Market Intelligence Vs. Market Research

By Elaine Harris and Ron Sullivan

How often in your business team meetings aimed at improving growth and earnings, have you heard someone suggest doing a market research study? A customer satisfaction survey, segmentation study or perhaps focus group work is suggested. The scope would be consistent with the specific area of interest- maybe product or service features, positioning and communications optimization, or even route to market issues, but increasingly it’s “let’s do a pricing study”. After all, an increase in price goes directly to the top line.

By doing a study you may gain valuable information on the impact of a potential change, but you also may be blindsided by thinking that the market variables you are evaluating are independent from each other as well as others. For example doing a pricing study alone does not take into consideration the impact of product design, competitive positioning, segments, promotional channels, or other key elements of your marketing strategy. Nor does it provide you with the correlations (cause and effect) between all the marketing elements or the underlying market drivers that define the market characteristics that you must address to grow your business. Even more importantly, it may not effectively address the competitive reaction to making a change in any one or all of the marketing variables.

What you really need is market intelligence, the capture of all the relevant market data that has been integrated, analyzed, and interpreted specifically to more completely evaluate all your options for growth. Market intelligence not only recognizes the interdepence of the four P’s (Product, Promotion, Price and Place), but models that interdependence in a way that enables you to consider multiple options and the associated risk.

An effective market intelligence effort requires the market team to:

1. Know what you need. Often this step is taken for granted given the team’s ongoing discussions. However it is critical to understand how the intelligence is to be used in order to identify what is needed, how best to collect the data and the most appropriate analytical methods to employ. Based on what it takes to win, develop strategy options and challenges that need to be addressed. From the alignment of this work, they can easily describe what they needed to know to transform hypotheses into market strategy.

2. Know what information to capture. Here it is best to start with a blank slate. With the strategic objectives in mind, a list of key issues needs to be addressed. These include competitive positioning, feature importance, key outcomes, pricing, customer attitudes, and issues that affect behavior. Some of these elements should already be known, but others may still be hidden.

Design your knowledge capture approach. The three critical steps here are:

Think ‘outcomes’ or what the specifiers in the market may want to happen as a result of an interaction with you. They buy products and services to help them get their jobs done.
Do a qualitative market assessment to identify the hidden elements and validate that the list of potential outcomes are correct. The key here is to discover what specifiers value and the criteria they use to measure supplier performance.
Design your quantitative market study in a way that you can both measure the market and test concepts. A good quantitative design employs exercises in which the respondent is asked to make choices on what is important to them and identifies the difficulty a respondent is having in achieving their most important outcomes. The design should capture the respondents’ beliefs and attitudes about the primary topic, competitive behavior, and willingness to act as desired.

3. Compile the learnings -- and get a complete story that you can implement. A well-designed market intelligence study should provide you with ‘causal’ or prescriptive view of the market. These learnings should be translated into actionable implications . A key benefit to this approach is models enabling your team to do what if scenario analyses.
Without providing actionable implications, market intelligence is almost useless. One company complained so much about the quality and utility of their quantitative market research that they stopped doing surveys altogether. However with a different approach to gaining market intelligence, and a method to leverage qualitative learnings, an actionable approach was found.

4. Provide multiple perceptions of the marketplace. The market consists of different groups of customers, which can be referred to as segments. These segments may be based on differences in key market drivers such by outcome performance, attitudes, and feature benefits, as well as key demographic and sales variables. By segmenting on behavioral factors, you can both identify multiple value propositions and select target groups that best fit your capability to deliver value. Analysis by segment also tells you how you fare against competition within each group.

Example: A company found that with two of the four identified segments, they could deliver distinct value propositions better than their competitors. Once discovered, they found a way to engage each of these two segments uniquely and distinctively from the non-targeted segments, modifying all elements of their marketing mix- including pricing.

5. Develop and test compelling alternatives. Effective market intelligence should generate the potential for alternative strategies. Your team should have some hypotheses about alternatives before embarking into a market intelligence study. Those alternatives should be tested in the qualitative phase, then designed into the quantitative study.
In the process of compiling the learnings, and gaining the multiple perceptions, you can generate analytics on each alternative and conduct risk assessments.

In one example, a company found a potential new opportunity, a Blue Ocean that was beyond the original scope of their market intelligence. They went back to the marketplace to test the resulting value proposition with potential early adopters for a new strategy. The outcome that drove them to reevaluate was We want our supplier to ‘take charge’ of the whole transaction.
They were originally reluctant to include that outcome. Once explored further, they were able to validate the outcome and create a value proposition against which they could deliver.
This increased their bottom line through economies of scale.

A market intelligence study incorporates a comprehensive assessment including analysis of the critical components of your business interaction with a defined market.

Obviously the design is dependent on the nature of your market and the competitive environment. However, for most business-to-business markets, the study should be able to answer most or even all of these questions:

How important are our product attributes to the market and how do the major competitors (including us) perform against those attributes?
What benefits (outcomes) do the specifying customers in the market want to achieve and how do they perceive their primary suppliers performing relative to those outcomes?
How can we distinguish between what customers say is important and how they actually behave?
How do these attributes and outcomes vary by different segments of the market, or what segments are derived from different responses to attribute and outcome importance?
How will price changes impact competitive share and how does that differ among the defined segments based on attribute and outcome importance?
What is the right balance between price and share that maximizes profits?
How would customers value a new product concept that we are considering bringing to the market and what would they be willing to pay for the concept?
How would customers value some new offering features we may bring to the market, and how does that value differ across customer groups?
What new features would provide us with a ‘blue ocean’ of opportunity?
How do customers perceive our brand vs. competitive brands?
What are the underlying structural components and attitudes of the market that define where we need to focus for future growth?

Elaine Harris is president of BREAKTHROUGH MARKETING TECHNOLOGY and Ron Sullivan is a senior partner at the company.

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