Is Market Research and Analytics Relevent for my Business
Market research (MR) is a discipline that primarily collates a wide range of information relative to the market for goods and services by profling the behaviours of existing, past and prospective customers. Data analytics enables organization to get actionable insight from data gathered to drive business decisions.
Organizations take help of market research agencies to design their questionnaire, the appropriate methodology to ask the questions, mode of deployment of questions and sample population to whom the questions ought to be asked in order to beter understand or predict the behaviour of their customers. Data analytics in most of the organizations is done in-house
A signifcant amount spend in market research is driven by the need to make an informed decision when spending large amount trying to reach existing and prospective customers.
Traditionally FMCG companies that wish to reach specifc segments of the population or exploit the power of their brand to drive consumption patern mostly use the market research service. Market research also comes into action when companies are launching new products or product enhancements or services where communication with existing and prospective customers becomes important.
Despite the need to understand and track the behaviour of customer closely, the amount of market research performed is actually limited. What are the reasons for companies conducting limited market research; though they feel beter insight supported by market data can help them take more informed decisions.
When we posed this question to 90 companies in the UAE, the responses received were as follows:
For companies to continuously take decision based on market data it is necessary that market research has to be performed in a scalable, frequent and low-cost manner. It is important that companies refresh the market data accumulated over the years, even though it may be relatively repetitive process. In the case of repetitive market research, the need to re-engineer the basic survey design and strategy is minimal. Once the higher value, front-end component of market research is stripped away, the process of collecting and processing the data is actually fairly commoditized. Collecting data from consumers or businesses is becoming signifcantly less expensive with the availability of tools such as Computer Aided Telephonic Interviews, Computer Aided Web-based Interviews and online surveys. Processing data in tools like SAS or SPSS are also relatively easy. The extraction of basic information from market research is also something that requires fairly low skills.
One of our clients in the GCC in the fnancial services space designed a credit product for SMEs targeting women entrepreneurs based on analysis of behaviour of their existing customer base. They had used regression model and sampling techniques to arrive at potential demand for their new product. The management however before deciding to 'go-live' with the product wanted to validate their hypothesis with market research. To their surprise they found that the market research results were no were close to their hypothesis. The management decided not to launch the product at that juncture.
Market research on standalone basis is not sufcient. The next step involves data mining to manage, integrate and manipulate the data and data analytics to get actionable insight from data gathered to drive business decisions.
Illustration of how market research and analytics can aid decision making across the business:
While it is needless to reiterate that research and analytics are important in every area of the business, it is in the marketing arena that organizations invest more on knowledge than any other functional area. Irrespective of the nature of the industry, the marketing organizations are expected to understand the needs of the customer and transmit it to product department in the company.
If implemented correctly, market research and analytics supports informed decision making at every phase of the sales lifecycle, from acquisition to cross selling to managing atrition to enticing customers who have lef to return.
In case of knowledge companies such as IT services and Business process outsourcing frms, research and analytics add actionable insights to the critical task of maintaining employee satisfaction, employee retention as well as high performance. Obtaining answers to questions such as: "Which employees are likely to leave the organization, reasons for their leaving, compensation and growth perception of employees, etc.?" is critical. Analyzing their responses along with performance data, demographics, tenure, compensation practices, and other policies can reveal and predict which employees are most likely to leave and which are most likely to stay.
In one of the IT outsourcing companies based in India with large clientele in the US and Europe faced high absenteeism during certain months of the year and the HR head wanted to call for meeting of stake holders to discuss the issue of high absenteeism armed with one year data she had gathered. But she frst decided to run the data with her analytics department. The analytics team afer going through the data, created control charts and came to the conclusion that high absenteeism in certain months were not due to any induced causes but were random in nature. The analytics team though fully agreed with the veracity of the data provided by HR head was of the opinion that no purpose would be served by calling a meeting of the stakeholders to discuss the issue, since the months in which absenteeism was high was due to random causes which cannot be controlled. A beter agenda for a meeting if required could be to discuss seting experiments to capture diferent sets of data which may help to reduce the overall average annual absenteeism.
In the internet age there is no evidence to suggest that good companies have more or beter information than not so good companies. Both sets of companies have virtually identical access to data generated within the company and from the market. The successful organizations on periodic basis keep refreshing data and data capture mechanisms and also use analytics to a great extent to get insight from the data, thereby taking data driven business decisions. Businesses need to make efective use of IT tools deployed within and outside their organization which are easily available and cost efective. Outsourcing market research but retaining analytics within the organization can be a cost efective strategy which organizations should not ignore.