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August 2002
Market Research:A Valuable Business Investment(Not an Expense!)
Market research should be a valuable tool to drive more appealing products or services greater velocity, increased sales potential, and reduced costs. It cannot tell management the best decision, but can provide compass-like guidance towards an informed decision.
Research ROI
The Association of University Technology Managers (AUTM) measured return on investment for federally sponsored research products and found that "research really does pay off, even if it takes years to do so." It is undeniable that research has generated profound advances in virtually every facet of modern life: communications, health care, the manufacturing industries, financial services, military security, housing, transportation, energy, environmental protection, agriculture, entertainment, and the management of government and industry.
Belden Associates encourages clients to quantify research value – either in advertising sold or saved, or in cost savings.
One newspaper is committed to annual research: "For each $1 the {newspaper} invests in Belden, we sell or save $150 advertising dollars… Talk about ROI!"
Another reports, "Our study has already paid enormous dividends on the advertising side resulting in upgraded retail and classified contracts which has more than paid for the study... Editorially the study clearly outlined strengths/weaknesses and we are currently making plans to incorporate changes that will increase circulation…"
Measuring Brand Equity
Many newspaper companies are striving to develop a unified brand for their print newspaper, online Web site and local cable- or broadcast-TV affiliate. Recently, one Belden study used a variety of research measurements and methodologies to develop a new branding and strategic marketing plan.
The primary study objective was to determine the best positioning strategy to increase readership quantity and frequency. Identifying and understanding the strongest motivators for readership would be critical in product development and overall brand promotion. To this end, a 25-minute telephone interview was designed and conducted with 1,600 adults respondents. Key measurements included reading frequency, content-opportunity analysis, reader-motivation segmentation, prime prospect analysis, brand element analysis, and affinity to the core city.
In particular, the brand element analysis was designed to measure the importance of various media traits as they defined the newspaper brand. A list of 29 traits was read to the respondent, and they were asked to rate the importance of the newspapers having each. Factor analysis was then used to group the traits into six brand elements, along with a “gap analysis” to identify traits with the largest number of adults who rate the trait as important but do not give the newspaper a favorable rating.
In other words, the largest opportunities for strengthening the brand are determined through this study. Marketing and promotional efforts – both internal and external – are created and deployed against those greatest opportunities!
Advertising Satisfaction Research
Samples for most advertiser satisfaction studies consist of current newspaper advertisers (sometimes advertising agencies, too), with a separate sample of classified accounts. Usually, eligible accounts have advertised at least four times during a one-year period, and have been called upon by an advertising representative. Some include a revenue cut-off, that is, a minimum expenditure over 12 months.
Once the sample is selected, a 15-minute telephone interview is conducted with advertising decision-makers or classified placers/users. Some general issues to understand:
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How much of the decline in classified advertising is attributable to the economy and how much has been lost to other media?
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Is the change cyclical or permanent?
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To which of the competing media is the newspaper most vulnerable, and which alternatives are most vulnerable to the newspaper?
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What internal changes - product and/or marketing - might ensure the newspaper regain as much as it can as quickly as possible? What might be done to test any such changes in advance or while in development?
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What is the expected revenue split in five years?
Answers to these questions provide information to improve sales up performance, create more actionable databases, design better products and generally better response to customers!
Consider Other Market Research Applications:
Prioritize Market Opportunities
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Research can target population segments and potential growth opportunities.
Benchmark the Company vs. the Competition
- External market share and customer satisfaction data can validate a firm’s position and determine strengths and weaknesses and vis-á-vis the competition.
- Once a product is ready for market, research can determine how consumers rate it compared with products they are currently buying and likelihood to change.
Design Effective Promotional Campaigns
- Market research can be designed to measure impact of current promotional campaigns and/ or recommend improvements.
Identify Future Products - Insightful market intelligence, can ensure the right product with the right technology at the right price.
- Research can sometimes elicit new product ideas from potential consumers.
- Research can estimate the potential sales of new products and guide decisions on what NOT to do, as well as what makes the most sense.
In every case market research provides the means for making better management decisions – based upon what advertisers and consumers are saying, then tempered with experience and financial reality.
Research Role in the Future
As change accelerates and most commerce becomes more customer centric, marketing research will be more critical in all decisions, from product innovation and development to advertising and promotional activities. It will be beneficial, and implement more effective marketing strategies to increase sales. More than ever, market research will be a valuable business investment.
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