Market research in isn’t just a good idea — on today’s hyper-competitive business landscape, it is a fundamental requirement. Indeed, whether your business wants to glean the voice of your customers, identify and exploit future marketplace trends, assess the viability of launching a new product or service, and the list goes on, market research is a definite asset. Well, that is, most of the time.
This is because there are scenarios where market research is actually a liability. According to Communications for Research, a leading nationwide full service market research firm that runs hundreds of market research projects a year, the following three scenarios invariably lead to market research misery:
- When the Market Research Problem is Unclear
All businesses that conduct market research want to improve their bottom-line; either by boosting revenues and profits, reducing overhead and waste, or ideally, a glorious mix of all of these objectives.
However, none of this can or will happen if the market research problem is not clearly defined.
For example, if the issue is excessive customer churn, is the market research problem related to current customers who are exiting the relationship, or prospective customers who are joining the roster? Of if the issue is that customers are not buying as much per transaction as they were last year, is the market research problem rooted in product selection, pricing, staff training, marketing — and so on?
Identifying the right market research problem – which is something that a good market research firm will help its clients do — puts the plan on-track to deliver business intelligence that translates into actionable decisions, and ultimately, into bottom-line increases.
- When the Market Research Budget isn’t Sufficient
Most businesses do not buy market research on a regular basis (and some have never bought it in the past). As such, they can underestimate how much things are going to cost. For example, a market research plan that calls for focus groups or in-depth interviews, yet has a budget of a few thousand dollars, is simply not going to work.
This is not to suggest that market research is prohibitively costly, or that businesses need to be prepared for 5 and 6-figure outlays. Rather, it simply means that, as with any other investment, there has to be a realistic alignment between budget and plan. Otherwise, the initiative will be doomed to fail before it even begins.
- When Sensitive Information Must Remain Under Wraps
Sometimes, businesses have both the focus and budget they need to conduct effective market research – but what they do not have is the ability to share what they are doing with the marketplace. For example, a business may be thinking about acquiring a competitor, and wants to assess how its marketplace would react. Or, if may be contemplating a major re-structuring of its operations to focus away from retail stores and towards a larger online presence, and wants to glean how this would affect key customer groups. While market research would be ideal here, a conventional approach could lead to a costly information leak.
With this in mind, it might still be viable to conduct market research, provided that extremely well-defined information flow protocol is established and strictly enforced, and that all data gathering is done without reference to specific businesses or brands.
As noted above, conducting market research is not a nice-to-have. It is a fundamental necessity for short-term success and long-term growth. However, market research must be designed, developed and deployed the right way. Steering clear of the three pitfalls above will point you in the right direction, and help ensure that your investment is an asset — not a liability.