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Stephen King 25 February 1931 – 16 February 2006 Two basic criticisms of market research: (i) An over-reliance on data/reluctance to use judgement: “…..I believe that part of our national failure to innovate has come through trying to use market research not as an aid to innovation, but as a system that ideally reduces all personal judgement to a decision as to which of two numbers is the larger” - Stephen King (Research for Decision Making 1983) Two basic criticisms of market research: (ii) The best decisions are made based on a range of sources: “….The winners of the IPA Effectiveness Awards show how market research is used at its best. I don’t think a single entry relied on just one measure of how advertising works. What the judges were looking for was a convincing argument based on the interpretation of many different forms of research.” - Stephen King (Research for Decision Making 1983) Once upon a time things were different: “Just over 80 years ago our industry was founded by two pioneers: Art Nielsen and Daniel Starch... They were consultants and they based their consultancy service on the hard data they derived from consumer research... These two men operated at the highest level and were trusted gurus to the men they served... Even as the nascent science of market research grew in the 1920s and 1930s, it retained its position in the rarefied atmosphere of consultancy to the top decision makers of industry... The trend since, of course, has been almost invariably downward.” - Simon Chadwick 2006 Full Circle into the Future How market research can enhance its value for 21st century marketing companies Judie Lannon Merry Baskin From backroom to boardroom • One of the longest running debates in market research history Are we analysing the issue correctly? Why isn’t MR as valuable as it should be? After all…. • More and better techniques and methodologies • Closer to the consumer • Branded and segmented (a mixed blessing) Theoretically MR should be more valuable than ever before So, what holds the industry back? • Structure: vertical integration rather than partnerships and cross-disciplinary teamwork • Attitudes: obsession with craft can overshadow meaning and utility • Mentality: consultant vs. vendor Consultant • Presents new knowledge of client business; how to improve it • Casts client problem in financial terms; what problem is costing client • Speaks business language: – Client’s business functions – Client’s competitors – Client’s benefits – Client’s value & profit vs. Vendor • Presents knowledge of his own products & services and how these may be useful • Depends upon client to identify the problem for him, usually in non financial terms • Speaks sales talk: – How vendor operates – Vendor’s competitors – Vendor product features – Vendor pricing & discounts – Alex Biel 1998 But the real barriers to valuing market research lie elsewhere: In marketing itself Researchers constantly ask themselves: what do marketers want from market research? This is the wrong question The question isn’t ‘what do marketers want from market research?’ but ‘what do CEOs want from marketing?’ A decade of attacks on marketing from many quarters “Marketing is being challenged in the executive suites of organisations around the world. Marketing leaders bemoan their loss of prestige and power in senior management ranks of top organisations. Today marketing in many organisations is only peripherally involved in major organisational decisions” – Schultz et al 2004 No clear definitions: what exactly IS marketing? 12 different answers • • • • • • Market research Consumer communication Key account management CSR NPD Internal marketing • • • • • • Pricing Marketing fund allocation Distribution strategy Corporate image and reputation Sales staff Shareholder communication – What do CEOs Want From Marketing? Marketing Society/McKinsey 2004 Unclear Expectations “A number of CEOs admitted they had not made their expectations clear as to what marketing should deliver. This ambiguity is exacerbated by a lack of accountability from marketers themselves and a lack of proven models and processes consistently applied” – Marketing Society/McKinsey 2004 Reputation of marketing directors: At best • Creative • Committed • Hard working • Inspiring • Essential • Passionate • Talented At worst • Undisciplined • Not value-oriented • Inconsistent • Self-important • Not commercial • Narrow • Not accountable - Marketing Society/McKinsey 2004 High Churn Rate Tenure of CEOs vs. CMOs CEO CMO 54 months 39 months – Spencer Stuart 2006 Counterproductive organisational structures “Organisational structures bear a great deal of the blame. Too many companies structure according to function which emphasises specialized knowledge and skills determined by what can often be a series of rigid silos. If marketing is vertically organised as a department it will inevitably be seen as what a department does rather than what the organisation does”. – Don Schultz 2004 Dominance of finance “Now that CEOs have squeezed all the value they can out of the distribution chain, they are turning their guns on marketing.” – Shaw 2005 Furthermore: • Too much data, not enough insight • The dead hand of procurement • Poor recruitment and training Strategy Management Consulting Marketing Consulting Research Consultants Marketing Research Firms Internet Collectors CATI Centers Direct Marketing Firms Call Centers Data – Alex Biel 1998 Marketing is at a turning point: the future will look very different • Brands and branding are now accepted and valued constructs • CEOs are requiring marketing to be more accountable • Organic growth and innovation are top priorities • CEOs are looking for a new breed of ‘Super CMO’ • The rise and rise of Consumer Insight …people/departments/role What’s right: theory and practice From P&G’s recruitment ad (Consumer and Market Knowledge): “CMK’s role is to create a competitive advantage for P&G through superior consumer and market understanding. This brings consumers to the center of P&G’s business decision making. • …an integral part of multi-function business team • …like an internal research and business strategy consultant • …will influence diverse business partners within P&G and find creative solutions to business issues” 8 Proven steps to making it work: 1. A clear vision that is comprehensible to non-researchers and marketers 2. A senior champion of change 3. A dynamic department leader to evangelise and make things happen 4. Existing staff have to want to change 5. Commitment to internal training programmes with marketers 6. Essential to have buy-in of Marketing 7. Needs a lot of people – losses from Brand Management 8. You have to DELIVER in a short period of time – Michael Harvey, Global Consumer Planning Director, Diageo Problems that currently exist but we believe they will eventually be solved (1): Still too low in status, still too poorly connected: “…In practice, MR isn’t at the top table …leaders are low ranking vs. other disciplines … ‘insight’ is a word attributed to a decision that was expedient …investment in research is not a priority’” – Consumer Insight Director Problems that currently exist but we believe they will eventually be solved (2): Turf wars and internal politics: … “Marketing managers and directors are politically savvy and protect their connections. They don’t want Consumer Insight stealing their thunder or limelight” … “Clients are very silo driven. It would be nice to think there was some very powerful insight person who was incredibly well connected with all the important people who are making the big decisions” - Consumer Insight Director & Research Agency Director Problems that currently exist but we believe they will eventually be solved (3): Cosmetic change of name but not of function: … “Most market research clients DO still think their job is to process work that the MR agency has done… de facto traffic men between the research agency and their own marketing client” - Research Agency Director Problems that currently exist but we believe they will eventually be solved (4): The wrong type of people: “Client researchers turned Consumer Insight Managers often come from research companies and their most salient skill is getting it done; they like the tidy, timely management of projects and care about the use and misuse of data” - Consumer Insight Director How researchers can move more forcefully into consultancy mode: External world • The new challenge of managing a total brand communication strategy. “The big (above the line) advertising campaign model has changed and nobody knows how to measure the new stuff as part of a totality so we’re all on an equal footing” - Research Agency CEO • Driving growth and competitive advantage “Researchers could do themselves a huge favour by developing new and/or more effective ways to discover competitive advantage. We need to be more explorative and brave” - Planning Director How researchers can move more forcefully into consultancy mode: A new role internally • Helping to evangelise marketing in the company: over-coming silos, uniting different departments under larger marketing projects. • Measuring marketing. Marketing MUST be more accountable. Market research can help develop dashboard metrics. What should be done? Individuals • Get out more • Join a wider network of organisations and groups • Read a wider range of journals and books What should be done? Companies • Recruit more widely: Look for people accustomed to working in a creative environment such as planners, exconsultants • Train more broadly • Offer exchanges and internships with clients • Get to grips with your own internal silos • Sharpen your positioning • Examine your literature and re-write a lot of it What should be done? The Market Research industry Take the issue seriously – at most: - “a more substantive change of business model is needed’ - Simon Chadwick At the very least, if researchers are integrating other data, - “develop a guide (or Charter) to understand how to evaluate the quality of this more 'holistic' offer. - David Smith In the meantime, the MRS should: • Take a hard look at the training programme • Build relationships with other training bodies – IPA, APG, CIM, MS Conclusions • We firmly believe the future is bright for market researchers who genuinely want to engage with the marketing challenges companies face. • But it requires a completely fresh look at how successfully the industry is in tune with the way companies are evolving in the 21st century.