Rx for Market Research – Guest Column

It is easy to see why some people think marketing research is ailing. Companies such as Sony, Chrysler, and Compaq, successfully “ignored the customer” to create the WalkmanTM, minivan, and PC network servers. Others listened to customers and created such flops as New Coke (Coca-Cola Co.) and McLean burgers (McDonald’s Corp.).

The Marketing Science Institute- sponsored study, which sought to assess the use of marketing research methods by Fortune 500 companies, found that many managers, especially top executives, gave research a low rating.

Today when knowledge is critical to success, research can be a knowledge-creation engine and can provide key insights on how to achieve profitable growth. But for that, here is our prescription for putting research on a path to recovery.


Research needs to move from just testing solutions to diagnosing the market. Consider this scenario using the doctor-patient analogy: Patients do not, typically, have a specific solution to their problem. Instead, they might tell the doctor they have an upset stomach, have trouble sleeping, or suffer from aches and pains.

The basis of an effective marketing diagnosis is an ongoing, iterative process, similar to the way a doctor treats a case. After the first diagnosis, the doctor prescribes a treatment. Subsequently, he assesses the effectiveness of the treatment and the process is repeated. All through, the doctor is educating the patient about the symptoms and the possible treatments. This interactive process leads to the development of the best treatment. In contrast, most marketing research projects are viewed as a one-shot event.

Typically, a patient would visit a doctor only when the problem is severe and home remedies or over-the- counter drugs have proved ineffective. Similarly, companies need to lead the market in situations in which there are discontinuous innovations and market uncertainty.  This is particularly important when customer needs are not articulated, preferences not developed, and, products and technology are unfamiliar.

Here, customer responses to products and services may not be very useful. If asked whether they would use interactive television for education or movies, they might say education. But, at home, they might just be as likely to choose a movie over education and a Big Mac over a McLean sandwich.
Since discontinuous innovations require a major change in consumer behavior, the role of appropriate research cannot be overemphasized.

AT&T’s videophone failed to take off.  People did not want to pay extra to be seen in their bathrobes.
In contrast, Domino’s pizza delivery service was a big hit in Japan, where consumers, typically, don’t eat tomato-based food and finding customers in the labyrinthine streets of Tokyo seemed impossible. Domino’s introduced toppings such as fish and sushi and developed a complex address database and small scooters to navigate the narrow streets of Tokyo.


IT offers opportunities to increase the speed of research and also provide an unprecedented amount of data. It can also provide subjects a direct experience of a virtual product, avoiding the costly, time-consuming, and competitively revealing process of using real-life test markets. Tests conducted with products such as automobiles, medical equipment, and new cameras, have provided insights into the market that were borne out by subsequent experience.


Historically, researchers have created artificial divides among types of marketing research approaches (such as qualitative vs. quantitative) and have separated themselves from other information. Significant among them are the company’s database on their customers, customer complaints, customer satisfaction studies, product and service quality studies, financial data, and information on competitive behavior. Research can help integrate these into coherent strategic insights.


The biggest contribution of marketing research can come from helping management ask the right strategic questions.  For example, companies when measuring market share often neglect to ask questions such as: What is the market? Should the company look at the share of the total market or the “share of wallet” of its customers?

The myth of market share

Look at the traditional approach to market share. Consider four competitors, each with 10% market share. To give this figure any meaning, one needs to look at trial and repeat buying patterns. Instead of showing how the market is divided up today, they provide insights into where it is headed.

Brand   No. of first     No. of repeat   Avg of units per  Total Unit Sales  Total  Market   Market Share  Major Strategic Implications

time buyers    Buyers            repeat buyer       of Brand                                   of Brand

——–   —————     —————–    ——————–     ——————-    ————–       —————-   ————————————-

1     100                     –                       –                    100                 1000             10%         Get repeat buyers
2       20                   20                      4                    100                 1000             10%         Increase trial
3       50                   10                      5                    100                 1000             10%         Increase repeat buyers
4       50                   25                      2                    100                 1000             10%         Increase usage by repeaters

Coca-Cola today, looks at the potential of the total global beverages market, including coffee, tea, and water. Instead of looking at ways to compete with Pepsi, it now asks how it can replace British “tea time” with a “Coke time” or substitute a “Coke break” for a “coffee break.”
Marketing research can also be used to inform global strategy, but less than half of researchers at major U.S. corporations have conducted international studies. So, on what basis are they developing strategies for entering global markets?

With a focus on diagnosis, the use of the latest information technology, increased integration, and a more strategic focus, marketing research can rise to its full potential in contributing to building value for a firm.

Vijay Mahajan is Dean, Indian School of Business, Hyderabad.
Jerry Wind is the Lauder Professor and professor of marketing at the Wharton School of the University of Pennsylvania.

This is an edited version of the article that appeared in the Journal of Marketing Research in 1999.

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