In the ideal business world, market and consumer research precedes any marketing activity. The world is not ideal, but when it comes to capricious emerging markets such as China, the need for solid research turns into an acute necessity: sound and specific knowledge of these markets allows to minimize the business risks which go hand in hand with their complexity and volatility. By contrast, an insufficient understanding of market context, customers and competitors can lead to failure, as we have seen at large scale in examples such as Barbie, eBay and BestBuy.
Not surprisingly, market research in China presents a challenge in itself. Multiple factors come into play. First, the Chinese market is inherently difficult to structure and systematize due to its heterogeneity and quick change. Its developments are conditioned by a unique mix of social, political, ethnic and cultural variables. Therefore, they cannot be anticipated by analogies in the familiar context of developed Western markets.
Second, China’s market research industry is relatively young and thus immature: whereas the discipline of market research was introduced in the West at the beginning of the 20th century, it was not until the 1980’s that the first market research unit, a subsidiary of Procter&Gamble, was established in China. Since then, Chinese marketers have gone a long way in mastering Western methods of market research and adapting them to the Chinese reality. However, as of now, the industry is still fragmented and lacks a unified quality standard.
Finally, as a foreign company, you will not only witness the “inherent” challenges of China, but also bump into linguistic, cultural and legal access barriers. The installation of additional intermediaries in the intent of overcoming these – be they consultants, local providers or native employees recruited for that purpose – often does not lead to the expected results. Instead, it further complicates the information flow and pulls the company into a vicious circle of dropping quality at an increased cost.
The potential of social media for market research
Where there is a problem, there is a solution – in the case of China market research, one solution, intriguing and challenging at the same time, is to step out of the comfort zone of familiar methods such as surveys and interviews, and “ride the wave” with social media and advanced analytics technology. More than in any other region of the world, social media in China have developed into a powerful and ubiquitous digital infrastructure. WeChat, the uncontested leader among Chinese social networks, counts 1.1 billion of accounts and 517 millions of daily users; other national platforms such as Weibo and Zhihu, as well as endless topic-specific or regional resources, complete the picture and cover almost all conceivable communication topics – thus contributing to a self-sufficient ecosystem which flourishes hand in hand with the informational liberation of the country after decades of strict censorship.
Chinese social media contains a wealth of information about consumers and markets. This is due, on the one hand, to the strong orientation towards consumption of the Chinese society, and especially of the younger, online-savvy generations. On the other hand, digital channels for sales and service are gaining in popularity, which also contributes to the creation of market-relevant data. Beyond the availability of the relevant data, social media has some additional advantages when compared to traditional, “old-school” research:
- It is big – millions of posts and comments are posted daily. By contrast, field data projects normally range in the thousands of samples.
- It is up-to-date — with the appropriate technologies, social media data can be harvested and analysed in near real-time. Traditional field research produces static data for one point in time, with a high cost for subsequent updates and follow-ups.
- It is to the point – users talk about what is directly relevant to them and invite the researcher to discover and explore. By contrast, market research surveys and interviews prime the respondent to specific topics, thus preshaping and limiting the information he provides.
- It is authentic – the lack of personal contact often neutralises culture-specific communication barriers. For example, whereas Chinese respondents normally remain polite in face-to-face communication, the Web 2.0 encourages uninhibited, authentic self-expression, often leading to frank negative statements which uncover important opportunities for improvement.
- Last but not least, it is free – as opposed to data solicitation which comes with a high price per sample and creates a trade-off between cost and data quantity.
Integrating social insights in the organization
Obviously, these advantages come at a price – social media data is not available in the familiar, structured and well-focussed format of market research data. It is online and cannot be directly “imported” into common analytics programs. Besides, most of the data is unstructured and has a high degree of noise. Inside a company, three ingredients should be mingled to successfully generate insights from social media:
- Technology and tools
- Data science expertise
- Mastery of the business context
Tools ensure the feasibility of the research – the right technology will allow to collect data that contains the relevant information and to actually extract this information. In most cases, there will be no single “one-stop shop” that can do the job. Instead, multiple tools are combined into a pipeline that produces detailed findings and is customized to the specific business circumstances. Special attention should be paid to the technical details behind unstructured data analytics. While applications in this domain are often marketed based on alluring concepts such as Artificial Intelligence, Machine Learning and Natural Language Processing, the algorithms don’t always produce high-accuracy results and thus can devaluate even the smartest data strategy.
Data science expertise is needed to pick and mix the right tools so as to produce relevant and correct output. The data scientist makes sure that the right tools are correctly integrated into an analysis pipeline. The main requirement is that the pipeline produces results that are maximally close to concrete actions and decisions. A point which is often neglected here is the cleaning and preprocessing of the data: as noted above, social media data comes with high levels of noise in form of spam, advertising etc. The “garbage in, garbage out” principle applies at full scale – thus, before going into analysis, the data should undergo a carefully designed cleaning and filtering process.
Finally, mastery of the business context is required to use the social media tool set with maximum benefit. On the input side, this means translating business issues and reframing information needs into the query framework of the used data and applications. On the output side, the analysis results are fed back into the real-world business context and translated into concrete and actionable insights.
Adopting social media for market research is a challenge that requires the right tools, skills and judgment. However, efforts put into designing a customized social insight strategy will pay off and solve many a productivity issue associated with traditional market research. Especially in a market as volatile and diverse as China, leapfrogging over familiar research methods to leverage advanced analytics and the wealth of available online data appears to be a promising, future-proof strategy for an up-to-date and actionable understanding of the market.
Janna Lipenkova, CEO Anacode GmbH