The Hindu Business Line : Researching the market

Hello all. Recently, one of the larger states in our country went to the polls. When the results were declared, the incumbent CM and his ruling party had been pretty much booted out by the ballot. Now normally, this would mean recriminations and cross-recriminations and all-round expressions of `sore loserness'. However, this time, things were a little different. Against all expectations and in a rare and surprising display of grace by the Indian realpolitik, the incumbent gracefully accepted defeat.

Indeed, the mandate of the people can be a bitter one. And not just for politicians who need the votes and a moviemaker who needs the audience, but also for companies like the very ones you are working for.

(Disclaimer: Here I am referring to companies that need to market their products and services and, therefore, depend on the masses. There are several organisations and sectors like private equity, venture capital, consulting, loan repayment enforcement, Air India and so on who really do not fall within this category.)

Understanding the needs of the consumer is one of the most primal needs for a successful business.

"Customer focus" is one of the driving forces of our companies. Organisations live and breathe customer satisfaction and companies spare no expense to ensure that their customers are not just happy, but delighted by the quality of their experience and the service levels rendered.

The above is a popular paragraph one will find in annual reports and press releases often. In reality, most sales and marketing managers fondly hope for a time when slow strangulation is legal, so they can organise customer meets and then invite each customer into a small room one by one for "personalised service".

But here is where we must remind ourselves that our career development, at the end of the day, depends on the customer and his patronage of various goods and services provided by our firms. After all there is only so much sales you can show by hacking into the SAP system and making those little changes to the finance module.

So when managers are faced with the customer dilemma, they are normally forced to sit down and think about who their customer is and what his needs and wants are.

A true professional would then need to pick up his bags and notebooks and hit the streets. He needs to catch the local to Ghatkopar or Thane and walk up and down the local markets in the blazing hot sun asking people questions and really getting into the actual environment in which the customer lives and buys. Therein, in the real world, lie the answers to most of our marketing dilemmas. And these true professionals can be found in market research agencies.

And so the young manager picks up his office-paid cell phone to do what he has been planning for a few days now: he calls his parents in Dubai and speaks for a few minutes about Rohan's exams and Shabnam mausi's new Octavia.

And after that he calls up his greatest friend when it comes to understanding the consumer — the market research agency.

Market research is one of the most important skills that young managers should understand. This is why we will spend a couple of columns talking about market research and how to understand the customer.

Now some of you must already have some market research experience during your internships. Many companies pick up summer interns promising them interesting sales and marketing projects in the field of "demand estimation and customer acquisition strategy".

Young MBA students are suckers for the word strategy and immediately sign up. After a wonderful orientation programme full of presentations and buffet lunches and goodie bags, the interns are then addressed by the top management of the firm.

CEO: "You young guns are the future of our company!"

Interns: "Yay!"

CEO: "Our future strategy depends on your efforts!"

Interns: "He said strategy. Yay!"

CEO: "Did I forget to say strategy?"

Interns: "Yay! Awesome internship!"

Within 15 minutes, the intern is in a shirt and tie, standing outside a store and asking customers so many questions in so little time that many respondents go home and wait hopefully for their group discussion and personal interview calls.

And of course it goes without saying that these stores are almost exclusively in places like T-Nagar, Chakala and Sarojni Nagar where conditions are so oppressive that most of the tourists you see there are NASA trainees quietly preparing for the Mars expedition!

Most interns do, however, put in a lot of effort and hard work and finally give up and use the random number function in Excel to fill in their questionnaires. This can cause problems:

Project guide: "So you say most of our users are female and below 15?"

Intern: "Yes, yes. The graphs look nice no?"

Project guide: "Umm yes... but our product is the RGH-2400 Clipster beard trimmer dude."

Intern: "Err... yes... Talk about a weird niche market, eh?"

As time passes and these interns join companies, they never make the same mistake again. When they have to sit down and collect consumer data, they immediately get a market research agency on board. (Or summer interns in case they have no research budgets due to recent increases in commodity prices and salaries that may be because of an error in the SAP system, which is being investigated.)

A market research agency specialises in going out to the market and digging up mounds of data. For instance, I was involved in a research exercise once where, after just one week of fieldwork, the agency sent us over 15 whole cardboard boxes full of printouts of expense reports.

Market research today is a critical first step before companies even think of launching products and services into the market. Sitting together with the agency, they make detailed customer questionnaires and other research tools, which are then administered to thousands of unsuspecting subjects over many months. This data is then analysed and re-analysed, often with the help of consultants.

Following this, workshops are held for the top management detailing the major findings of the market research exercise. These are normally statements like: "The product must be of high quality" or "It must, above all, work".

After this workshop, the top management appoints an exploratory team with a cool name like "Team Explore" or "Dynamo Kiev" to develop and test-market the product.

Finally, after more than a year, they launch the product amidst much fanfare and are overwhelmed by the response from the market in the sense that the product "sucks". Angry and frustrated, they call up the market research agency and, after a heated exchange, hire them to do deep dive research on the reason for the failure.

Next time, we will look in more detail at the tools and methods used by these research companies including focus groups, questionnaires and, my personal favourite, phone tapping.

(The writer, an alumnus of IIM-A, was a management consultant before quitting to work as a freelance writer, author and general handyman. He blogs at http://sidin.blogspot.com)

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