Market Research – An Important Management Tool

In today’s business world the term “market research” is used to describe a variety of activities or actions taken to better understand business issues facing their company. Unfortunately, too often, the activities referred to as “market research” are not aligned with the actual needs and real value that is required by the organization.

Phillip Kotter, in his book Marketing Management, 7th Edition, defines market research as: “The systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company”.

A true market research effort needs to be framed with a specific set of goals and objectives. These goals and objectives are intended to support (or challenge) one or more actionable items by management as a result of the information gathered. When decisions are made that are influenced by the market research that has been conducted, the process can be considered a success.

Choosing to employ market research as part of a company’s strategy is driven by a variety of business circumstances individual to a particular business. The scope of the market research needed is unique to each business situation.

There are few “rules-of-thumb” that can be applied to the situations that dictate the need for market research. In all cases the process must deliver information management needs to help facilitate decision making. (See Table 1).

The dynamics of effective market research are sometimes lost in the notion that market data, by itself, can be a primary tool for decision making. Market size and growth rate projections are useful information assuming they are from a reliable source.

Depending on the intended use for this market data, there is a concern that reliance on such information, too heavily, will result in a very misleading business picture.  It can also contribute to “wishful thinking” that overlooks many of the fundamental issues or barriers that exist which challenge the viability of the company’s current goals and objectives for their business.

For market research to deliver sufficient value to management (that will contribute to effective decision making) the goals and objectives need to be well defined. The methodologies involved in gathering this information need to be rigorous enough to ensure that the results of the effort will provide a management tool that brings insight into the strategic decision-making process.

Resourcing the market research effort can be a challenge. The availability of internal resources to tackle the job is the first place most companies look. Depending on the complexity and scope of the market research effort, an organization’s ability to internally resource the effort can become challenging if not difficult. The reasons for this are many:
• Timeframe for completion does not provide sufficient flexibility
•  Scope of the effort
  o  Geographic scope is broad: Global and or regionally-specific
  o  Market targets are many with a need for significant detail
  o  Target markets include some that extend beyond the company’s knowledge base
  o Technologies involved are unfamiliar or divergent from the company’s current core competencies
• Segregating resources to perform the tasks required is not a realistic option.

Outside resources become an important option for management to address their market research needs. Consulting services and industry experts provide an important option that can be used to complement or augment the capability of internal personnel. Importantly, bringing in a fresh, independent assessment of the company’s current business situation and view of the relative merits of alternative strategies for growth going forward brings an important added value to the market research effort. 

In today business environment, the importance of vision in guiding and ensuring a company’s growth can’t be understated. Challenging existing go-to-market strategies is an important management responsibility. Contributing vision and direction, that keeps a company competitive and positioned to grow their business, is part of this process. Market research, as a tool, plays a key role in addressing these needs. 

Table 1: Examples of Drivers for Employing Market Research

• Problem Solving
  o  Operations and/or organizational Issues
  o Product line(s) assessment: Invest & grow; Divest; Re-focus; Acquire

• Strategic Direction
  o In-depth assessment of current markets served and the competitive environment
  o Analysis of adjacent market spaces for current product lines or technology platforms

• Tactical Approach
  o Benchmark company’s current go-to-market approach against competition
  o Re-assess present marketing tactics, growth strategies
  o Bo Understand trends and transitional issues in the markets currently served

• Long-term Strategic Planning
  o In-depth analysis of current and adjacent market spaces
  o Identify long-term trends at an industry level and on a global scale

• Diversification
  o Evaluate, characterize options for business expansion outside the current business framework