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Is Market Research Getting Lost in the Shuffle?

Throughout my career, I’ve had the great pleasure of working with many clients across various industries.  While the businesses may have been different, what’s often been the same is the customer.  That person who lined up for his double shot latte without foam in the morning, is the same person who picks up groceries at the supermarket in the afternoon, and is still the same person who wraps up his day going online to pay his bills and browse Amazon for a great deal.  Understanding who that customer is – just is – will be as important as tracking their series of purchases.  So, how can we give more thought to the customer?

 

Data Chatter

Each day that customer is making countless decisions that are captured by big businesses.  When you start adding up those decisions they made, a momentum builds and what results are millions and millions of data points appropriately dubbed big data by those big businesses.  In the past ten years, companies in FMCGs, telecoms and banking have ramped up their efforts to create sophisticated systems and pull together the most talented of analysts and statisticians to mine the data of what customers did in hopes of predicting what customers will do in the future.   These predictions are then used to create compelling promotional offers or design appealing new products and services.

So, what are the customers saying in all those data points?  In a nutshell, the data tells us customers made the decision to purchase something and carried through on that decision.   The data confirms a purchase has been made but does not shed light on why customers decided to make that purchase.  If businesses do not understand why their customers made that purchase, how can they be equipped to successfully design future products and services?  In other words, have businesses placed enough thought on their customers?

 

Meaning behind the Chatter

If companies want to launch that breakthrough product, they better understand the underlying motivations and wants of the customers. This goal to understand the why is a mainstay in market research.  However, in the January 2014 article “Finding a Place for Market Research in a Big Data, Tech-enabled World” published by the Wharton School of Business, there is frank talk about whether market research is past its prime:

 

“It is a sad state of affairs. Market researchers were the ones holding up the light so we could see an otherwise dark world,” says Wharton marketing professor Peter Fader. “They used to be leading the way, from the 1950s, 1960s and 1970s on, at giving us a window into customer preference. For resulting managerial decisions, it really was a vital function for so many companies. Today it is in the back seat, if companies are doing it at all.”

 

Companies may be scrutinizing the benefits of market research for many reasons.  Are the practices out of touch with today’s needs and realities?  What are the limitations of certain methodologies?  Just as there is an impatience mentality among consumers, are businesses driven by instant gratification to hear from their customers and therefore dismiss market research because it takes too long?

 

Trial By Fire

In addition to the stigma towards market research, other practices are surfacing that some companies consider are comparable to market research.  The approach of testing and learning by launching prototypes into the market place has resulted in a potentially false understanding of whether or not customers would purchase those products ongoing:

 

“People say, ‘Let’s just try stuff and see what works. ’ It’s a widely held belief that it has become much easier to test things in market [i.e., by saying,] ‘Let’s put out our concepts and see what gets clicked on the most.’  That can help you determine a winner, but it doesn’t help you design what would have been the best. By doing careful research and determining the underlying drivers that cause people to click, we can develop better products and services.”

 

When companies launch prototypes without having done the research to understand the customers, it is more different to determine what attributes to the success or failure of the prototype.  For instance, was a failure due to a distribution issue or an inherent flaw in the product design?

Incorporating careful research encompasses a rigorous planning process to articulate the objectives, identify the most suitable methodology and create a technically sound execution of the research to deliver valid, thought driven results.   The Wharton article continues to state:

 

“Some experts suggest that earlier comprehensive market research could have saved the industry some blunders, and moved it more quickly toward developing a new technology customers wanted, or at least liked. But do customers know what they want? Fader says that ironically, an anecdote from one of the most stunning successes in consumer electronics history has sent exactly the wrong message about the importance of market research. ‘Too often we are counting on a visionary, a Steve Jobs, who really set the market research industry back years because he was so disdainful of it,” Fader notes. “[Jobs] said, ‘I am going to tell people what they want.’ And unfortunately, he was right, or maybe he was just lucky. In that one specific test study, it might have been a fair point, but for most companies most of the time, emulating Steve Jobs — having that kind of brilliance, or arrogance — isn’t going to work. It is going to take more thoughtful data-driven approaches.”

 

Before you easily disregard the merits of market research and the thoughtful nature of putting the customers first, read more about Vizio’s experience of launching its at home 3D TV in the article “Finding a Place for Market Research in a Big Data, Tech-abled World”.

So remember, the next time you have an opportunity to launch a new product, practice a thought driven design by engaging and listening to your customers.

 

This is a creative commons image is courtesy of featureset1

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