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Is it Time to Do Away with Market Research Departments?

What’s your gut response to the title question about eliminating Market Research Departments? Yes? No? It depends?

I am probably in the third camp. No, if it is a department that integrates and analyses information from multiple sources, and then delivers actionable insights and recommendations. Yes, if it is the traditional market research department. Let me explain.

Thanks to social media and websites, the IoT (Internet of Things) and smart products, companies are inundated with information these days. Who better than market research to help in its analysis? But in order to become this new business decision support group, new skills are required.

Insights 2020 by Kantar-Vermeer spoke about the need for researchers to have five critical capabilities:

  • Research & analytics mastery
  • Business acumen
  • Creative solution thinking
  • Storytelling
  • Direction setting

 

This research is now a few years old and the world is changing fast. A more recent study by BCG and GRBN resulted in an Invest in Insights Handbook to help organisations report on the ROI of the insights function. They found that those who measure their ROI have found a seat at the decision table, increased budgets, and more control. Those are the department objectives that the FMCG world in particular desires today, be they in a manufacturing or retail environment.

As the handbook mentions:

“Architecting a world-class Insights organization requires executive, cross-functional commitment/engagement”

To do this, they mention the following six points:

  • Vision & Pace
  • Seat-at-the-table and leadership
  • Functional talent blueprint
  • Ways of working with the Line
  • Self-determination
  • Impact and truth culture

The report concludes that:

“The biggest barriers to experimenting with innovation in CI are resources, both time and money. A lot of times there’ll be [a need for] an innovation project but it can’t find a home.”

Barriers to CI innovation

This seems to suggest, at least to me, a chicken and egg situation. Resources are insufficient because the business doesn’t see the benefit of investing in market research and insight. But the Market Research Department is struggling with insufficient budget and personnel to provide the support that they should – and often could – provide.

In the GRBN report, they mention the largest barriers to the measurement of the ROI of market research and insight. These were found to be:

  • Difficult to do – studies are used in many different ways
  • Difficulty in isolating impact of consumer insights
  • Time lag between insight delivery and business results

The secondary concerns are:

  • Consumer insights distant from business decision-makers
  • Business objectives not clearly defined
  • Insufficient staff to measure
  • Lack of alignment on important metrics

Looking at this list, it is clear that the market research profession is in need of a significant overhaul. Most local MR associations, as well as the global ESOMAR team are all very aware of this and have set up various groups to look into it. If you want to learn more about what they are doing, check out the discussions on the topic in last year’s ESOMAR conference in Amsterdam. You can also read a short commentary from System 1. Hopefully we will see changes coming out of all those debates in the coming years.

In the meantime, I decided to propose a few ideas to get your market research and insight departments moving in the right direction, no matter where you are today.



Hopefully the following ten proposed steps will move your market research department forward, wherever it is today. If you want to talk to someone about your own particular situation, then book a free advisory session with me to get you started. 



10 Steps to Reinventing Your Market Research Department

Here are the steps that I would suggest you take, should you wish to create or optimise your market research and insights function:

Step 1: If you already have a market research or insights department, then the GRBN / BCG self-assessment tool is a great place to start – and it’s FREE! The link is: http://insightsassessment.bcg.com/ . This will clearly indicate both what stage of development you are in, and what you can do to improve. Invaluable! Then all you have to do is to prioritise the changes needed!

Step 2:  Another assessment tool than can help you to better understand your customer understanding in its wider sense, is our  C3C Evaluator™. Again it is FREE; the link is: https://c3centricity.com/customer-centricity-mini-quiz-2. Unlike the insight assessment tool from BCG, this evaluator tool looks at insights as the motor or foundation to adopting a customer-first strategy. As such, it considers best-practice market research and insight development as a management decision support tool. Again, after your evaluation, you get a summary of what you need to change so you can prioritise your actions.

Step 3: Review the management’s needs in terms of information – besides the financial data they are certainly already receiving. Prioritise these and choose only the major KPIs (Key Performance Indicators) to follow your business vision and strategy. For a truly customer-centric organisation these may include:

  • Market and category shares
  • Customer profiles
  • Brand image and brand equity metrics
  • Pricing, value perceptions and CLV (Customer Lifetime Value)
  • Distribution and OOS (Out-Of-Stock)
  • Awareness of communications
  • Understanding and appreciation of messages
  • Website and social media traffic, and conversion rates
  • Customer retention and churn rates
  • Sales funnel’s level distribution

Besides measuring your chosen metrics, trends often mean more than the numbers themselves – in many markets the numbers will be going up anyway. Although I have mentioned many examples above, remember that KPIs mean the metrics you choose must be KEY to your business. Choose wisely so you don’t drown people in data and information.

Step 4: Identify which of the metrics you already gather and which you need to start collecting perhaps on a more regular basis. Then review methodologies and suppliers for providing all the information. If you already conduct regular tracking studies, they should be opened for pitch every few years, to avoid both sides becoming complacent and stale.

Step 5: Once the metrics are agreed upon, turn them into a one-page summary or dashboard. Most executives don’t have time for more than a rapid scan of information, so find ways to help them to read it. Using traffic-light colours, graphs and one-number indices all help them to quickly understand the current situation and identify any needed actions.

Step 6: In addition to data, management will also require information about the market, its customers, competitors and retailers. This can be gathered through observation and listening, whether in person or through market research qualitative studies. Read “Five rules of observation and why it’s hard to do effectively.” for more on the topic.

Step 7: Improving your data and information collection coming from market research will depend upon a solid briefing document. The brief should be developed in collaboration between the internal client and the market research department. It must include at a minimum why the information is needed, by when and why. For more on better briefing, read “Why Marketing doesn’t Always Get the Research it Needs, But Usually What it Deserves.”

Step 8: Identify how to measure the ROI of your service. The importance of a detailed brief cannot be overemphasized. It will not only allow good work to be done so the business gets the answers it needs. It also allows the measurement of its ROI. Knowing how the information will be used and the value of the decisions made from it, will go a long way towards proving its value. If this is only considered in retrospect, it is unlikely to meet with agreement from all concerned parties. Therefore these need to be discussed and included in your briefing document.

Step 9: The next step is to build a team of supporters within the organisation with whom you regularly share all the nuggets you learn from your different analyses. Beyond answering the questions for which any research was conducted, there are always additional learnings which can be invaluable to share. Unfortunately most Market Research Departments are so stretched that they spend most of their time behind their desks.

Even if it is just in the corridor, or during a coffee or lunch break, always have something interesting to share with your internal clients. This will quickly build respect and the MR team will be seen as an invaluable source of business understanding. Of course, this does mean that the department should be involved in business meetings, but this tends to naturally come when you start sharing more than market research presentations and reports.

Step 10: The final step in optimising your market research department is to start developing insights. Although I mention this last, the 7-step insight development process I suggest to my clients involves data and information gathering only at step 6. And yet this is the one thing most MR departments are seen to do.

The reason why I mention insight development last here, is because an organisation must believe in the need for a deep understanding of their customers before it can start to develop insights about them. Otherwise its market research department will remain simply a data-gathering group. For more details about the C3Centricity insight development process, read “Customer centricity is today’s business disruptor, Insights are its foundation.”

Et voila! The first ten steps that I believe will help all organisations upgrade their market research department. If nothing else, please complete the two assessment tools. They will give you a terrific start to understanding just how good – or bad – you are today!

Also do check out our insights training offers. You can download the brochure HERE

Hopefully these ten proposed steps will move your market research department forward, wherever it is today. If you have experience in creating or upgrading a market research and insight team I would love to hear what challenges you faced. 

 

You’re Not Competing In The Category You Think You Are! (How to Find Out)

Last week I wrote about my 7-step CatSight™ Process for Insight Development. The first step is to identify the Category in which you are competing. I got so many comments about this step that I decided to dedicate a whole post to this important topic.

If you haven’t yet had the chance to read last week’s post (“Customer Centricity is Today’s Business Disruptor, Insights its Foundation”) I suggest you do this first, as background to this post. In it, I summarised the very first step of Insight development like this:

C = Category

Whenever you want to develop insight, the first task is to decide on the category you want to study. This may seem obvious to you, but in many cases, it isn’t as clear as you might think.

Category identification by zooming inFor instance, suppose you are looking to launch a new juice flavoured soft drink. You may think that you are competing with other juices or perhaps other soft drinks.

In working with one client in just such a situation, we actually found that their main competitor was an energy drink!

The reason was that these are seen as being for lively, energetic, fun-loving people who needed a boost. Whether this comes from the caffeine of an energy drink, or from the added vitamins and minerals which was my client’s offer, didn’t seem to matter.
If we’d only looked at other fruit flavoured soft drinks we would have missed a whole – and large – section of category consumers.
By starting our comparison in all beverages and then slowly zooming in as we learnt more, we were quickly able to discover this perhaps surprising positioning for the new drink.

This shows the power of taking the consumers’ perspective, especially when segmenting a market. But more about that in a moment.

The above example is a great start. But many readers have since asked me to help them with their own category definition, so here are the suggested steps to doing it for yourself:

 

Step 1. What is the category definition you are currently using? 

In any process we need to start by identifying where we are today. In this case, it should be the category you think you are competing in. Depending on whether you are offering a product or service, you might define it as:

– All hot beverage consumers ….. or ….. users of an insurance service.

– Consumers of coffee ….. or ….. people who have bought insurance for natural disasters.

– All consumers of instant coffee powder ….. or ….. house owners in Florida who have bought insurance for natural disasters.

– Consumers of instant coffee powder costing less than US$ 2.50 per 100 gms ….. or ….. owners of houses over US$2 million in Florida who have bought insurance for natural disasters.

As you can see from these few examples, the bottom definitions are far more precise and focused than the top ones.

In any process we need to start by identifying where we are today. #Process #Business Click To Tweet
The one you use, will depend upon whether you are looking to grow your brand through your marketing activities or looking to develop a new product or service offer. I call this zooming in and zooming out. In general understanding the category by zooming in is best for growth, zooming out for innovation.

Now take a look at your own current category definition. I bet it’s too broad for general use isn’t it? This is the mistake that most businesses make, big and small. They want to attract all consumers or users of a category, but as is often quoted:

“If you try to please everyone, you end up pleasing no-one”

The more precise you are in the group of customers you are trying to attract, the more focused will be your actions and communications. In addition, they will also resonate more strongly with your target audience.

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Step 2. How is this category changing?

Once you have identified the precise category in which you are playing, you need to consider what is currently happening to it. Is it growing or declining? Why?

Understanding how the category is changing and more importantly why, will help you to understand it better. For instance:

- Is the category growing? If so is it the leading brands which are increasing, or are there new brands that were recently launched which are making the difference? Identfying which brands are growing and the reasons for this growth will enable you to take corrective action.

- Is the category stable? Are category shares stable, or are some brands gaining and others losing? Again, why? What do the brands which are gaining have in common? What are the losing brands lacking? Are the changes making a difference to the category definition?

- Is the category declining? Are all major brands in the category losing or are some gaining at the expense of others, but not maintaining overall category size? If so, What are the declining brands lacking? Where are customers who are leaving the category going to? Is there a new category which is better meeting their needs?

Your answers to these questions, will help you to understand whether the category in which you are currently competing is going to remain as attractive as it is today.

 

Step 3. How will this category change in the future?

In addition to current category trends, you also need to assess what is likely to happen in the marketplace in the coming years and how this may impact it.

Things are changing nd changing fast these days. There is no more "business as usual." Expecting the unexpected has become the norm, which is why I am such a big fan of scenario planning.

There is no more business as usual. Click To Tweet

Industries are being disrupted. A study from the John M. Olin School of Business (Washington University) estimates that 40% of today's Fortune 500 companies on the S&P 500 will no longer exist in 10 years time!

40% of today's Fortune 500 companies will no longer exist in 10 years time! #Business #Trends #Future Click To Tweet

Understanding who and what will impact your category, is the first step to preparing for the changes which could come. Preparing for likely future opportunities and risks is the second step, and the reason scenario planning is so vital to ongoing busines success.

 

Step 4. Which of the category users are you attracting?

This question surprises some people. They expect that once they have identified the category in which they are competing that they can just start trying to attract everyone in it. However "You can't please all the people all of the time" as the infamous quote from John Lydgate mentions.

You can please some of the people all of the time, you can please all of the people some of the time, but you can’t please all of the people all of the time. John Lydgate Click To Tweet

You therefore need to identify which of the category users would be most interested in what you have to offer. The best way is by running a segmentation study and then plotting the groups on the Boston Matrix I mentioned in last week's post. Or you can read "How to Sell Less to More People: The Essentials of Segmentation." for a more detailed explanation on how to divide all category users into relevant sub-groups.

Understanding which sub-group of all the category users you are most likely to appeal to with your offer, is one further step in focusing on the very best target audience for your brand.

Step 5. How are your customers changing?

After identifying which category users are the most attracted to your offer, you also need to consider how this sub-group is changing. Is it increasing or decreasing in size, and how and why is it changing.
 
As with category changes mentioned above, it is important that you target a viable group. This can either be a growing segment or you should have plans to attract those who switch out with a separate offer
There are many reasons why a segment may decline:
  • The introduction of a new category segment that is taking customers away from yours.
  • Natural decline because of aging.
  • Behavioural changes that make the category less relevant than in the past.
Having identified how your customers are changing today, you then need to consider societal trends and their impact on your customers. That is the ultimate test to choosing the right group of category users to target.
 

Conclusion

Going through these five steps will give you the very best understanding of the categroy in which you are competing, as well as the customers who make up the sub-segment you target.

Have you successfully mastered every suggested step? What have you forgotten?

Is there something I myself have forgotten or that you would add? If so, then please share your ideas in the comments below. Thanks

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