Key Reasons Why Companies Fail
Why do companies fail? From 500 billion to one trillion dollar companies, the reasons for their failures are almost parallel to the reason that the local pizza shop stopped pumping out pies. It all boils down to one concrete reason, market research. Although the multi- billion dollar companies most likely, had a few more bumps in the road, essentially lacking market research was the main driver in their failure. Another reason for their decline was rushed and uninformed decision making. Of all the super advanced high- tech companies in Silicon Valley, how many of them actually conducted formal market research measures as a foundation for their product or service? The answer: very few. Should formal measures have been taken, would that have saved them from their decline? Probably not, however, it most likely would have prevented many bogus ideas from surfacing.
What Is Market Research?
Simply put, market research is a scientific method utilized to gauge and remedy business problems. Marketing research consists of experiments, surveys, a/b tests, strategy research, customer satisfaction monitoring and numerous other tools. What are the various types of research and how do I know which to use? It all depends on the specific situation; however, here is a brief summary.
Strategy Research » Identifying your target market, strategic position, points of parody and points of difference, which is your competitor and other fundamental questions is vital in any new business venture.
Product Testing » Although you may have had this grandiose concept for a latest gadget and you think it will fuel a new tech revolution, it is highly recommended to test this product with a variety of end users. Your opinions and feelings towards this idea or concept do not influence the end outcome. Be certain to utilize a series of tests (focus groups, surveys, etc...) to obtain the most data and ensure the best marketing positioning and overall performance.
Operations Research » Another vital reason why companies fall apart is that they do not have a solid foundation. In today's day and age, you must be a service oriented company in order to succeed. A few questions you may ask yourself regarding your business include; how is my service perceived? Are my employee's top notch? How am I treating my employees and how will I retain them? In a tech setting, a company's service is often merged together with its product, and thus both have to be stellar to keep a high retention rate of consumers.
Sales Analysis » Most companies do not do their own sales analysis, they work with outside companies. There are several key questions that anyone seated at the head of a company should be able to answer. Such as, Who is buying your product? What is the demographic of your sales, what is your sales forecast for the next quarter? What sectors of the market is your product penetration? Sales research is a relatively cost effective practice and can be highly beneficial in the results it bears.
Additional Research Practices » Varying on your companies needs, a mix of surveys, tracking, testing, media-mix evaluation, and other customer oriented assessments should be taken to ensure your product and/or service is reaching its full potential.
When should marketing research be utilized?
Simpler said than done, marketing research should be implemented in all phases of business. It should be used as a guide and precautionary measure to predict the reactions, response, and general emotions and feelings your product and/or service evoke out of the everyday consumer. More often then not, companies in today's economy cannot afford to make expensive mistakes, in some instances, research will be the gatekeeper from those errata occurring.
How to choose a market research firm?
Suppose everything is in sync with the above and you want to pursue conducting marketing research on a larger scale. How do you go out finding a firm who will generate the results you are looking for and provide the solution to grow your business? In many instances, finding a company to contract with is like dating. It is based on a recipe of practical solutions mixed with emotions and your "gut feeling". Chemistry should play a big part in selecting a firm; you should have no apprehension or negative feelings about your choice. However, many times you will feel like you are on the fence. Here are a few warning signs when evaluating market research firms.
Off the Wall Approach » If you don't understand a company's methodology or it seems too exotic for you, don't buy it!
There are No Guarantees » If a company is guaranteeing a result they most likely will not be able to deliver it. You should have real expectations for the end result and not something that you are holding them to. You may be setting yourself up for disappointment if you have guaranteed results.
Competitive Pricing » As with anything that has a price attached to it there is a sense of value that comes with the product as well. When selecting a market research firm, you should feel like the price is appropriate for the product and level of service you will be receiving. Be weary if the price is too low or too high. Be a competitive shopper, as there are a lot of market research firms.
How to maximize your market research firm?
Relationship Building » As with any person or company you choose to work with and want to incorporate in your business or your life, a relationship is key, and a positive one at that. The relationship should be dictated by you, the client, and should be very free flowing and open.
Attainable Goals » Be certain to set attainable goals and objectives that are manageable. If these precautions are not taken, you may be setting yourself up for disappointment.
Constant Monitoring » Don't be afraid to listen in on some of focus groups or in depth studies taking place. Remember that you are the client.
Conclusion
At the end of the research you should view a written summary of the findings along with a presentation. All members of your team should view these findings simultaneously. This is to avoid any misunderstanding or confusion, be certain to discuss your grievances with the market research firm in one meeting. Be certain to address all complaints no matter how large or small. Research is by no means a final solution to every question asked, however, if used appropriately it can provide the solutions to avoid the next major meltdown.