1046 words long | 5 minute read
Conducting market research is a crucial part of identifying the core market for your company. If done well, market research can be the catalyst a company needs to becoming focused on one segment or area of the world. At Export Abroad we originally identified our target market as "exporters". This was way too general (we didn't define who or where in the industry made the most sense) and we conducted market research to segment out the size of different potential customer markets. Market research has saved us a lot of precious time not going after poor leads and has helped in the initial stages of our company.
Due to the importance of having a well thought out market research report, it makes sense that companies spend $33 Billion globally because it can define your companies strategy for at least a few months.
What doesn't make sense is how most people still conduct market research.
I used to work in international market research and sifted through mounds of economic data all day long, which ended up being the inspiration for Export Abroad's market research tool. Many companies approach market research in the wrong way as they tend to have the results they want to get before they even conduct the research. Confirmation bias comes into play more often than people think. Like A/B testing, market research needs to be conducted without any emotions or expectations. If you go into conducting research assuming that you're going to want to target middle aged men, you're more prone to finding data that supports your thesis. Many of the processes and ways of conducting research are prone to using stale data and poor practices as well. Below I have outlined a few of the issues that I see in the market research industry.
Many market research companies require a lead time of two to three weeks. In the grand scheme of things, it doesn't seem like a terribly long time to wait for insights. When you are a fast growing company or a startup, however, three weeks is a lifetime and they may not be able to wait that long.
Unless you are doing in person interviews of consumers (which is also too expensive for most companies) it doesn't need to take more than a couple days. Companies are still pulling data by hand and the inefficiency gets passed on to the consumer. Anyone that gets quoted a 2-3 week estimate should be asking the company, why are you still pulling data by hand?
Unlike other data types, like internet analytics, many metrics used for market research are offline (economic, demand data, etc.) and therefore need to be digitized. Research companies don't need to do the digitization themselves as there are many services that provide data and your market research provider should be able to get a good data set. It shouldn't be necessary to compute by hand any longer and I believe companies that utilize the power of computer computation will be rewarded in the long run. Our market research tool can identify the top target markets for any physical product anywhere in the world in a matter of seconds. I suspect that there will be other innovations in research surrounding services, but the industry for now continues to lag behind other industries, like internet analytics, in regards to data processing.
The standard for market research is either an industry white paper or a tailored report for your particular company. The latter tends to be more insightful, but is also much more expensive. The expense often drives companies to buy industry white papers, which can often sit on sites for years at a time without ever being updated.
In the age of real time data and insights there really isn't a reason that data shouldn't be up to date, barring any extenuating circumstance like countries not reporting statistics. It becomes especially problematic when a company does pay for a tailored report specific to their company and it still contains old data. If you are buying market research services, make sure that the firm you go with is using the latest data available. I realize that sometimes the data just simply isn't available, which is unavoidable. What is problematic is when you receive a report that uses the US's GDP from three years ago. Having up to date data is crucial and should be of the utmost importance for any market research initiative.
This issue mainly lies within reports that specifically deal with secondary data sources. I've been seeing a trend where a company will receive a report that is simply a collection of raw data without any computation being done on it. It is up to the market research professional to figure out the trends and insights within the data. If I wanted to know the consumption trends of Malaysia, I could've looked that up myself. Market Research is meant to produce insights, not just be a source of raw data. Like I said, this issue is more of an industry specific one that I've seen (exporting) where secondary data is heavily relied on. Ensure that before you buy any market research reports that insights will be included!
I suspect that many companies have had issues with the problems that I previously mentioned. For some reason, market research has lagged behind other industries in the sense of utilization of technology. I believe that this is largely attributed to the fact that there isn't incentive for research companies to innovate as they are still paid exorbitant rates for conducting the same style of research. The current trend of big data will hopefully help innovate with generic market research as it has already helped in other sectors like consumer insights.
In a follow up post I will outline some of the ways that these issues can be combatted. For now, I wanted to raise awareness to some of the issues that companies should be looking for. Market research is currently broken, but it doesn't have to be. I've seen a couple companies doing innovative things and I think that very soon they will begin to compete with some of the entrenched players. Until then, know what to look for in market research reports and make sure those you work with are using best practices!