What stops a business from investing in market research?
Many small to medium size businesses know that they should conduct some form of market research. But, what do you think it is that stops many businesses from making the investment? Is it a misunderstanding of the value it adds to the business, or is it something else? Do you have an experience you can share?
There's much of value and a lot of real-world experience speaking to us in the foregoing comments. (Sorry I'm joining so late - I just came on board recently.)
FYI: With the project resources available these days for custom-design market researchers, there's not much good reason for small/medium firms with consumer markets (B2B is another matter), to forego their own projects. Tools exist to obtain good, informative and original marketing research that yields product-specific results proprietary to you, the client. If you can, get it on a full service basis, i.e., with a report and presentation to clarify the results and discuss the marketing implications. Should be rather easy to justify, as remarked above, on a ROI basis.
I've worked in large corporate B2B environments in market research / competitive intelligence / strategy development roles for many years. The issue is not unique to small/medium businesses. In my experience, many people in leadership roles have difficulty identifying the value of the research because there is not an easy link to a monetary measure. I found that many people, at all levels in the organization, assume that most any information that is needed is available "free" on the web. There is a real lack of understanding of the process of data gathering, analysis, and -- most important -- interpretation. My most repeatable success in corporate was presenting summary conclusions identifying probable impact on the business as well as possible actions to either capitalize on a strength or overcome a weakness. As others on this thread have cited, there are many misperceptions about market research and market researchers.
When a business is succeeding many new business owners do not see the need to invest in the market research while they are profitable. Some business owners will only consider the market research needs when the numbers dip or the business is in a downtrend. This is counterproductive to "keeping an edge" and market research should be an ongoing consideration both before launching a product and during the product's market lifetime. Also, market research should be made easier and available without too much capital investment to encourage struggling business owners to invest any of their already stretched capital- possibly as a service that can recover costs from any ROI.
Market feedback strategy in necessary for every business because by this study you can improve your product and also by the help of this study you know your original standard, and you also find ground realities,...
There are several reasons; especialling coming from someone like myself; who has worked for Fortune 500 and smail companies in past. First of all the Fortune 1500 more or less set the market segments covered by the typical providers of these services (e.g., Frost & Sullivan, Gartner, etc.). Second the cost for a market segment report ranges from 3,000 to nearly 10,000 $US. Out of range for most small and medium size enterprises. Second, many small and medium size buinsess may have few employees with the relevant experience to address the challenge, let alone know which questions to ask or report to select. Thirdly, it is best to get a blended view of a market. Translation, you really need to comb through several market reports to neturalize the bias, from a single report. And finally, fat and ignorance is blizz success of some small business, blind them to envisioning a future that would be other than the current success. I call that the diosaurs feeding on the savania before the asteriod hits.
In my experience, companies are reluctant to invest in research because they think it costs too much and takes too much time. I encourage them to start small, by identifying the one story they would like to be able to tell their investors, their customers, or the market at large, and then do some research to validate, inform, or in some cases refute that story line. Often, once they see the power that having data to support your claims wields as part of a solid communication and marketing strategy, they come back for more!
Not understanding what marketing is really all about...Marketing is understanding "what part of the customers mind you wish to own" and you can only get to that point in your organization if you know what is going on in your market place...Not doing marketing research is a death knell from my view to many mid sized companies...I always did market research in areas that influenced our customers, and since they were furniture and cabinet manufacturers, we purchased periodicals etc. that spoke about what was going on the industry.
We were also a member of an Association, whose main purpose was to let us know what was happening in the Industrial Coatings Industry...I also used D&B for researching potential customers in geographic areas, by employees, by SIC code, and by credit rating...
I think it is simply the pricing in combination to the industry and category your business falls in. If anyone here has a small business and has spoken to an IBISWorld rep for example it makes you question if the quote they give you is at all worth it if your business isnt generic enough to make the most use from their data. Then to really make it worth it a custom research has to be commissioned which is a lot more money than IMO their over-priced reports already are.
Hello Steven , first of all I think that the bsinesses small & medim size don"t go for market research because of the cost value ,they can"t offer to pair the cost & some of them do have market research but not in proper way or make their own ,without going to consultants companies , from my own experience I was incharge of a company ,the owner was refusing to pay that much cost .
Here in Brazil, only large corporations usually invest in research. Hiring companies or research institutes are costly and this removes investment opportunities. In fact, for most companies, research is understood only as a costs. Doing research is essential to get answers identifying the target audience, their tastes and habits.
As I have taught Marketing Research for three terms so far ...1) The business owner has not framed the question, opportunity or concern as a marketing research question. ie. Sales are down, what do I do? Not who are my customers and what factors in (Product, price or promotion) would influence their decision to buy or consume more of what I have to offer
2) They may see the need for marketing research and then
a) They don't know where to go or get the information
b) They perceive it is too hard
c) They perceive the cost of obtaining the information exceeds the value of the information
d) They don't trust the results
3) For the course, I do get potential clients for student projects; however, the job is to define the issues down to marketing research issues.
I trust this grants some insight
1. They don't know how.
2. They do not understand the importance
3. They feel they do not have time.
All are serious mistakes to make.
With small and medium sized businesses I would think they might question the value and benefits of market research as well as the validity of the information. Good market research has the potential to save money and prevent mistakes as well as the potential to uncover opportunities.
However I have seen far more bad market research than good. I have done market research that indicated the exact opposite of reality. Most often when I give information to someone doing market research I scratch my head and wonder why they structured it the way they did because they were not able to glean the real situation from the poorly structured questions they asked. Then too, people often tell someone what they think that person wants to hear.
The following can stop a business from investing in market research:
1. fear of the the business "looking in the mirror"
2. fear of credibility of the results of market research. This stems from the fact that today everyone knows that testimonials and reviews written online can be fake and people do get paid to write testimonials / reviews
3. fear that the market researchers will do the job dishonestly, hastily, superficially, inattentively
4. fear of the expense on market research
Interestingly enough, I’ve observed the main deterrent to market research is ego. A small to medium size business conceives a new product or service that they believe will be accepted by the market before doing much (if any) market research. They then become convinced that the product or service will be a hit. At this point, to get information that would not validate their initial hunches would be devastating. They then go ahead and attempt to promote the new product or service with disappointing results.
By digging through the annual reports of publicly held small and medium sized businesses, you will see many sustaining losses year after year due to their inability to gain traction in the market. In most instances, this dismal performance can be directly linked to a lack of market research prior to launching its product or service.
In my experience as a Business Consultant the reasons are many and varied. Other contributors to this thread have identified many of the reasons as to why it should be done yet despite that many businesses do not conduct research. It can be a lack of capital or a lack of knowledge but I have found that arrogance and / or stupidity can "stop" this activity just as effectively.
Yes, they don't know the importance of market research to their business. It also goes to not knowing what to ask or how to ask questions to obtain the information they need. Some don't believe that the finds of 3rd party research applies to them, because they are small and the research is asking 'large' businesses.
The purpose of marketing research is to obtain information for marketing decision. Not to obtain such information means to make marketing decision without the necessary information. The ability to compare with or without such information lead to the possible variant of the outcomes and whether such variances are within acceptable risks. SMBs willing to start without complete marketing information are due the willing to bare risks of missing information
Perception that market research is only commissioned by large companies. Bust this myth with attractive packages / benefits and you could have a winner.