This blog post was written by our guest blogger Mark Dengler, President and Owner of Research & Marketing Strategies (RMS), a market research agency in Upstate NY.
Many firms today are grappling with two strategic decisions revolving around market research:
1) Should we do market research?
2) If we do it, should we commission it through a third-party or utilize in-house staff for the project.
In order to be successful, firms must know their competitors, how to make their customers completely satisfied, and how to manage change effectively — all while being cognizant of the company’s objectives and corporate direction. More often than not, it makes the most sense to outsource market research activities.
Budgeting for market research is crucial, because many firms do not have the resources or the time to conduct research internally. Moreover, outsourcing market research enables a firm to benefit from professionals who thoroughly know the market research field and can customize research according to specific objectives and guidelines. Famous economist Philip Kotler once said: “companies tend to spend half of one percent on research and 99.5% on promotion, when they would be better off spending 1.5 to 2% on research.”
Market research firms have a significant, comparative advantage with access to diverse talent, a wide range of information, specialized software and dedicated research facilities. Equally important, they are able to remain objective, which can be difficult to do with an in-house research team that has personal and/or emotional interest. An outside firm can make valuable, objective recommendations based on the research results.
Deciding whether or not to conduct market research is relatively simple: it is important to have a clear and firm grasp on your company’s direction and core competencies, as well as satisfaction levels of customers. Part of a marketing budget should always include room for research, as an instrument of both growth and knowledge. Market research firms offer sophisticated expertise and can deliver valuable results that may allow more cost-effective processes to be introduced within the company.
What a firm doesn’t know can hurt it. It is easy to make wrong assumptions without conclusive data from market research. Those assumptions could have devastating effects.