Research and improved profit performance should go hand in hand. Too often they parade as strangers. An increasingly voluble message seems to be that managers should conduct useable research more and simultaneously demand more professional performance by the researchers that deliver it.
A recent market research conference in Gothenburg, Sweden on “Managing Research for Profit” concluded that changing organisational “mindset” is taking place worldwide and managers are focusing on the “contribution marketing research” makes to the bottom line. Changes in the business environment and more competition are driving “a profound transformation in the demand side” of the market research industry, according to the conference organisers.
If the transition is taking place, it’s not before time, according to Massey University-based researcher Ganeshasundaram Raguragavan. His own research suggests most New Zealand businesses that conduct market research do not see any improvement in profitability as result. The problem, he says, does not lie with market research itself but with the type of research being conducted.
According to Raguragavan, who conducted the research for his PhD thesis, businesses regularly conduct ‘background’ research to broaden the managerial knowledge base and better understand the market. It is less common, though far more profitable, for business to conduct ‘decision’ research which applies research findings and delivers conclusions to fix problems.
The explanation for the anomaly he suggests, rests with established convention among researchers and marketers who prefer to do background research. Other managers in the hierarchy accept their expertise and so their views prevail.
Decision research is less expensive, is quicker to conduct and can be easily and objectively evaluated. It also helps managers test their ideas and concepts and find solutions they can implement. “It gives clear direction for decision-making and puts an emphasis on the financial implications of these decisions,” says Raguragavan.
Organisations need to find balance between background and decision research but research companies need to “shift their thinking so that decision research gains the prominence it deserves and managers need to have greater say in the type of research carried out for them”.
Raguragavan sampled 89 New Zealand companies and evaluated 6000 market research reports conducted by the companies over 10 years. He also researched their financial and market performances over the same period. Then he analysed managers’ perceptions of various aspects relating to market research use, the purpose and usefulness of the research, the types of research undertaken. Finally he evaluated the type of research used, the outcomes and the implementation. The result was not flattering either to researchers or to managers for the way in which they fail to turn research to account.
