This link to Inspired Research, re-enforces the importance of Ethnography in Design. The alternative to this is often focus groups, which don't fully provide insights, since they are often not true accounts of experience:
'Asking people to explain their feelings is asking them to explain a visceral reaction - something that happens in the subconscious. We cannot understand what goes on back in the dark corners of the brain, much less explain it. So when focus groups ask people to explain their feelings, they make up stories that sound logical. They don't believe that they're lying. They're just groping to come up with a reasonable explanation for something they can't explain.'
The article also shows examples of ethnographic research in everyday products/objects. E.g. Britney Spears Fragrance, Volkswagen, etc.