Market research is one of the activities that most brands indulge in regularly. But more often than not it has been proven that is a waste of time.
Now most of you reading this would be finding it difficult to believe above statement, after all brands spend Crores of rupees in this activity. All business schools teach us that this is the most important activity that precedes any market launch. But just hear me out before you dismiss this statement out right.
Market research was firmly established in the early part of the 20th century as an important activity. This was further fuelled by the belief that most brands can capture the felt and latent needs and wants of its consumers. This activity is again divided into qualitative events like focus groups or interviews and quantitative techniques like questionnaires.
The net result was a result based on which the brand managers would develop the 4Ps – product, price, place and promotion for the service or product before positioning it to the consumers. But most of this activity is a sheer exercise in justifying a promotion that the brand has about the market segment and does not have enough evidence to guarantee the success of a launch.
A good case in point was the launch of new Coke. Post World War II Coke had almost 65% share of the aerated beverages market in North America. But by 1980’s it had fallen to 24%. This was mostly due to the launch of the Cola wars by then Pepsi president John Scully, who introduced a series of blind taste tests that proved that most consumers preferred Pepsi for taste if the brand name was not disclosed. The tests were even televised and by 1980 the results were causing considerable alarm in the Coco-Cola headquarters in Atlanta.
So the CEO Robert Goizueta launched the vision of new Coke, a new formula which was field -tested and backed by market research. It had an acceptance rate of almost 70% and only 10 % of respondents felt disappointed with the new taste. But when launched on April 23, 1983 it was a disaster. Most loyal Coke drinkers formed associations to ban the new drink and Coke market share fell further.
Finally Coco-cola relented and brought the old Coke back. It cost them Billions of dollars and some very angry consumers.
The market research did them in and Coke took some time to come back to level terms.
There are countless examples like this when Market research has actually harmed the company more than it benefitted them.
On the other end of the spectrum there are companies like Apple which do not rely on market research at all. Steve Jobs in fact abhorred market research and relied on his personal knowledge and intuition. What he famously said was – The consumers do not understand what they want or what is a “great product”, they come to know it when you give it to them!
Similarly no sane market research specialist would have advised Larry Page or Sergei Brin to launch yet another search engine when Yahoo was the going great gins. Also, Mark Zuckerberg may have never launched Facebook if he relied on market research.
So how does one go about launching new products or services if one has to completely do away with market research? Well the answer is not so simple but a good place to start is the sales data.
Sales data both from competing and substitute, products and services are a great place to start to get inputs into your own product development. Many great marketers have stressed on the need to be in the field and observe the consumer buying behavior at the point of sale. The issues and concerns of the consumer form a good insight into a product development, like for example storage of songs was an important input into the iPod.
Secondly product packaging and design would form the second key component. This again cannot be ascertained from field tests of focus groups but one has to just look at the packaging of Tobacco products to understand how something so deadly can be beautifully packaged to look attractive. A good example in India is the ITC soap brand Fiama Di Wills.
Thirdly sales training to ensure that they communicate the right message which was the input from the design. This could be from the sales data, point of sales experience or the design of the product.
All these three require considerable effort and are not for every firm, but only those with the right investment in sales, marketing and design. For the rest there is always the luxury of stale market research.
Would love to hear your views on this!