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Market Research Void is Key in Failed Market Expansions. The following article appeared in "Search Conference Rerport." An extremely disturbing problem has existed for 10 years in the business outlook research conducted by The Beta Consulting Group, Inc. (Concord, NH), a qualitative, business-to-business research concern, because of the "abysmal use of market research," according to Beta Consulting President Bradley Hosmer. Hosmer's annual research asks presidents, owners and top executives of U.S. manufacturers and services about successes and failures during the last year and the business outlook(s) for the coming year. There has been a gradual change in the companies acceding to answer the survey, but company responses in the past decade have been and continue to express clear dissatisfaction with the volume and profits they are achieving through expansion of their customer base and/or entering new markets. The reason, Hosmer says, is that companies are time and time again refusing or overlooking the use of market research "to find out the things they need to understand before they create a strategy." "Many companies are utilizing inventory management better than 10 years ago, but I haven't seem the same improvement in the MR area," he reported. "While over 80% of companies surveyed cite growth through new customers and new markets as a key strategy, only one-third rate the performance of their marketing functions above 'adequate.' Generating new customers and entering new markets is a lot more difficult in practice than in theory. Since entering new markets often involves the adoption of new business practices and policies to understand the needs of new buyers, companies often underestimate the difficulty of cracking a new market. They also underestimate the quick reactions and skill of their competition. Without significant improvements in marketing results by surveyed companies, their desired growth objectives can never be met. "Well-established companies are moaning about continuing expansion problems," Hosmer related. "We do business with divisions of publicly-trade companies. In one case, just by simply going out and asking a few probing questions of their customers, I was able to identify a major new market opportunity. The company should have been doing that themselves and it was something that should/would have been picked up long ago if they had any real contact with their market. From what I've seen, when a new market venture fails it often happens for unnecessary reasons. Mistakes could have been discovered or prevented through market research." He voiced surprise that in this bustling and prosperous economic climate that companies have not used research in a more formidable way. He compared the absence of up-front research with starting a trip without a map and then getting one half way there. "Most companies do the ready, fire aim business," Hosmer commented. "They want to get started right away, so they start implementing without research. You can over-research, but there is a balance between implementation and research--and most companies are biased way too far in the direction of doing something today instead of figuring out the right things to do before they implement. It might take them a little longer to get started, but they would have a better chance of success if they took the time and trouble to just put together a basic understanding of their customers and markets," he said. From experience, Hosmer detailed how the research void contributes to bad decision making. "Ideas internally within companies tend to get a life of their own," he explained. "they get pushed forward without an objective evaluation as to their quality and what is likely to happen when they are implemented." He shared a recent customer experience to highlight how market research can shape a company's future. "A lot of opportunities that are important to customers don't involve product features. Instead they hinge on their customers' logistical and operational needs. One of my clients is in a fairly mundane semi-commodity business. Their product is fine. But some customers really benefit from special service such as just-in-time delivery, specialized packaging, ordering and resupplying electronically. The idea is to differentiate your products by supplying them in a manner that minimizes the customer's total cost. These special services enable the company to compete on a new basis. It turns out that not all competitors have the ability to do likewise. Hosmer acknowledges that his vantage point is not perfect as "I am a little like the emergency EMT. I see the companies that need help, so the sample I see is probably biased toward the negative." Some of Hosmer's responding companies have research or business planning departments, but many do not. "Those that do have been relatively ineffective for reasons I'm not sure about," he said. "Some respondents try to do research, find they do not know how to correctly do so and toss in the towel," Hosmer remarked. "One, I recall, stubbed its toe so badly on a new market project that they figured they don't have the ability to determine what they should be doing about potential opportunities and have become overly conservative. Others learn from their mistakes and experience to fine tune and hone their skills and improve results." Bradley E. Hosmer, CMC, heads The Beta Consulting Group in Concord, NH, specializing in improved sales, marketing and new business development for generating profitable growth. For further information please contact Mr. Hosmer at Beta Consulting. |
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