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Some Observations on Marketing Research in Top Management Decision Making JOHN G. KEANE The author's comments on the role of marketing research in top management decisions are based on his association with six companies (and continuing contact with many more) spanning manufacturing, consulting, and advertising. Some of these observations on the diverse marketing research-top management interface in decision making were presented to the Chicago Chapter of the American Marketing Association. The Chapter conferred a Merit Award on the earlier presentation during its 1968 competition for papers advancing the science of marketing. Journal of Marketing, Vol. 33 (October, 1969), pp. 10-1&. A RESPECTED source estimates that investment in marketing .t*. research will increase approximately $50 million in 1969 to almost $600 million.' In order to improve the return on that size investment, top management needs to use marketing research more in top level decision making. Time is certainly appropriate for marketing research to participate in these high decision-making efforts. Never has top management decision making been riskier. Consider some of the responsible forces: • Explosion of information and information processing • Intensifying competition • Increasing complexity of business • Infiationary cost trends • Expanding technology • Collapsing product life cycles • Increasing R&D and capital costs • Overall economic, financial, political, and social uncertainty • Ever layering management This is the backdrop of management at the top. Against it, there is an acknowledged need and opportunity for marketing research to play an expanded role in top management decision making. This paper (1) describes the flow of marketing research information to top management, (2) assesses the role of marketing research in top management decision making, (3) summarizes obstacles impeding the effective use of research in decision making, and (4^ offers suggestions for improving the marketing research-top management interface. Research Flow Where does marketing research start? What is its path to top management ? Figure 1 is a diagrammatic attempt to help answer these questions. While obviously not a blueprint for all companies, it is representative of current practice. The request for research can originate almost anywhere. It can come from the top, from a nonresearch staff function, or from research itself. Sometimes the request comes from the outside (for example, advertising agency, research company) in the form of a suggested need or opportunity. Regardless of where the request for research originates, evidence indicates that completed research may or may not reach top "Marketing Research Investment to Hit $600,000,000: Dutka," Advertising Age, Vol. 39 (December 9, 1968), p. 88. 10 Some Observations on Marketing Research in Top Management Decision Making 11 ^search and velopment Product Management Range Planning STAFF DEPTS. Market Development Advertising Agencies New Products Media Research Companies Consultants Trade Associations^ Y EXAMPLES OF OUTSIDE RESEARCH SERVICES FIGURE 1. Illustrative flow of marketing research to top management. management. Considering the current situation regarding the flow of market research information, the following observations are noted: 1. The more directly concerned top management is with an original research request, the more likely it is to be influenced by the results. 2. The more management layers research results must pass through, the less likely results will be timely and undistorted. 3. Among potential marketing research suppliers, advertising agencies and consultants appear to be in the best position to develop direct client contact and influence top management of enduser companies. Decision-Making Influences Top management decisions are the reconciliation of many influences. The reconciliation occurs both within and among management members. Admittedly, marketing research is but one input; however, one which should grow in impact and persuasion. Decisions may be as perfunctory as casual observation sometimes suggests. Often they are not. Many influences may be operating as Figure 2 suggests. Some influences such as past experience, personal bias, judgment, and intuition operate within an individual. Their infra-personal character belies their potential significance in a given decision. For instance, intuition and bias can be powerful factors. In some instances, intuition is the dominant influence. Figure 2 portrays another set of influences. These influences are termed exfra-personal and operate outside the individual. This group would comprise • ABOUT THE AUTHOR. John G. Keane is vice piesident-iesearch and \ planning director, J. Walter Thompson Company. Chicago. He holds an AB degree from Syracuse University. BSC from the University of Notre Dame. MBA from Indiana University, and a PhD from the University of Pittsburgh. Prior to joining J. Walter Thompson. Dr. Keane held positions with U.S. Steel. Booz. Allen & Hamilton, and three advertising agencies (Needham. Wade, and North). He has published in the Journal ot Adveitising Reseaich, Brewers Digest, and Chicago Tribune. Currently, he is a director of the Chicago Chapter of the American Marketing Association. Journal of Marketing, October, 1969 12 experience experiment observation survey marketing research goals policies procedures precedents company considerations subordinates peers superiors group dynamics competition government markets stockholders outside considerations extra-personal influences related unrelated pro con intra-personal influences poor superior poor superior intuition FIGURE 2. Expository decision-making tree. marketing research data, company considerations, group dynamics plus competition, government, stockholders, and the market. Here it becomes quite apparent that marketing research interacts with many other influences in the decision process. Important among these influences is the interplay of group dynamics. For instance, there is the "bulldozer-type" executive who sometimes substitutes voice and title for logic and facts as he rams his decision home. This individual intimidates others who are perhaps more capable of moving a group toward a better decision. The bulldozer-type is a likely candidate to ignore, slant or otherwise abuse marketing research in his decision deportment. Other, but less blatant, group dynamic infiuences exist. Disguised motivations, subtle power plays, management trades, gamesmanship, and one-upmanship may operate. When they do exist, marketing research sometimes becomes the "whipping boy" or "the executive out." The decision-making process of top management has largely become a committee effort. This most often means decision by consensus, which frequently indicates compromise. Assuming these circumstances, research findings are usually given a rather broad interpretation. This is the system and it seems to work satisfactorily. For the most part, marketing research does not seem generally abused. Even when it is, often it is abused unintentionally. Does Top Management Really Decide? A relevant question is whether or not top management makes its decisions based on research. This requires an answer to the even more basic question: Does top management really decide? In many instances, top management decides things in every sense of the term. This seems particularly true in an enterprise which is not of huge proportions, technologically complex, or run by committee. Within this kind of company, marketing research either does not formally exist or tends to be a modest staff function with a relatively small voice. Yet its role ranges widely. In some companies it provides information and little else. In other instances, recommendations are solicited and followed by top management. For other companies the case is not so clear-cut. This is the acknowledged era of conglomeration. Attempting to pinpoint who does what is tricky business. It distills down to what is meant by the term "deciding." If the meaning refers to rendering a judgment and determining courses of action, then top managements decide. But if deciding means developing alternative courses of action, thoroughly analyzing and reconciling them before making a judgment, then top management decision making may be legitimately questioned for many of our larger enterprises. In large corporations characterized by elaborate staff functions and committee management, top management decision making seems narrowed to approving or disapproving the recommendations of others. Some Observations on Marketing Research in Top Management Decision Making 13 TABLE 1 PROBABLE AREAS OF TOP MANAGEMENT-MARKETING RESEARCH CONFLICT Top Management Position MR lacks sense of accountability. Sole MR function is as an information provider. Area Research Responsibility Marketing Research Position • Responsibility should be explicitly defined and consistently followed. • Desire decision-making involvement with TM. Generally poor communicators. Lack enthusiasm, salesmanship. and imagination. Research Personnel Research costs too much. Since MR contribution difficult to measure, budget cuts are relatively defensible. Budget • TM is anti-intellectual. • Researchers should be hired, judged and compensated on research capabilities. • "You get what you pay for" defense. • Needs to be continuing, longrange TM commitment. • Too many nonresearchable requests. • Too many "fire-fighting" requests. • Insufficient time and money allocated. • TM generally unsympathetic to this widespread problem. • Not given all the relevant facts. • Changed after research is under way. • TM treats superficially. • Good research demands thorough reporting and documentation. • Insufficient lead-time given. Tend to be over-engineered. Assignments Not executed with proper sense of urgency. Exhibit ritualized, staid approach. MR best equipped to do this. Problem General direction sufficient . . . Definition MR must appreciate and respond. Can't help changing circumstances. Characterized as dull with too much researchese and qualifiers. Not decision-oriented. Too often reported after the fact. Research Reporting Free to use as it pleases . . . Use of MR shouldn't question. Research Changes in need and timing of research are sometimes unavoidable. MR deceived by not knowing all the facts. Among others, John K. Galbraith infers this: In the last case, however, there must always be questions as to how much the individual is deciding and how much is being decided for him by the group which has provided the relevant information; the danger of confusing ratification with decision must again be emphasized.* Within our emerging technocracy, it seems likely that top management will become increasingly dependent upon marketing research (and other staff functions) to supply conclusions and recommendations. This forecasts an expanding role for marketing research as an analytical function in addition to its information function. This also indicates a trend of more approving disapproving and less true decision making by top management. Some Inherent Problem Areas What are the apparent or potential causes of top management—marketing research conflict? Pinpointing these areas of conflict may suggest appropriate remedial action. 2 John Kenneth Galbraith, The New Induntrial State (Boston: Houghton Mifflin Company, 1967), p. 83. • TM use to support a predetermined position represents misuse. • Isn't used after requested and conducted . . . wasteful. • Uses to confirm or excuse past actions. The following areas frequently present conflict between top management and marketing research: • Research responsibility • Research personnel • Budget • Assignments • Problem definition • Research reporting • Use of research Table 1 is an attempt to indicate the typical position of respective top management and marketing research staffs on these areas of conflict when they exist. Improving Top Management Decision Improving top management decision making through marketing research calls for tightening the interrelationship of the two groups. Figure 3 suggests some primary opportunities for this achievement. Suggestions for Top Management 1. Define Research Responsibilities. A strong marketing research department wants to know what is expected of it. Top management sometimes fails to make research responsibility and limitations ex- Journal of Marketing, October, 1969 14 TOP MANAGEMENT Define Research Responsibilities / Budget Realistically Be Objective Communicate Persuasively \ Seek Opportunities \ Be Imaginative Periodically Review and Plan Improve Methodology / Be Decision-Oriented Emphasize High Yield Projects \ Reflect Management Viewpoint Minimize Management Filters MARKETING RESEARCH FIGURE 3. Two-way improvement flow. plicit. There should be a written explanation of the research department's overall function, limitations, and priorities. The research director's role should be defined and others should not be permitted to play research director. Vertical and lateral working and reporting relationships should be specified. 2. Budget Realistically. The supply-demand gap on highly competent researchers has boosted their salaries and mobility considerably in the last several years. Management should be aware of increasing salary trends as well as the cost of outside services. Realistic budgets should be established and periodically reviewed. The marketing research director should be involved in budget setting. 3. Be Objective. Frequently managers allow their biases to interfere with an objective appraisal of research efforts. It is important that all levels of management be open-minded in dealing with researchers. New approaches should be solicited and judged fairly. 4. Periodically Review and Plan. The research department should be reviewed periodically and informed of top management's appraisal. All facets of the research organization, that is, budgets, priorities, personnel, goals, and policies should be reviewed with the objective of improving the marketing research function. Formal sessions should be held at least once a year and should result in an operational research department plan for the ensuing year. 5. Emphasize High Yield Projects. Management often forgets to consider past research and makes repetitious assignments. Fire-fighting assignments usually waste resources and affect morale. Each research request should be questioned as to its current benefit and cost. Alternative uses of resources on other research and other areas may be more advantageous. The focus should remain on the best way to increase profitability through marketing research. It is of vital importance to first determine the business problem and then the research problem. 6. Minimize Management Filters. The number of management layers through which research information must flow lengthens the time span between research completion and top management appraisal and tends to distort the original findings. Where possible, management layers between top management and marketing research should not impede the timely flow of original research findings to top management. Suggestions for Marketing Research 1. Reflect Management Vieu^point. Marketing researchers should make every effort to understand top management thinking, particularly on company short- and long-range goals and priorities. Research planning should establish priorities to emphasize efforts geared to company profit goals. 2. Be Decision-oriented. Researchers tend to lack a sense of urgency in reporting. When they do report, it seems too often dull, windy, researchese, and not decision-oriented. To avoid aggravating the decision-making process, researchers should push to understand the nature and context of the decision riding on the research assignments. 3. Improve Methodology. Much of the continuing acceptance of research can be traced to the research director. If he combines research skills with communications skills and stimulates innovation in research methodology, he and his research organization will become an integral part of the business machinery. The research organization should investigate recent developments in management and the social sciences. Researchers should combine objectivity with imagination in employing such areas as learning theory, input-output analysis decision trees, game theory, and cost-benefit analysis. 4. Be Imaginative. Unfortunately imagination in research seems to be in short supply. There is a tendency to repeat the familiar approach rather than seek the best approach. Meanwhile pressure builds Some Observations on Marketing Research in Top Management Decision Making for the shorter way, the easier way, the cheaper way, and the better way. Plainly there is a need for more imagination in marketing research. 5. Seek Opporttmities. It is important that the research department not only react to requests for research studies, but also cast about for research opportunities which may have high company profit potential. The research department should scan and internalize relevant trends in demographics, economics, dietetics, geriatrics, technology, fashion, consumerism, income, health, etc. In this role, the researcher can initiate new research studies. 6. Communicate Persuasively. If the value of marketing research to top management decision making is to improve, communications must improve first. The research response should be tailored precisely to the problem. The presentational format should be streamlined and geared to the audience with detail presented only as necessary. An executive digest style which presents the issue, facts, reasoning, conclusion, and recommendations is suggested. 15 Concluding Observations Competitive pace, management science advances, high cost of poor decisions, overall business uncertainties, need to document decisions are but some of the concentric forces which pressure for an improved role for marketing research in top management decision making. These forces appear far more likely to intensify than abate. Maximum contribution of marketing research toward top management decision making requires some basic efforts by both groups . . . and toward each other. Top management needs explicitly to define research responsibility and limitations, communicate regularly, support organizationally, use objectively and focus on research programs with high profit potential. Concurrently, marketing research should dovetail its organization, personnel, techniques, emphasis, pace, style, and communications to top management's legitimate needs and opportunities. It should reflect top management's point-of-view. Otherwise, marketing research is likely to exist as an ineffective arm of the organization, under-realized and under-rewarded. •MARKETING MEMO The Problems of Planning in Government . . . Unlike the typical consumer market for which industry can normally formulate sound plans for a number of years into the future, the defense industry is subject to significant oscillations. You don't schedule wars; you can't program them five to ten years ahead; but that's where much of the demand lies as regards the Defense Department. (This holds at least for large volumes of production, not necessarily for the technolog).) Through intelligence, you generally gain some idea of what weaponry or counter-weaponry you'll need to match that of potential adversaries, and your own people can tell you what might be coming through your own technological channels. But you never know how much you re going to need, you never know when you'll need it, and you're never really sure that you can move into production on a large scale without encountering bugs. —Richard E. Balzhiser, "A Technologist in Government." Ingenor 6 (Spring, 1969), pp. 11-13 and 21-23 at pp. 11 and 12.