Market Research For Market Leadership

by | Sep 14, 2025 | Uncategorized

ABSTRACT

Does market research cause “analysis paralysis” or does it really help firms to develop more successful products? This article looks at the folly and costs of ignoring market realities and provides a practical framework for an effective approach to research that will help to prevent analysis paralysis while increasing the odds of success in the market.

MAKING THE CASE FOR RESEARCH

Guidebooks are available for pretty much every kind of endeavor these days, from restoring a ’64 Mustang to exploring Bali to traveling across Europe on less than $20/day to starting your own winery. To gain a clear understanding of where you should take your business however, the information that is readily available is rarely clear or reliable. This article describes why market research is needed to increase the odds of business success.

Taking research seriously is a key to effective business leadership. In my twenty plus years in consulting and business management, I have come across numerous examples of otherwise successful business people who charge forward with a “seat of the pants” mentality and end up wasting incredible amounts of time, energy, and money executing ideas which could not in the end be justified by the market situation.

One example that stands out happened in a small engineering firm, where the founder/owner got the idea to create a new type of pre-programmed keyboard that was based on one being marketed by the company’s main competitor. Over the next year, this business owner had his two top engineers plus other key staff spend several months of their time on programming this device, and in addition he spent two to three months of his own time designing the product. The company also paid the hard costs of hiring an external industrial design company to engineer and manufacture a prototype. At the end of that year, did that product work? You bet it did. In fact, they had accomplished everything they had set out to build a year earlier and the final product was both physically attractive and highly functional. And did this become a successful addition to the company’s product line? Not a chance. After this company completed their prototype, their competitor dropped this product line altogether because the market need for this type of product was filled from an entirely different direction. So this company was forced to dumpster the product.

They suffered a double blow because the time invested by their senior engineering staff could have been used to work on real business opportunities rather than whims, while the money spent externally could have been used for marketing or further developing their existing products. In the final analysis, this was an example of a “we built it because we could” mentality. This is the kind of logic that gets business people in trouble repeatedly, because business is all about developing products to meet market needs, not to demonstrate your ingenuity or pursue your whims and personal interests.

A company which enshrines “research” as a critical product development stage will never find itself in this situation because it will develop a business case before investing this kind of time and money in building the product. This doesn’t mean that with research every product you develop will be a success, but at least you give the product a fighting chance if you can first demonstrate a valid business reason for going down that road. If you wanted to climb Mount Everest, would you simply fly to Delhi or Lahore and start walking towards the mountains in the hope of one day stumbling across your target, or would you buy a map and investigate the successes and failures of others and then plot a course based on your careful analysis? Heck, I won’t even drive across town to a meeting unless I first download a map showing the best route, because I hate to waste time getting lost. Imagine how your employees feel when you waste months of their time on misconceived projects.

BE PRAGMATIC

A danger with making research a key part of your product development process is that some companies bog themselves down at the research stage and get into the “paralysis by analysis” quagmire. I like the balance that the former CEO of GE, Jack Welch, expected of his people. If someone came up with an idea for a new product, they would assign a small team of executives, usually numbering not more than two people, to learn everything they could about the opportunity in a period that was generally expected to last no more than four weeks. At the end of that time, they would make a decision to either proceed with the new product or shelve the idea. As Welch put it so elegantly, “We would look at the market, pick a direction, and then execute like hell.”

One of the secrets to staying ahead of competitors and uncovering new market opportunities is to keep moving and relentlessly explore new ideas and concepts and approaches. In business, “action” is often its own justification, which supports the “ready, fire, aim” approach that so often results in bold new discoveries and astonishing market successes. However, history is littered with the carcasses of failed businesses which fired wildly without a target in sight and thereby wasted their ammunition altogether. There are an infinite number of possible targets at any given time; the trick is to investigate the most likely options and then prioritize and focus on the most promising choices.

When you begin to research an opportunity, realize that you have limited time and resources and plan accordingly. Identify what you know and what you need to know, the questions that need to be answered, and then assign a budget and people and timeline to each question.

CAPTURE & CHALLENGE

Too much business intelligence is either stored in the heads of people or is based on wrong information and false assumptions. Write down what you know and what you have learned and then get the key stakeholders on your team to challenge the information, identify new questions that need to be answered, and sign off on conclusions along the way. This way you can start off at the 50,000 foot level and quickly zoom in until the image of the marketplace resolves into a clearly focused picture or map of the current situation. The conclusions you draw will act as guideposts for future discovery and exploration and will let you get beyond ad hoc decisions based on faulty data and unconfirmed suspicions and feelings.

ENTITIES, RELATIONSHIPS, & CONCEPTS

One of the best tools for market analysis is a diagram or diagrams that show the key entities in your situation and the relationships between them. (I call this, amazingly enough, an “ERD” for “entity relationship diagram”.) People can get their heads around visual maps better than columns of numbers or lists of bullets, so it is good to show, wherever possible, visual representations of the data you have captured.

One enterprising company recently created a web-search tool based on a map of Antarctica. To them, Antarctica represented a blank slate on which information could be projected, because most people do not know anything about the geography or regions of that continent. This company therefore mapped the information available on the Internet to an image of Antarctica, giving users an accessible visual representation of the entire Internet. With a glance, you could see the states or provinces or regions of “Financial Services Information” or “Educational Resources” or “Travel & Holiday Resources”, and their relative importance in the entire world of Internet information. So if “Educational Resources” represented 3% of the information available on the worldwide web, that is how much land it would occupy on the map of Antarctica. You could then click on that region and thereby begin to drill down. As well, you would immediately understand the relative weight of that “region” in the grand scheme of things.

I worked with an agricultural chemical manufacturer that marketed itself through a channel of farm-product dealerships. To understand the competitive environment, we conceptualized a “push-pull” continuum, where competitors on the left of the continuum were those which “pushed” their products through the channel by spending more resources giving the dealerships incentives to push that manufacturer’s product on the farmers. Those on the right would spend more resources educating the farmers, who then came to the dealership and asked for that manufacturers products, thereby “pulling” the products through the channel. With this visual tool, we could quickly plot each manufacturer’s relative channel strategy and look for ways to counter the moves of competitors and make our strategy more effective.

As you begin to survey the current situation, try to think of your situation from new conceptual viewpoints and then flesh these out to help obtain a clearer picture of the opportunities before you. For example, soft drink makers used to measure market share to understand their position and progress relative to their competitors. But then they realized that consumers could also buy milk or beer or water or tea rather than soft drinks, so they began to also measure “share of stomach” to understand how they were doing relative to other categories of liquid refreshments.

AREAS TO DRILL

What are some of the common areas that should be researched? How about:

  • Competitors: who they are, how they are doing, their history, positioning, strengths, weaknesses
  • Winners and losers: have you analyzed and documented the reason why customers chose your products in the past or why prospective customers went in another direction?
  • Trends and opportunities in the marketplace; the changing needs of customers
  • Product positioning
  • Product adoption behavior
  • Legal and regulatory environment
  • Barriers to market entry
  • Market segments
  • Distribution channels (including industry norms and alternatives)
  • Current industry pricing structures
  • Revenue and profits: who is making the money now and forecasts for the future

BEYOND EGO AND ATTACHMENTS

One of the benefits of an objective analysis and review is that it helps a firm move beyond ego and emotional attachments. As humans, we tend to identify ourselves with our ideas and conclude that if people are challenging our ideas, they must think we are not competent or valuable. The market of course doesn’t care about who is highly esteemed by their colleagues, it simply rewards businesses based on their ability to satisfy the needs of the market. So we need to put our ideas out there for an objective assessment, and then let the chips fall where they will.

If an executive in a position of authority has a pet project or gut instinct that cannot be validated by an independent review of the market opportunity, just think of the damage this does to the firm to pursue the project or idea while disregarding market realities. Not only is there a cost in terms of dollars and wasted opportunities, but the people who are asked to execute the strategy will lose morale and confidence in their leaders. People want to work towards commonly held goals that they can believe in. If an executive pushes a team to go after a goal without giving them a reason to believe in the goal, the team will lose respect and will subconsciously undermine their own efforts. Effective market research and business analysis then is an important part of leadership, because it helps the troops to understand the objective and be willing to make the sacrifices needed to reach the goal.

FROM RESEARCH TO WORLD DOMINATION

Adman David Ogilvy had a background in market research before he started his famous advertising agency. Once he started his own firm, he was known for getting out and talking to customers, prospects, suppliers, salespeople, competitors, etc. to gain insights into the true market situation. If he was doing a campaign for a petroleum distributor, he would go out to a gas station at seven o’clock on a Saturday morning and work the pumps and talk to the people who came in and find out what made them tick. Based on the premise that marketing is more successful when it is driven by clear insight into the market needs, Ogilvy built the world’s most successful advertising agency.

Take research seriously: don’t relegate it to junior people but let your entire organization be focused around understanding the needs of the customers and the evolving market situation. Ask the questions, listen to the answers, write it all down, debate the findings, ask more questions, and pretty soon you will have your own proprietary guidebook to help your firm move forward with the most promising strategy.