7 Minutes 
Key Takeaways:
- Perform market research to understand consumers needs and maintain market share as they reduce non-essential spending during a recession.
- A recession hits small-and-medium-sized businesses harder than larger counterparts, which leads to increased prices for consumers to improve operating margins, risking a further decrease in consumer demand.
- Collect more complex data and descriptive information through qualitative research like online focus groups, digital discussion groups, mobile ethnography and more.
In a recession, numerous economic factors are at play. Gross domestic product (GDP) and wages stagnate, reflecting lower economic output and dwindling operating margins. Inflation erodes the value of currencies, impacting purchasing power and disposable incomes. When consumers have less money, they spend less. This shift directly impacts bottom-line revenues for every business across every industry.
In response, there is some must-run market research every organization should carry out before a recession. This research provides the critical consumer insights needed to weather the toughest market conditions.
Why is Market Research Important in a Recession?
In a recession, opportunities dwindle at the market level—and consumers and businesses both change their habits in response.
1. Consumers
The U.S. Bureau of Labor Statistics lists a range of behaviors that change for consumers in a recession:
- Consumers eat away from home less and cook at home more.
- They purchase used vehicles instead of new.
- They switch from premium food and beverages to low-budget alternatives.
- They rent property instead of purchasing property.
- They reduce purchases of appliances and furniture.
These changes are, in part, a reflection of essential-versus-non-essential spending. Consumers reduce non-essential expenditure and, at the same time, optimize their essential spending to minimize outgoings in a recession. Research from Grant Thornton shows UK consumers look to cut back £25 billion of non-essential spending until April 2023.
2. Business
A recession hits small-and-medium-sized businesses harder than larger counterparts. Investopedia highlights numerous recessionary effects experienced by enterprises:
- Reduced sales and subsequent drops in revenue
- Workforce layoffs and reduction in employment benefits
- Increased prices for consumers to improve operating margins, risking further reductions in consumer demand
- Reduced access to credit and increased lender scrutiny, thereby reducing cashflow
- Banks and FinTechs experience higher lending costs from increases to central bank interest rates, reducing margins. All businesses pay more interest on loans as a result.
- Diminished sales reduce flow of inventory, and lead to overstock and wastage.
Where consumers have reduced capacity to purchase goods and services in a recession, businesses find it difficult to sell goods and services—the dichotomous relationship of supply and demand.
What Must-Run Market Research Should Enterprises Conduct to Beat the Recession?
In response to growing economic risks, enterprises should perform market research to better prepare for and address consumer needs. Enterprises gather essential consumer feedback to guide decision-making every step of the way.
There are two overarching categories of market research, with specific methods contained within:
1. Quantitative Research
Quantitative research is the process of collecting statistical or numerical data. Researchers test causal relationships between variables to derive quantifiable consumer data, which is analyzed and processed into key consumer insights. Use quantitative research to reveal “what” answers to a question.
Examples of “quantitative research style” questions include:
Q: How many times during the day do you unlock your smartphone?
A: 20 times per day.Q: How many times per week do you visit the supermarket?
A: Twice per week.
Researchers use a variety of methods to obtain quantitative data. We explore some examples below:
– Online Surveys: This is where a business sends a survey form to each respondent, and responses are collected asynchronously. Researchers design quantitative surveys with multiple choice, either-or, or ranking questions, for example.
Online surveys are ideal for companies that need numerical insights and flexibility in survey design. An example is tracking changing attitudes and behaviors as compared to previous survey responses. Surveys also run asynchronously, meaning respondents and researchers do not need to be available simultaneously for research to occur.
– Offsite Fieldwork: This involves in-field research such as offsite and intercept interviews and product tests. Approaches include in-store tests, pen and paper surveys, computer/mobile/tablet/interviewing, mobile surveys, and central location tests.
2. Qualitative Research
Qualitative research reveals the “why behind the what.” Use qual to collect descriptive information about “why, who, and how?” questions. The complexity of qualitative research is greater than quantitative, but the depth of insight makes up for that.
Examples of qualitative research questions include:
Q: Why do you use supermarket X?
A: They offer better quality produce at a lower price than the competition.Q: How do you feel about the recent increase in federal income tax?
A: I am worried that my disposable income will decrease, especially considering inflationary and recessionary risks at present.
Researchers use a variety of qualitative research methods, with examples below:
– Online Discussion Groups: Online discussion groups are a conversational method of collecting qualitative insights in a virtual space. Researchers can obtain asynchronous insights using this method, as respondents respond as-and-when they can to questions from any location in the world.
Businesses use online discussion groups to obtain authentic, personal research data. The relaxed discussion environment promotes idea sharing, problem solving, and collaborative feedback between the group. This method offers greater breadth and depth of insight than with one-on-one settings.
– Mobile Ethnography: Ethnography is the process of observing people in the context of their natural environment to understand their feelings, beliefs, and behaviors. Mobile ethnography uses technologies like images and videos to capture insights into a consumer’s home environment. This method is longitudinal and asynchronous, where respondents submit video diaries, voice memos, in-the-moment images, and more.
Mobile ethnography allows businesses to be in-the-moment, right alongside consumers. You could watch a respondent unbox and learn how to use your product in their home environment. It combines the environment via video or audio, the person’s emotions and thoughts, and your product for well-rounded insights.
– Focus Groups: This is where a group of respondents come together to discuss and explore a topic, product, or service. Focus groups consist of a carefully chosen and specific demographic. Participants respond to moderator questions and provide input in response to other group peers to deliver deep and comprehensive insights.
Businesses use focus groups to collect live insights among multiple respondents. People build on other people’s comments, adding layers to the insight onion for deeper knowledge. It also enables monitoring of tone of voice and body language for physiological data—an often-neglected side of market research.
– In-Depth Interviews (IDIs): IDIs usually involve one respondent and one highly-trained researcher. This researcher looks for underlying thoughts, feelings, beliefs, and attitudes—reading between the lines. IDIs lead to some of the richest qualitative insights; however, their one-on-one nature limits the scope to a single target consumer. In response, multiple IDIs can take place with many people to broaden the scope.
Run Your Market Research with Sago to Beat the Recession
Sago is a global provider of qualitative and quantitative market research solutions. Our suite of adaptive technologies and team of experts work together to simplify and streamline market research.
As recession looms, consumer insights are the key to understanding and navigating uncertainty. Get in touch with Sago for support in designing and deploying a market research campaign.
