2008 Q1 Using Market Research for Strategy Development
How large is the industry in which your company competes? What is the current growth rate? How about projected growth rates over the next three years? Which market niches in the industry are growing the fastest? What are the real drivers in your industry? Which of your competitors is getting most of the new business and why?
These types of questions typically surface during strategic planning sessions. Usually senior level managers base the answers to these questions on “educated guesses”. Seldom is there sufficient information available because it is perceived that the information is either impossible to compile or that it will be very costly to obtain.
Frequently, this type of information can be obtained in a timely and cost effective manner through market research and is used by many companies to make better decisions and take some of the guesswork out of assessing the market. In one survey of several hundred companies conducted by the American Marketing Association, many of the respondents indicated that they use market research. Listed in the following chart are a few of the more common reasons cited by these companies for conducting research.
In addition to the reasons cited above, SPG has observed that many companies seek to have a better understanding of their customers including satisfaction and loyalty levels, services valued most and perceived strengths as viewed through the customers’ eyes.
Recognizing that managers will never have 100% of the information available to make a business decision, it does improve your batting average by compiling information about your industry, markets and competitors. Typically the research can take two approaches, primary and secondary. Primary research consists of interviewing or surveying users, competitors and industry experts regarding specific information needs. Secondary research involves the compiling of published information including publications, trade association data, existing research studies, etc. Combining the two types of research results in a clearer picture of industry trends, market niches and early detection of where the industry is heading. Armed with this knowledge, executives have the competitive edge for developing strategies to exploit market opportunities.