Articles
ACR TODAY: Market Research - Why bother?
It is a fair question! If you asked the average Chief Executive if he or his management team knew their customers and their market, the most likely reply would be of course we do, we have been in business for 20 years or more
.
Whilst in one sense it is true, they know who their customers are, in another very real sense it is not. Companies do know in detail how their products work, features that they have they frequently understand.
The problem comes when a question is asked such as, "Why do customers buy from you"? as opposed to What they buy?
. The why
question is the essence of marketing and market research namely customer and markets. Successful companies understand clearly what is happening; a) to market trends and b) what motivates customers to buy their products.
If you think about it for a moment, understanding why customers buy from you is the key to success because it is that which enables you as a company to differentiate yourselves from your competitors, and to ensure that your services are directed towards reinforcing the reasons why your customers do by from you.
Without this information so much time and money can be spent persuading existing and potential customers to buy for reasons that are unimportant to them, but which you believe are important.
This introduction is designed to be thought provoking as to why market research matters. My own company has been involved in providing our clients with a clear understanding of why customers buy from them, as a result of conducting perception surveys of existing and potential customers.
KEY CUSTOMER CRITERIA
The reasons for not conducting market research are usually ones of cost - and of course serious market research cannot be conducted for a few hundred pounds. However, one has to see what the benefits of conducting it are to offset this and I list below some of the primary reasons why research is so important;
- Understand market trends
- Enabling critical process of market segmentation to take place
- Understand better your competition (their strengths and weaknesses)
- The buying motivations of your customers
- Your customers perceptions of your competition
- The decision making process of your customers i.e. who is involved
- The basis for a marketing plan/strategy
This latter point brings to mind the much quoted phrase
If you don´t know where you are going, any bus will get you there.
It is essential that a company that is moving forward has a sense of direction. Market research should be seen as a beacon shedding light on the alternative routes ahead, so that management decisions can be made in the light rather than the dark.
The route ahead for a company must be the result of a marketing plan, usually 3 years ahead. No marketing plan worthy of the name can be generated without market research that addresses the markets you are either in or intend to be, and the customers that make up these markets.
So I would submit to you that market research must be an integral part of a companies marketing plan and strategy. The best companies in our economy have such a direction and use market research as part of their decision making culture.
Future articles from this author will address some of the techniques used in business to business and industrial markets, but I want to make clear the case for market research as an investment not a cost towards achieving company objectives.
One comment regarding market research expenditure, is to say that no company who currently does not readily use market research as a management tool should argue they do not have the money, when they are already spending thousands of pounds on promotional activities. Market research should be used to determine how that promotional money should be better spent. This may well mean spending less on the promotional budget and reallocating money into research, to ensure that the money spent is as a result more effective.
An obvious application of market research to promotional activities is to conduct pre and post advertising awareness surveys, which can act as a benchmark for measuring objectives such as a percentage increase in awareness of a particular product or service.
Benchmarking Results
To summarise market research is a valuable management tool. Not a substitute for decision making, but a vital ingredient in good decision making. The answer to the question Why bother?
should be can you afford not to. If the decision is that important so should be the information to make it a correct one.
