As markets become stagnant and bottom lines get narrower – just as we have seen for the last four years – companies look at global markets for growth. To make the right investment decisions, they should re-evaluate the type of international market research they should do.
All too often this re-evaluation has resulted in across-the-board cuts in funding, drastic reductions in travel or elimination of projects without regard to their potential to company strategy. This cuts not only the fat in the budget, but also the muscle.
Consequently, companies are launching marketing programmes or new products without sufficient understanding of the market, hugely increasing the risk of failure while saving a few rupees in research costs.
They could also adapt the Discovery Driven Growth™ (DDG) framework to drive this decision more scientifically by testing assumptions and fixing checkpoints.
What we do for companies across the globe is the use of DDG as a process throughout the organisation and not just at the top management level.
The reality of reduced research funds can be addressed by tailoring expenses for more effective and efficient spending while still reducing the risk in marketing programmes and new product introduction. Two key methods for doing this are by
carefully selecting the countries to be researched, and evaluating the need for travel. These can make your spending match your leaner budgets without damaging the muscle you need.
While selecting the countries to be researched, often companies proceed on less-than-systematic criteria. Thinking often is like this: “We need to understand Europe. So, let's do the UK because they speak English, and we’ll understand what they’re saying without translation. Let’s do Germany because that economy is going great.
And, we need one more country ... how about Norway? And let’s not forget that the senior VP is from Belgium, so we must work there.”
A more systematic approach will save resources and derive better insights. Doing a little homework on potential market size, internal capabilities, business goals vs. company politics, and research cost by country will allow you to focus your financial and travel resources on the countries with the most potential payoff for your enterprise. To start with, consider the size of the market using country population as a surrogate. If you want to penetrate the five largest markets in Europe, then you should be conducting your research in Germany, France, UK, Italy and Ukraine.
Next, consider your company’s true business capabilities. One of the fastest ways to waste research money is to conduct a study in an area where your company has no exposure.
Third, consider how to deal with internal company politics. Yes, it’s difficult not to include the home country of the senior vice president who is heading up the international effort. However, if that country is Sweden and you wish to market beach umbrellas, some reasonable argument could be found to eliminate Sweden from the list in favor of the Dominican Republic (both have similar population, but the Dominican Republic has more beaches).
Fourth, consider research costs. Nearly twice as many focus groups can be conducted in Germany as in the UK for the same cost.
Once you have considered this list of issues, you should be able to select the right markets plan your research at optimum costs.
When deciding whether to personally visit the countries being researched, more should be considered than mere personal preference. Key factors include the project team’s previous experience with the culture, complexity of the issues being researched and the method being used (quantitative or qualitative) and availability of alternative methods of research.
First, if your company already has extensive experience with the issues to be researched in the target country, or if the project team already has extensive personal and business experience with the target country, then travelling to observe research can be avoided. However, if this is not true, there is no substitute for even minimal first-hand experience with the culture being researched when you are trying to interpret a report. Second, less involved research doesn’t really require on-site observation or supervision. A simple awareness and trial survey is worth less personal attention than a qualitative exploratory effort. Alternative methods of monitoring or participating in research often provide savings in travel. Watching focus groups from your own conference room obviously costs less than visiting three countries in a week.
If you use the criteria discussed above to evaluate the countries that you research and the ones you visit personally, you will almost certainly spend your marketing research money more efficiently and travel only when business issues justify it.
(The author spearheads execution and innovation for clients @CustomerLab)