It’s no secret that the current economy is challenging businesses across the board. That makes it even more important that businesses make the best use of their advertising and marketing dollars, and that starts with good research.
“With the announcement that consumer confidence levels are the lowest in 16 years, it makes it all that much more important to do research to help validate marketing and communication decisions,” said Kim Moss, executive vice president for media and research for GodwinGroup in Jackson. “Everybody is challenged in this economy to make sure their dollar is going to the exact right place, and research can help inform those decisions and make sure they are being channeled in the right places so there is no waste in investment.”
Perception vs. reality
The cost of good market research is definitely a barrier, especially for small business. Moss said many small business owners might feel they already know their customers and can make decisions based on intuition instead of hard market research.
But as Moss points out, perception versus reality is often very different. For large businesses where a lot of money— and jobs — are at stake, investing in good market research makes sense and can end up saving money in the long run.
“We completed a pretty significant research project for a retail business who, after that research study, realized they needed to make operational changes before they were ready to come out and advertise to the public,” Moss said. “Marketing was delayed. It kept them from channeling their capital expenses into marketing and advertising when instead they needed to make operational and business changes first. This is going back to the fact marketers can’t afford to have any wasted dollars. By investing in research, they are informed to allocate their dollars in the exact right place insuring there is minimal waste. That allows them to make informed decisions about the right audience, the best way to reach that audience and the type of communications that would best motivate that audience.”
In the current environment, Moss is seeing some businesses making short-term decisions. Their marketing is based on the next three to six months rather than longer periods of time that might have been common in the past.
“They are having to react to the economy and consumer confidence levels,” she said. “Gas is obviously a big issue.”
Good research is especially important when introducing a product into the marketplace to find out the attitudes of consumers towards the product and the specific brand of product.
“Generally we find there are things we like about how consumers feel about a product or category, and things we don’t like,” said Bob Potesky, executive creative director and partner, The Ramey Agency, Jackson. “We might find that someone says, ‘I love cars, but I hate your car.’ A range is a range is a range unless it is a Viking Range. We need to know how consumers feel about the brand. We build out the brand around the truth of the brand, and also around the consumers’ lives and needs so that the brand remains relevant.”
A second category of research is also important. After the marketing and advertising has been done, it is important to find out how effective it has been. All some clients need to know is if sales are happening. Potesky said other times branding is more subtle, and it is necessary to need to go back and find out how attitudes have changed because of the advertising or marketing.
Research is particularly important for startup businesses.
“Current research is the best way to go giving you more actionable information to make decisions like the location for a facility, and being able to see how many people in that area would be likely to visit,” said W. C. Lloyd Jr., project director at Southern Research Group in Jackson. “Research can be critical to find out what your market is. It can also help you fine tune your demographic or what group of people will be interested in your product or service.”
When clients come to the Southern Research Group with proposed businesses, they get help developing the scope of project with a feasibility study or perception type study to help them determine how people will feel about a certain product or service.
“For example, if someone wants to develop a mall, we find out how people in that area would perceive a mall in that area,” Lloyd said. “We help develop a survey instrument to get actionable results to determine if the business idea is feasible.”
Depending on the topic of the survey, they have a pretty good compliance rate. People like being asked their opinions.
“We’re not trying to sell them anything,” Lloyd said. “With certain projects we do from time to time, such as focus groups, people actually come to our offices and get paid for their time.”
Often companies aren’t as proactive with research as they should be. Companies sometimes wait to do research until problems arise such as a drop in the market share or customers leaving.
“A lot of people will come to us for that reason or to figure out how effective their ad campaigns are,” Lloyd said. “It is very important for a start-up company to contact us and for us to help them determine the feasibility of their venture. That information will be helpful for them to get funding from financial institutions. It will show them that they have potential to grow and be productive.”
Businesses tend to scrimp on the whole marketing area when times are tough. That is a mistake, says Dave Philo, Mississippi District director for the Service Corps of Retired Executives (SCORE). Philo said when businesses are feeling the pinch, that is the time to reassess what they are doing and make necessary changes.
“You can use your down time from slow business days to move up,” Philo said. “Things always change. Access what you are doing. You were mining for a particular target market. Are you getting that target market? Do you need to change that target market? Do you need to use a different approach? But you shouldn’t really cut back. Remember that marketing should always be a part of your budget. There are other places I would suggest cutting back before you cut back on marketing.”
He gives a good example of why current market research is important. After Hurricane Katrina, a significant number of people relocated north of Interstate 10. Businesses south of I-10 need to find out if they can still reach customers who have relocated and, if so, how.
“They might even consider moving the business,” Philo said. “It depends on the type of business. A manufacturer can’t move easily, but a service industry like a lawn care service could. If all your customers were on the Coast and moved inland because of the storm, you might find it worth your while to move into that area in some way, shape or form, I don’t necessarily mean physically relocate, but have a presence there.”
Contact MBJ contributing writer Becky Gillette at firstname.lastname@example.org.