Sign in or 
| Version | User | Scope of changes |
|---|---|---|
| May 10 2007, 9:13 PM EDT (current) | laschmitt | 2 words added, 2 words deleted |
| Mar 18 2007, 2:00 PM EDT | laschmitt |
Changes
Key: Additions Deletions
Anyone who reads a lot of business plans or who has ever judged a business plan competition is immediately struck by the reliance on ‘Market Research’ methods that result in a lot of data but very little understanding. There is typically a wealth of data about sales and revenues, size of market, growth rates, number of customers or web-site visitors, existing market segments and cost factors. The common thing that is lacking is, without fail, insight into what would motivate a customer to put down actual money for the new thing being proposed. One has to wonder is if these bright, intelligent, motivated individuals creating a compelling business plan actually talk to any potential customers.
Market research is a necessary, but not a sufficient condition for evaluating an opportunity. Market research is the easy thing to do (which is probably why it’s also the first and only thing done). It is much easier to read reports, get figures and numbers and put them in a spreadsheet than to actually find and meet with individual people who could be future customers and find out what they know, think and will do. Market research can also easily mislead. An example taken from a real-life project illustrates the pitfalls. The diagram below shows the results of a comprehensive survey on automotive safety conducted by a well-known karketmarket research firm. The person taking the survey had to respond to the survey statement from strongly agree with the statement to strongly disagree with the satatement.statement.
What's immediately obvious to an observant person is that 54% of people are saying that they never get drowsy while driving and 42% of people say that they never get distracted while driving. These results don't pass the 'sniff' test but are typical of what you often get in this type of market research.
Instead of this type of superficial customer data, true customer insight is invaluable. Customer insight should come first, then market research, not the other way around. People are slowly coming to this realization. In his book, 'The Change Function', Pip Coburn makes the point that it is much more compelling to have a deep insight into the customer than it is to have all the market data. One should consider this the next time someone asks 'What's the market for it?' instead of ' How will the customer respond?'.
Market research is a necessary, but not a sufficient condition for evaluating an opportunity. Market research is the easy thing to do (which is probably why it’s also the first and only thing done). It is much easier to read reports, get figures and numbers and put them in a spreadsheet than to actually find and meet with individual people who could be future customers and find out what they know, think and will do. Market research can also easily mislead. An example taken from a real-life project illustrates the pitfalls. The diagram below shows the results of a comprehensive survey on automotive safety conducted by a well-known karketmarket research firm. The person taking the survey had to respond to the survey statement from strongly agree with the statement to strongly disagree with the satatement.statement.
What's immediately obvious to an observant person is that 54% of people are saying that they never get drowsy while driving and 42% of people say that they never get distracted while driving. These results don't pass the 'sniff' test but are typical of what you often get in this type of market research.
Instead of this type of superficial customer data, true customer insight is invaluable. Customer insight should come first, then market research, not the other way around. People are slowly coming to this realization. In his book, 'The Change Function', Pip Coburn makes the point that it is much more compelling to have a deep insight into the customer than it is to have all the market data. One should consider this the next time someone asks 'What's the market for it?' instead of ' How will the customer respond?'.
