What most people are familiar with in the Market Research and Marketing world are the classic four P's: Product, Place, Price and Promotion. There's also a lot of buzz in the industry about mobile research, localization and big data. Much of it is pretty sexy in a geeky, infoverse kind of way. All of those sources, though, are as useful as a mobile map without a data plan if you are responsible for the long term direction of an organization.
There is an area of market research that hangs out around 10,000 feet in the planning stratosphere. If you wear an oxygen tank and don't pass out from the altitude, you will find there the four C's: Category, Customer, Channel and Competition, wrapped in Porter's Five Forces. Historically, good strategy often came from people with loads of experience, well-connected relationships, good intuition and a tolerance for calculated risk. When Google came along in 1998, it changed the game. It helped surface useful information from millions of 'experts' to anyone with a good internet connection. It also spawned a heavy DIY research culture. While it has helped fuel our curiosity and we can conveniently validated our instincts, confirmation bias is a significant hazard when Googling stuff, particularly if we don't fully understand the intentions behind a source. Yes, anytime someone publishes a report, an article, a blog post with data, that number serves a master: the person telling the story. When we can get hold of unbiased data, however, to challenge our conventional wisdom, justify our intuitions and compare all available options, then we can get to a better strategy. Anecdotes from a webpage or a snapshot in time isn't sufficient enough to win over and keep your stakeholders engaged. What they want to know is: How big is the prize? From where has it come and where is it going? Can we win it? Is it worth winning? Those are all smart questions to ask but getting to the answers is more difficult than some executives might think.
So what's typically missing from a great strategy? Here are three major elements most people have a difficult time accounting for:
- The Big Picture. Many market research sources only capture a sample set of consumer insights. These are largely qualitative in nature and cannot be used to size the prize. Other sources amass large sets of quantitative data from major retail chains but it does not account for all the products sold through all the different channels at which people shop. Both of these sources are great for a micro market but the micro is affected by underlying macro forces. Getting reliable information on the macro, for all the different ways that consumers buy things (internet, direct selling, home shopping, vending machines, convenience stores, office consumption, restaurants, etc.) is very difficult to get. Scale, time and money become a huge obstacles. While getting that additional information may seem like a nice-to-have (i.e. we've operated this way for over 100 years without it...), think about that cup of coffee (or tea) you had this morning. Did it come from home? A coffee shop? Your office? Those are three unique sales channels: retail, foodservice and institutional respectively. Only one of those three, retail, is well tracked by most market research firms. If we blissfully ignore the rest of the market, we miss sizing the complete prize and the opportunity to win two out of three consumption channels. What is typically missing from great strategies? The context of the big picture.
- The Long Term Perspective. Much like the problem on Wall Street, market researchers have a problem with short-termism. Many sources are just a snapshot of activity without much historical context. Other sources provide some history but may only go as far back as two years (which today wouldn't reflect the big financial crisis in 2009). Even fewer sources actually forecast the market and where it is headed in the next five years. A long term view can supply context: from where has the market come (has it matured and plateaued, is it primed to take off, is it ripe for disruption or has the market completely shifted) and where is the market likely to go. What's working now won't always work in the future and many strategists want to know what niche they can win or what could disrupt their current business today. Without longer term context, it's hard to see what the future holds, let alone to understand if we are doomed to repeat omitted history. What is typically missing from great strategies? The development context over a longer period of time.
- Complete and Comparable. Just about every source (I am careful here not to make any absolutes) is meant to fulfill a local purpose. That means a source uses whatever methodology and definition best suits their agenda. For example, researching something as seemingly simple as how many people are in your country is actually pretty difficult to do. Have a read on Wikipedia about population census. It's an imperfect science as noted in the 2012 census in Chile. Each country is responsible for conducting their own census (assuming it is a priority) and the methodology and questionnaires are not uniform from country to country, let alone decade to decade. It is inconsistent, expensive and filled with flaws and gaps. Not every household answers the door. Not every respondent is completely truthful about how they live or who lives with them. Why? People often don't trust how this data will be used, particularly if they think it may be used against them (see the Economist's article about the Myanmar census). While population figures may appear to be hard facts, they are only the best estimate of a population, based on a very large sample. It is then used to to set policy and direction. If you want to compare populations segments from country to country, you will invariably find gaps in time series, limited levels of detail and inconsistencies in methodology. That's one reason it is so hard to quantify the base of the pyramid, the emerging middle class and other social classes around the world. Sizing a population and segmenting it is a challenging area of research. [Shameless plug alert: my talented colleague, Sarah Boumphrey, wrote a great white paper on the BoP and EMC in Latin America, which we presented at ESOMAR Argentina and IIeX Chile in 2014.] That said, now try sizing the entire competitive landscape for your own product and services across the four C's (Category, Customer, Channel and Competition). What is typically missing from great strategies? The context of complete and comparable data.
To put a bow on this idea, I need to pull back the curtain and expose a truth about market research: there is no such thing as perfect data. Anytime someone tells me they have accurate data, I challenge them, particularly as it pertains to a statistical population. No one really knows with 100% certainty what 100% of a market is (but if you state it enough times, it often becomes a form of the truth). The role of strategy research is to filter sources, explore the definitions of what's been included, excluded or even double-counted and provide the best estimate based on the most comprehensive data evidence available. To give an analogy, a strategic picture is like a mosaic. To be seen properly requires the viewer to step back and look at all the millions of pixels together. The more you zoom in, the fuzzier the resolution is (like foodservice and institutional channels). The farther back you stand, the more clear the picture becomes. So what is typically missing from a great strategy? The context for clear direction.
(Photo credit to Koike Lab @ Tokyo Tech)
