“Market research”, in reality, doesn’t seem to be what I had learnt in theory.
What I had read about it was:
1. It’s a method to discover the real needs of a customer w.r.t a particular situation.
2. Gaps in existing solutions and what is needed to make them better.
3. Need based segmentation, which involved a statistical method of analysis.
Instead in reality, it is stuff like
1. Broad level trends in the market (50000 feet level)
2. Growth and value of target market over the next five years.
3. Raw estimation methods with lots of assumptions.
Justification, through market research, is asked even if we want to build a small prototype and test it out with some customers. As such, half of our portfolio is stuck in the Market research part of the pipeline. I understand that people must know the market space we are planning to enter and some insights into the current customers, players, solutions etc. But do we really need to bother ourselves with exact answers for questions like “How big will the market be over the next 5 years”, “What are the macro-economic trends that will affect this niche product” etc. I don’t understand the company leadership’s attraction towards getting such high level questions answered.
It might not be wrong to ask such high level questions. It’s just plain wrong to ask for actual billion dollar values as answers. More so, because trying to getting to a definitive answer on market sizes and growth rates, not only eats away valuable time in the initial stages, but also dependency on such numbers to make a decision will just corrupt the whole activity.
A proper market research needs to be done through a lot of time spent with potential customers. Instead we spend time googling, reading hundreds of pages of costly research reports, building vague models with many assumptions and generally adding bits and pieces of information together to form a custom story. At the end of the activity, no one can vouch for the accuracy of the story. It would just be a set of pages which reinforces your skewed beliefs.
Hiring an independent research company hasn’t helped so far. Most of the times when we have asked them “Whats the time now?” their reply has been “Give me your watch and I ll tell you”. The last time we paid thousands of dollars for a custom market report, we figured that the contents were picked from the first few search results from google on that topic. We got 50% of the money back, but we lost about 10 weeks in the initial stages. Another research company understood that we were too passionate about this particular market and hence just to get into the good books of our leadership, gave bloated estimates on the size and growth of the market. Weasels!! Another mistake we typically make is to blindly take the numbers from a free report available online. These reports inflate the number so much that common sense just fails. A very famous MR company’s report claimed that the RFID market size will be $5B and $6.7B in 2009 and 2010 respectively. They wouldn’t publish how they came up with that number. Their model and assumptions were for them to concoct and preserve! A few months later, they had a webcast where they shared these numbers and got lots of flak from participants for just bloating it up. A few weeks later, they reduced estimates to $4B and $4.7B!!
Sometimes I feel that people hide behind this activity just to put the blame on someone else (“well ABC product has failed, but then XYZ company’s research told us it would be awesome.”) or to defer a critical decision (“Why don’t you give me a market research and we will decide based on the outcome. Make sure you take about 2 months so that it is detailed enough”)
Market research is supposed to be
1. Insightful and not broad minded.
2. One of the inputs and not the sole input for your decision.
3. Indicative and not definitive.