Market Research Doesn't Work

Too often I hear marketers complaining about their market research. They tell me they've invested thousands of dollars in studies that just don't paint a clear picture of what they should do.

Here's why this happens: Data is meaningless. Analysis is meaningful. Market research is about data collection, not analysis. With apologies to my market research friends, I am not talking about statistical analysis.

Statisticians will look for patterns in the data using different statistical analysis like conjoint or regression. All good stuff. But to really understand what's happening so you can make good decisions, you need to conduct behavioral analysis. This is how our government intelligence agencies do it.

How Behavior Analysis Works

In behavior analysis, meaningful data are the behaviors or activities of individuals and organizations that either promote or discourage future behavior. For example, a "discourager" could be a new law that says lenders cannot loan money to unqualified applicants. This law would "discourage" the behavior of loaning to unqualified applicants.

In contrast, there could be a "promoter" law which says everyone, regardless of credit history or financial capabilities, is entitled to a loan and the government will guarantee it. This would "promote" the lending of money to unqualified applicants.

So you have two types of meaningful data: promoters and discouragers.

We know from our example above that laws are important data points for behavioral analysis. But those are pretty obvious. The other key data points are not so obvious and require skill and experience to identify and judge. But you can do it.

Here are the six key data points you need to analyze:

Financial - This data defines the availability of cash and credit. Without cash or credit, commerce cannot happen. It is the fuel for the economic engine.

Demand - How well is the buyer satisfied with current solutions? Is the buyer seeking better, faster, cheaper or a combination? How strong is their demand of new solutions?

Availability - How available are raw materials, labor, finished product, services, and suppliers (aka competitors)?

Social Acceptance - Is a behavior encouraged, accepted, unaccepted, or actively discouraged? The Green movement is a good example. Right now, Green, is encouraged. And equally, waste or anti-Green is unaccepted and discouraged. In contrast, smoking is actively discouraged and unacceptable.

Personal - Whether you agree or disagree, intelligence experts and law enforcement have known for centuries that people tend to consistently act to serve their personal self-interests. Examine the behavior of individuals and organizations (organizations behave like people because they're run by people). How are they acting to satisfy personal fear, pride, greed, lust, power, or envy?

Regulatory - This is from our example above. These are laws, taxes, and the level of enforcement (strong or weak) present. There may have been laws in place to discourage Enron's management from doing what they did, but the enforcement was weak and the power of their personal greed exceeded the impact of the regulatory discouragers.

The Behavioral Truths

Why should you pay attention to behavior? Why should you invest in learning and implementing the processes I've outlined above? Because it is remarkably accurate and reliable. And it's only substitute are trends. If stock is going up, we buy. If a market is growing, we want in. If something works, we keep doing it. We're always betting that current activity will continue--at least long enough for us to get something out of it.

With behavior analysis, you can go beyond trends. You can reliably predict the end of a trend (long before it appears) and the beginnings of a new trend before its on the radar screen.

Why?

Because of the fundamental behavioral truths.

1. It is costly and risky to oppose or control behavior

2. There is little cost and low risk when taking advantage of behavior

Add behavior to the fundamental forces of the universe. It is that powerful. When the six key data points we've discussed above line up to promote a specific behavior--that behavior will occur. It is the irresistible force.

Now there have been many examples of individuals and organizations that have opposed or sought to control behavior with some success. Can you say Microsoft? But they do this at great cost and they can only do it for a limited time before they lose their control and behavior wins.

By the way, once a Microsoft loses control (Can you say Vista?), they usually try to quickly make nice and deliver those things buyers always wanted but could never get. Buyers tend to resent this and migrate to competitive alternatives.

Market Research Works Well - With Behavioral Analysis

Market Research works very well and is critically important. But it is simply data collection. Use the behavioral analysis techniques above to examine the data and you will find real value.