Marketing Research and Market Intelligence

Once you have come up with a great idea for an offering, how will you know if people will want to buy it? If they are willing to buy it, what will they want to pay? Will they be willing to pay enough so that you can earn a profit? Wouldn’t it be great if you had a crystal ball that would give you the answers to these questions? After all, you don’t want to quit your day job to develop a product that’s going to be a flop.

In a sense, you do have such a crystal ball. It’s called marketing research. Marketing research is the process of collecting, analyzing, and reporting marketing information that can be used to answer questions or solve problems so as to improve a company’s bottom line. Marketing research includes a wide range of activities. (By contrast, market research is a narrower activity. It is the process of researching a specific market to determine its size and trends.)

Although marketing research isn’t foolproof, it can take some of the guesswork out of decision making. Back to your great product idea: what, for example, should you name the product? Naming a product might sound like a minor decision, but it’s not. In some cases it can be a deal-breaker. Just ask the bug spray maker Out! International, Inc. In the 1990s, Out! International came up with what it thought was a really cute name for bug spray that would appeal to children. The product was called “Hey! There’s a Monster in My Room!” The problem was that the name scared kids. They wanted nothing to do with it (Stern, 2002).

Marketing research can help with many tasks:

· developing product ideas and designs

· determining if there is demand for a product so you know whether to produce it

· identifying market segments for a product

· making pricing decisions

· evaluating packaging types

· evaluating in-store promotions

· measuring the satisfaction of customers

· measuring the satisfaction of channel partners

· evaluating the effectiveness of a website

· testing the effectiveness of ads and their placement

· making marketing channel decisions

Closely related to marketing research is market intelligence, which is often referred to as competitive intelligence. Whereas marketing research involves solving a specific marketing problem at a specific point in time, market intelligence involves gathering information on an ongoing basis to stay in touch with what’s happening in the marketplace. For example, if you own a convenience store, part of your daily market intelligence gathering would include driving around to see what competing stores are charging for gasoline or checking to see what types of products are being old and advertised.

If you’re a small business owner, and you’re talking to your customers and suppliers about new product ideas, you’re engaging in market intelligence. If you go so far as to survey your customers with a questionnaire about a new type of service you’re considering, you are engaging in marketing research. In big companies, marketing departments are often responsible for gathering market intelligence. But they are by no means the only group to do so. (We’ll discuss more about who in the organization does which activities in a moment.) Students also gather market intelligence when they question other students about the best professors to take classes from.

Marketing Information Systems

A certain amount of marketing information is being gathered all the time by companies as they engage in their daily operations. When a sale is made and recorded, this is marketing information that’s being gathered. When a sales representative records the shipping preferences of a customer in a firm’s customer relationship management (CRM) system, this is also marketing information that’s being collected. When a firm gets a customer complaint and records it, this, too, is information that should be put to use. All this data can be used to generate consumer insight. However, truly understanding customers involves not just collecting quantitative data (numbers) related to them but qualitative data, such as comments about what they think.

The trick is integrating all the information so it can be used by as many people as possible in an organization to make good decisions. Unfortunately, in many organizations, information isn’t shared well among departments. Even within departments, it can be a problem. For example, one group in a marketing department might research a problem related to a brand, or uncover certain findings that would be useful to other brand managers, but never communicate them.

A marketing information system (MIS) is a way to manage the vast amount of information firms have on hand—information marketing professionals and managers need to make good decisions. Marketing information systems range from paper-based systems to sophisticated computer systems. Ideally, however, a marketing information system should include the following components:

· a system for recording internally generated data and reports

· a system for collecting market intelligence on an ongoing basis

· marketing analytics software to help managers with their decision making

· a system for recording marketing research information

Internally Generated Data and Reports

An organization generates and records a lot of information as part of its daily business operations, including sales and accounting data, and data on inventory levels, back orders, customer returns, and complaints. Firms are also constantly gathering information related to their websites, such as clickstream data. Clickstream data is data generated about the number of people who visit a website and its various pages, how long they dwell there, and what they buy or don’t buy.

Companies use clickstream data to monitor the overall traffic of visitors, to see which areas of the site people aren’t visiting and explore why, and to automatically offer visitors products and promotions by virtue of their browsing patterns. Software can be used to automatically tally the vast amounts of clickstream data gathered from websites and generate reports for managers based on that information. Netflix awarded a $1 million prize to a group of scientists to plow through web data generated by millions of Netflix users so as to improve Netflix’s predictions of what users would like to rent (Baker, 2009).

Being able to access clickstream data and other internally generated information quickly can give a company’s decision makers a competitive edge. In one example, Walmart took advantage of Target after 9/11 because Walmart’s inventory information was updated by the minute; Target’s was only updated daily. When Walmart’s managers noticed American flags began selling rapidly immediately following the terrorist attacks on 9/11, the company quickly ordered as many flags as possible from various vendors—leaving none for Target.

Many companies make a certain amount of internal data available to their employees, managers, vendors, and trusted partners via intranets. An intranet is a private, internal website that looks like the web and operates like it, but only an organization’s employees have access to the information. So, for example, instead of a brand manager asking someone in accounting to run a report on the sales of a particular product, the brand manager could look on the firm’s intranet for the information.

However, big companies with multiple products, business units, and databases purchased and installed in different places and at different times often have such vast amounts of information that they can’t post it all on an intranet. Consequently, getting hold of the right information can be hard.