Download Some Observations on Marketing Research in Top Management

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.