Industrial market research
Industrial market research can feed vital information to five management disciplines: corporate, financial, marketing, production and personnel. Each discipline involves decision making at director level, and each can topple management from its high wire, sending the whole show crashing into chaos.
It follows that to succeed, either management must be very well informed or dead lucky. Luck runs out in the end, but being well-informed is no more than an obligation. The success or failure of any organisation exactly mirrors the effectiveness of its decisionmakers.
Lack of information is a generic problem for managers. Without the right data you cannot plan effectively, and the absence of proper written plans is a symptom of weak managers.
Industrial market research yields information in six main areas:
- Your “products” and the services that support them.
- The size of your market and its structure, market share, trends and export market opportunities.
- Customer preferences and motivations. Nothing is more important than understanding your customer.
- The methods you use for selling, sales promotion and distribution, and their efficiency rated beside your competitors.
- How you are seen, where your strengths and weaknesses lie, and what your reputation really is.
- Your competition, which products or services they offer, which services they provide as backup, and which prices and discounts they apply.
Often a single research comprises a mixture of all six as each can quickly be divided into many sub categories.
Red, orange or green light
The best research comes right in the middle of a strategic planning exercise. For instance directors may believe there will be merit in investing in a new foundry or launching a new product or opening a new office somewhere.
Research gives a red, orange or green light, and shows up critical factors.
Some would say that research takes the fun out of management. A director keen to have a new non-ferrous foundry may not want to hear that there is already an oversupply of non-ferrous casting capacity at the prices he will offer. Research can also check the data in marketing plans, corporate image plans and promotion plans. It should always precede advertising.
Many useful facts can be found quickly and cheaply by formal telephone research. People at all levels defer to the phone and often interrupt a face-to-face conversation to answer it.
In all research, it is essential to word the questionnaire and preamble correctly. Otherwise you will get wrong or ambiguous answers - or no useful answers at all. My experience is that all respondents - from purchasing officers to consulting engineers - are happy to provide answers just as long as they see the questions as relevant and well presented.
Telephone research should always follow a direct mail promotion to check what impression was given. Every sales letter should be followed with research: if you have spent money presenting your case, it makes sense to spend a little more to check the target customer's reaction to what you sent him. And research can spur the customer into buying.
One leading multi-national asked me to find our why so many customers had cancelled contracts over the past year. Always, research answers are revealing. This time they were hair- raising.
Much valuable research can be done inside a company, eg. reporting on the attitudes of branch managers. In one firm I found that head office paperwork was stifling efficiency. In another I found great ideas being hidden because of a foolish inter-branch competition run by the boss himself.
Problems as the buyer sees them
A major use of market research is during the development of new products and services. To begin, research can detect and quantify problems as the buyer sees them, resistance to change, loyalties, degree of rationality in decisionmaking, current and latent levels of demand, likely cost of selling and promotion, and many other relevant factors.
Next, research can feed vital data into the design brief by defining what basic benefits the product or service must provide, what price and terms it must be supplied at, what delivery it must meet, and so on. Such data show what financial, production and labour resources will be needed to give the proposed product or service the best chance of success.
Then research can find the most efficient ways of getting the message across to prime target buyers, ie. how to win big contracts. To check its own efficiency, research can find out why a big contract was lost, and how the chance of such a loss can be reduced in future. Research should precede tendering and all favoured supplier proposals.
Whether conducted face-to-face or by phone, market research costs very little compared with the effects of bad decisionmaking. It must always be done by skilled interviewers with a feel for the technology and an empathy with the people to be questioned.
If the questions are sensitive and important customers are to be researched, it is best to arm the interviewer with a letter of introduction, and even warn the customers in advance.
On the other hand, most people like being professionally interviewed. Many commend the sponsor for taking the trouble to have questions asked. Many love to "get it off their chest" in the hope that things will improve. Sometimes the research will be done without divulging the name of the sponsor.
A skilled researcher can arrange questions and answers on a numerical scale so that responses to the whole survey can be totalled and more easily analysed. Respondents can be given a numerical "weighting factor" so as to shift emphasis towards buyers with big influence. Research can be nationwide and take weeks. Or it can be a simple one-day affair.
Data relevant to all managers
I still sometimes find an industrial company who have never commissioned a market survey and who have no idea of how to go about it. For such a firm, the survey can yield fascinating data relevant to all its managers.
Typical problems I have unearthed include: benefits unclear in tenders, incompetent staff, adverse corporate status, parochial mistrust, poor liaison with important editors, weak product benefits, unexpected tough competition, past failures still being recalled, technology misunderstood and ads put in the wrong journals.
Perhaps the best argument for industrial market research lies in the axiom: "Don't make decisions until you've got the facts." The keener you are to succeed, the more you need to get the facts exactly right.
This article was first published in NZ Engineering News
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