ROI Marketing Research - The Cost of A Bad Decision
Marketing research historically has been viewed as an intangible asset and cost center, removed from the actions of the sales and marketing functions, making it difficult to draw a direct link between marketing research efforts and a company�s ability to leverage information towards profitability. Inevitably it�s the first thing eliminated in organization downsizing.
However, over the years we have seen a shift in this belief as more and more companies recognize the importance of marketing research and its strategic role in success. Measuring what percentage of the marketing research process directly impacts a company�s marketing mix efforts and ultimate profitability is nearly impossible, particularly when there are so many other factors to consider, such as market change, competition, pricing, promotion and products. Nevertheless, each company�s success relies heavily on management�s ability to assess, analyze, and effectively act on information � and that is where marketing research excels.
The goal of marketing research is to allow companies to examine their past, measure their present, and plan for the future in an effort to drive key decisions and remain competitive.
Over the years, marketing research has taken on a strategic role, contributing to every phase of the marketing function. Relevant, accurate, reliable and valid information is a critical corporate resource that drives and directly impacts a company�s strategy and future direction.
Marketing research provides information about customers� behaviors and needs, competitors and the marketplace. Implemented properly to answer the company�s business questions, marketing research can provide high-quality, invaluable information to enable management to make wise business decisions.
Despite the importance of conducting marketing research, many companies both small and large choose not to invest the time and money into marketing research efforts. Sometimes the excuse for this is the cost of research or the time it will take to complete the project. The cost of not doing marketing research is the cost of a bad decision: depleted profits, prematurely stopped projects, layoffs, and an unfavorable competitive position.
As an example, a trade association decided to conduct a baseline assessment of their respective market and membership�s understanding of the organization�s brand value and definition. Awareness, familiarity, and reputation for the brand were good, but marketing research results produced findings that indicated that there was room for improvement and that the association�s brand fell short compared with competitors.
These findings provided the association with insight needed to take actions to improve its brand perception among members and its market through various marketing efforts. In the long run, the association saved money by adequately assigning marketing dollars to those efforts that would have the greatest impact in terms of brand perception, growth, and sustainability.
In another example, a small start-up company wanted to develop and launch a new product. The company believed the product was needed, based on its own passion, intuition and personal understanding of the competition and marketplace. Initial Internet searches gave some information about the competitive landscape but not enough to convince investors of the soundness of the opportunity to develop and launch a new product.
Sophisticated, methodologically sound research with a representative sample of the target audience gave additional specific insight into consumers� needs and wants. This gave the company the opportunity to develop exactly the right product. By effectively conducting, assessing and analyzing relevant research, the company learned whether and how to launch the new product with a differentiated advantage, establish appropriate value pricing, and craft marketing and advertising messages to appeal to its target audience.
Organizations should incorporate marketing research appropriately into every phase of the marketing mix for the marketing function as a whole to be efficient, effective and successful. Deciding not to incorporate marketing research into the various marketing efforts could cause companies to ignore core targets, implement non-relevant promotional and advertising strategies and miss social and demographic changes. As a result, companies could lose opportunities, make poor decisions and, most importantly, forego profits and even sustain losses.
Ultimately, companies that invest their time and money into research increase their chances of success within their respective markets. The cost is just too great not to!
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