Monday, February 10, 2014

Stop wasting money on market research

Everyone in business does Market Research. Some even pay for it.  Whether you are an experienced and sophisticated marketing manager or a startup trying to better meet your customers’ needs you need to make sure that you are asking the right questions.

My favorite story in this regard  comes from Sergio Zyman’s book “The End of Marketing as We Know It”. As you likely know, Mr. Zyman was, for many years, the Chief Marketing Officer of Coca-Cola Ltd. His tenure included that legendary marketing mistake, the New Coke fiasco when they “improved” the ninety year old Coke formula and “relaunched” the brand with the new product. Consumers, of course, were outraged, the company was humiliated and within the year they reversed course and returned to the original formulation.

Mr. Zyman explains in print how the marketing team did extensive market research to inform their business decision (no kidding!) and they felt certain that the new formulation was preferred by both competitive users and current users. He distills his mistake this way: “we asked them ‘what would you do if we gave you [this] product as Coke? They told us, ‘they would buy it’. We didn’t ask The Question…‘if we took away Coca-Cola and gave you New Coke, would you accept it?”

If those smart, experienced and well-resourced people in Atlanta can get it wrong…well, anyone can.  To get it right you need to do what I do at the outset of every research project, a Strategic Research Review.  By doing it you will a) save money by avoiding useless research that you don’t need b) ensure that your research is relevant and has a high value to the business c) enjoy the long term benefits of making smarter decisions.

Like most “problem definition” documents the SRR is neither easy to do nor easy to explain. It is not something you do perfectly; it is a continuous improvement thing. Experience helps. Despite the obvious challenges I want to give you a sense for how you can ensure that you have done your homework prior to implementing market research.

Why do we need research?

This is relevant background. It has to describe the business situation and category dynamics that have created the research need. It should demonstrate that you have identified what you think is the root cause of the business problem. To do that it usually breaks the problem down into its component parts.

Example: Brand X is getting squeezed in the yogurt category between a local brand with superior quality and a global brand with extensive innovation across flavours and formats. (and so on)

What relevant research has already been done?

What is that George Bush-ism about “known unknowns and unknown unknowns?” Previous research is a “known unknown”, that is, there is almost always something useful if you are willing to look carefully. Articulate a concise summary of what you learned and note the studies for future reference.

What are the business decisions to be made with the research?

Clear links to the decisions to be made are your security against useless research. Articulate realistic and accurate aims for the research. There may be multiple decisions to impact, but it is important to convey their priority. There is nothing wrong with having secondary decisions, they can be handled on a “nice to have” basis.

Some projects are suited to “decision choices” i.e. the brand needs to do A or B depending on if the research outcome is 1 or 2.  These decisions should relate to the components of the problem outlined earlier.

Example: Yogurt Brand X needs to choose  where  to focus investment and how best to position the brand to win in those segments versus competitors.

What are the research objectives?

What are the specific questions, the things you want to learn? What information would enable you to make the decisions? You can frame them as questions (How do consumers switch among the various brands?) or as information needs (Determine brand interaction). This section will also convey exactly whom you want information from. Again, it is important to convey the priority of the various objectives. “Self reported media habits” may be nice to have, but brand image perceptions would be critical. This is where the new Coke team failed to pull out the precise question that related to the specific business problem.

To understand yogurt consumer purchase habits in terms of frequency, location of purchase, formats, brands, container size.
To understand consumption behavior in terms of who consumes the product and  the type of occasion.

What is the expected use of the results?

This section articulates specifics of how will the research information help with the decisions? It may not be required for simple projects. For others, however articulating specific analyses and uses ensures that you are getting the right data.

To develop an in-depth profile of the yogurt purchaser, particularly the heavy purchaser both for the category overall and for the most profitable yogurt formats.

To populate a scorecard of key measures that will evaluate the overall effectiveness of marketing programs.

Once those questions have been answered, only then can you  start designing a methodology. In general, there is far too much attention on innovative methodologies (MRI scanning? Sentiment monitoring?) and not enough focus on defining the research problem.  The issue is exacerbated by research suppliers who are selling off-the-shelf “products” that are standardized and easily executed by relatively junior staff.

What happened to poor Mr. Zyman? Well he had to leave in disgrace a year later…but he may have been out to prove something.  He wrote a bestselling book , started Zyman Group consulting, sold it seven years later to MDC for $64million  and was hired back at Coke as CMO for 3 years. It seems he did okay… once he learned to ask the right questions. Luckily, I have not sold out yet – just call or email.

Lighthouse Clients

Cases, examples and client references are available upon request. Some of our clients over the last few years are:

Toyota Canada
Landmark Cinemas
Sleeman Breweries
Toronto Blue Jays
Cadbury Adams
Constellation Brands/Vincor
Cara Foods/Recipe - Casey's, East Side Mario's, Fionn MacCool's, Bier Markt, Kelsey's, Montana's
Sigma Alimentos - a large food company in Mexico
Multiple Sclerosis Society - MS WALK
Yellow Pages Group
New Balance Canada
Ideazon -(Gaming Hardware)
Edwards Builder's Hardware

Going further back:
Pfizer - Viagra, Detrol
Volvo Canada
Canadian Blood Services
Red Lobster USA
Xerox Canada
Sprint Canada
Absolut (Maxxium)

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