Investor Relations loads of financial and operational data, most likely strategy summary, interviews with board members, analyses done independent analysts. In most cases this is gold and saves you tones of money
  8. Sources of financial data. There are plenty of great aggregators of financial data i.e. Yahoo Finance. Even if the company is not quoted you can find its financial reports, however it requires a little bit more effort. Usually, it is kept by some state institution (i.e. court) and there are in every country companies specializing in providing those financial statements and other reports against a small fee. My advice would be to at least purchase the financial statements for all significant competitors of your customer.
  9. YouTube and Slideshare. Don’t forget the obvious sources like YouTube and Slideshare. You can find there plenty of interesting materials on the competitors. On Slideshare you look for strategy summaries, analyses of competitors or the industry, reports etc. On YouTube search for interviews with board members, product presentations, interviews with analysts about the industry or the companies, competitors
  10. World Bank Open Data. It’s time to move on to general data you most likely will need for the project. By general data we mean things like: population, wages, inflation, industry production etc. There are plenty of interesting sources. The first one to start from is the World Bank Open Data. Check my course online How to conduct Market Research for some examples how to use it in practice. The great think about World Bank is that the also allow you download and play with the data on your own
  11. Public data by Google. Google was very nice to aggregate some of publicly available general data. They also present it in interesting way. It is easy to navigate and to export data.
  12. Trend Economy. Another site with general data is Trendy Economy. Not the first choice but some of the data are presented in clearer manner than in World Bank. They also have some interesting reports.
  13. Trading Economics. Provides similar data set like Trend Economy. Definitely, something to be checked during market research.
  14. Statista. A very interesting aggregator of data is Statista. You can find there not only general data but also data specific to an industry i.e. number of cars produced by Tesla for every quarter, number of hamburgers eaten in USA. This is unfortunately a paid source but very good one.
  15. Euromonitor. For many industries you will need detailed analyses of quantity and price by categories. Luckily such analyses are don by Euromonitor. Another paid source but used by most of the top consulting companies. Some of their data could be improved so treat it with caution.
  16. EMIS. For emerging markets you can also try EMIS – it aggregates press releases, financial statements and other information for selected countries and firms. This a paid source used by a lot of consulting firms working for emerging markets.
  17. Keyword Planner. Google provides plenty of tools that help you check size of certain markets via the volume of searches performed. One of such tools is Keyword Planner. You can learn a lot using the Keywords Planner by Google on the behavior of people. It shows you what people look for and how many research were made for specific words. It also provides price estimation for a click for given words. In this way you can estimate certain markets, especially if they have significant share of online sales as well as the cost of acquisition of the customers in a specific niche. Below example of how it works
  18. Ubersuggest. Similar to Keywords Planner tool is Ubersuggest. It aggregates data from many sources and provides you data on the volume search, price per click, best pages for further research etc.
  19. Consumer Barometer by Google. If you want to learn more about the behavior of people online then you should check another Google product – the Consumer Barometer : You can get answer to a lot of question on consumer and purchasing behavior without the necessity to carry out your own online interviews. Below a short example
  20. Google Trends. If you need more dynamic view I would definitely suggest checking google trends that provides you a lot of information of the development of certain phenomena over a period of time. Again this is based on the searches done in Google. In this way you can learn a lot on the trends with a few clicks and on top of that you can do that for free
  21. Facebook Audience Insight. Similar to Consumer Barometer you can get a lot of answers from Facebook Audience Insight where they have gathered data not only on the likes and dislikes but also they have added data on the status, spending, earnings etc. On top of that you have great segmentation tool using dimensions like age, gender, place, behavior etc.
  22. Interviews. Both online and offline interviews are great. They are very good to check qualitative and quantitate data. Start with offline small batch and then scale using bigger sample online. I would recommend using it only after Consumer Barometer and Google Trends are not sufficient. You have plenty of nice free tools to carry out research online: TypeForm, Google Forms, Ask Your Target Market‘s, Mechanical Turks, Survey Monkey. You build the survey using one of them and you distribute it to your fanpges on fb, Instagram or Linkedin; you send it by mail to your friends and email groups, people on your email list. You can also put it in Facebook groups, LinkedIn groups, reddit, forums and others. Out of these tools you get data for further analyzes
  23. Interviews with independent experts. Quite often in consulting you try to find an expert from specific field. In bigger companies like McKinsey you can find them within the company (although in a different office than yours). In other cases you go through your network (Linkedin is very useful + headhunters). There are also specialized firms that provide you with an expert: Guidepoint, Dialectica, GLG – Gerson Lehrman Group
  24. Ready-made reports on specific data. You can find plenty of ready-made reports for each and every industry. In many cases it is easier to buy the report than to try to gather this sort of data. Usually, it is a good starting point that you can later enrichen. You have also a lot of sites that gather data and create mini-reports or snippets i.e. Statista, Trend Economy, EMIS and many more. Have also look at Wikipedia – surprisingly a lot of data can be found there + links to sources
  25. Estimation by proxy. Many markets cannot be observed. There is no transparency of data, price lists have nothing to do with reality. For those cases you have to find a market that is observable and somehow connected to the market you are researching. You analyze the observable market and using some proxy and assumptions you try to estimate the target market. For this I would recommend using bottom-up approach and top-down approach.
  26. Existing on-line data. In this category you have Facebook Audience Insight (detailed tool enabling segmentation and analysis of cohorts), Keyword Planner by Google (number of searches per keyword and category done monthly), SimilarWeb (give you estimation of traffic, bounce rate, spent time and source of traffic for on-line businesses), marketplaces (i.e. App Store Google Play Store, Airbnb), Google Trends (data on changes of searches in time), Google Consumer Barometer (extensive consumer research showing preferences of on-line consumers. You have also interesting resources offered by companies like Airbnb – have a look at their Big Data base that shows prices of rent in different cities. You can do also data scraping from on-line site using i.e. Import.io
  1. Previous projects. Consulting companies have the luxury of using data gather for other projects or even gathered from companies you worked for. Therefore, the more projects you do in specific area / branch the more private data you have gathered become your competitive advantage

That’s in short. For more tools and examples how to use the above methods and tools during consulting projects check my online course How to conduct Market Research. It should help you a lot to master the essential market research techniques and tools used during consulting projects.

Below the whole post in a form of presentation

Stay tuned and enjoy the day 🙂

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