Is the industry right to cut spending in market research?

Cited in Pharma Time this month are the results of the 2009 Survey of Market Research undertaken by QED Studios.

By Joanna Allen on Sep 21, 2009

Cited in Pharma Time this month are the results of the 2009 Survey of Market Research undertaken by QED Studios. This research indicates brand managers are expecting to decrease the amount spent on market research by 9.5% this year, with big companies expecting to see the highest drops. It strikes me that in doing this a potential conflict of interests may occur.


 


Is not the key to any marketing strategy the definition of markets to operate in, segmentation of them and determining the characteristics of the markets especially in terms of defining what are the wants and needs of the customers? For many companies the current and continued changes within the NHS means that all of the above change and evolve as the NHS does. Decreasing the money spent in this area could potentially lead to gaps in knowledge occurring and the making of decisions based on assumptions and not facts. In turn this could lead to a loss of competitive advantage and a decrease in revenues.


 


If companies choose to decrease budgets used for market research the challenge becomes how to harness and utilise the knowledge in their possession to make informed decisions. Whilst data on own product and competitor sales provides a base for strategic decision making around markets and segmentation it does not provide answers about the characteristics of the market. Therefore to aid the decision making process information is required about the wants and needs of the markets we intend to sell to. Sales people are well placed to gather customer intelligence at ground level, the challenge is in verifying this as factual and collation of it in a unified way. To a large company operating in a complex market this could prove to be a costly and timely exercise and may not always generate the level of information required. One needs to ask if this short term gain to reduce market research costs may cost companies dearly in the future.