Market research is one of the activities we know we should do more of but for lots of reasons we don’t do anywhere as much as we need. How many times do you debate customer behaviour and need simply to end up in a circular discussion, because you don’t have data to inform the direction?
In my experience there are two key reasons why this is the case: the time that it takes to carry out market research and the cost. The latter being the key hurdle because it’s seen as a cost as opposed to an investment.
So what do we actually mean by market research?
The Chartered Institute of Marketing quotes a Market Research Society definition:
“The collection and analysis of data from a sample or census of individuals or organisations relating to their characteristics, behaviour, attitudes, opinions or possessions.”
The research doesn’t need to be a massive, expensive exercise. Simple online questionnaires are so easy and cheap to put together and can cost pennies to run. Likewise the use of specialist research agencies to write, plan and execute the research often ensures that the research is effective. The key thing is that you have to have a mind-set that is open to doing research to test ideas, conventional thinking as well as the typical new market definition.
Assessing investment in market research
- Research can present opportunities for gaining revenue – what is the potential profit identified by the research?
- Research can help avoid unnecessary risk, mitigating costly mistakes. Research can also identify business efficiencies. – What savings where made as a result of the research?
- Seeking a satisfaction score from your team, on the research project, is a simple way to gain feedback
- And reviewing the projects objectives and if they have been met is of course another
Relevant and well-structured market research that informs or supports decision making is an essential tool. Market research helps us understand a market – either in total, or some aspect of it.
NB: Have a good look around the Competitive Advantage blog site. There are a lot of excellent articles that set out how to go about different types of research, how to plan and brief a research exercise.
Is Market Research worthwhile?
Back to the point about cost versus investment.
One of the most difficult things that I have found about market research is that of showing its value. Increasingly we are looking for the return on investment or ROI. Technically an ROI is (from Wikipedia this time):
“to measure, per period, rates of return on money invested in an economic entity in order to decide whether or not to undertake an investment. It is also used as indicator to compare different project investments within a project portfolio. The project with best ROI is prioritized.”
So when we ask ‘what is the ROI of the research?’ arguably we are asking for the wrong thing. I often think that, in marketing, in our desire to be friends with the accountants, we use their terminology incorrectly, ROI being one of them.
Either way we should always be looking to generate some measure of the effectiveness of the spend, to ensure that the market research has given us what we wanted it to.
Take a look at the excellent blog from Lucia Di Stazio of MRA. Lucia quotes a case study where research made a profound change to the way that builders merchant EH Smith goes about its business. Ultimately the ROI, if measured, will be fantastic but the outcome could not have been anticipated at the outset and so many other things need to happen to ensure that the ROI actually happens. So how do you attribute and specific return to the research (or any other launch activity)?
Does market research pay? Generally yes. But the ROI isn’t always measurable and, often, can’t be measured in financial terms. But a conscious review of the outcome of the research should be carried out. This way you will be able to demonstrate the benefits to the business.
So there are other ways of measuring than just ROI, you can demonstrate potential profit identified and cost savings, identified through risk mitigation and business efficiencies. You can also gain feedback from your team and review objectives meet.
Market research tells us something we didn’t know. It turns perceived wisdom or gut feeling into fact.
Often Market Research is about managing risk; the greater the understanding of a market that you plan to exploit, the lower the risk of failure and the higher the chance of success. Market research informs your decision making and underscores your business strategy.
Market research is not a ‘nice to have’ but essential in making knowledge-driven business decisions.
You should consider the impact on your business if you do not conduct research. Making assumption-driven decisions could be costly.