Market research and analytics have traditionally been seen by many people as independent disciplines with different methodologies and even with different scopes to solve business problems of different organizations. In fact, many companies believe they are exclusive to each other when it comes to solving activities related to the marketing and/or sales strategy, such as segmenting customers, segmenting the portfolio of products/services, developing the pricing strategy and creating customer-centric service culture, among many other examples. In this sense, there is ample evidence of pure analytical or market research approaches based on different sources of information, and above all, with possibilities of acting on diametrically opposed instances.
The truth is that market research and analytics, far from being mutually exclusive, can form a very powerful combination that offers many possibilities to create knowledge about customers/consumers, marketing channels and competitive environment. The adequate integration of the two can offer joint answers not only for the “what” but also for the “how” that marketing strategies design usually requires. In a post-pandemic world, where customers/consumers use various channels both to consume information generated by organizations and to make purchase decisions, having a comprehensive perspective of the face-to-face and digital behavior of people and organizations makes all the difference. The interpretation of the reality of clients and markets, as well as the actions to be implemented, can be substantially different to the extent that information from different sources is integrated. For example, having sales information to measure the impact of a brand’s positioning in its target market can lead to different conclusions as to how to invest in mass or segmented communication alternatives vs. only having positioning information and having to make assumptions about the impact of advertising levers on sales.
Below are some examples to illustrate the benefits of combining analytics and market research. These examples are related to marketing, sales, and customer service, and can serve as a basis for other types of business applications.
a) Market sizing
Many companies in different industries have the specific need of estimating the size of the potential market for one or several products in order to support the decision to launch new products. Building this kind of estimates is usually a challenging process that requires not only a good information basis but also a “feel” of the market and the product categories involved. Quite often, collecting first-hand information via market research is a difficult and expensive process, which means that the ideal volume of information is not always available.
By taking these limitations into account, it is then possible to build a good market estimate that uses different combination of data sources/analysis as follows:
- Market research from primary sources: it provides information on shopping/consumption incidence of product categories in one of several marketing channels as well as purchase intention estimates from surveys.
- Secondary sources research: it allows to collect information on the size of the potential market for the category or for a larger macro-category of products, and take it as a basis for a general estimation of volume and/or sales transactions.
- Analytics: it reconciles information from primary and secondary sources based on both extrapolations from sampled information and assumptions that can be statistically validated from secondary information to perform calculations of the potential market at different levels of granularity (total, geographical area, product category, individual products, etc.).
b) Customer footprint
Identifying customer segments, characterizing them and choosing the most convenient for a company are fundamental decisions for the success of the marketing strategy and the financial results of a business. Performing these tasks involves considering customer behavior from different viewpoints:
- Analytics: based on transactional sales information, it is possible to identify customer segments based on both their in-person and online purchasing behaviors
- Primary sources research: once the customer segments are identified, the market research provides a framework to delve into their socio-demographic characteristics, habits and perceptions on the company and its products, based on qualitative and/or quantitative research.
- Secondary sources research: it complements both the characterization of customer segments and the recommendations to design/adjust the marketing and sales strategy, based on references from other companies/industries.
c) Brand positioning
Measuring the level of adoption and customer loyalty towards a company’s brand portfolio is a rather traditional market research problem as it serves as the starting point to assess the effectiveness of marketing actions. However, positioning information by itself does not necessarily generate insights into the impact of other performance variables such as sales, for instance. In this case, the combination of market research and analytics can offer great advantages to explain the correlation of positioning variables as well as other commercial levers and financial information.
- Primary sources market research: it establishes a first-hand understanding of the brand adoption funnel and deepens into the attributes that characterize the selection and loyalty to brands and products within them.
- Secondary sources research: it allows obtaining competitive positioning references as well as information on commercial levers such as product channel distribution metrics, prices and advertising investment.
- Analytics: it provides alternatives to model correlations between positioning variables, commercial levers and financial information such as sales or profitability indicators.
d) Pricing Strategy
The pricing strategy is one of the most important levers to guarantee the profitability and therefore the sustainability of a company. There are different approaches to define the pricing strategy from different dimensions – financial performance, competitive landscape, and customers’ preferences. In this sense, the combination of market research and analytics can build robust pricing strategies based on both quantitative and qualitative insights in order to give greater business sense to what mathematical pricing models can suggest.
- Primary sources market research: it generates customer preferences indicators out of a product portfolio in one or several categories from statistically designed simulated purchase scenarios.
- Secondary sources research: it allows complementing the research of primary sources with historical information on commercial levers such as sales prices, distribution in marketing channels, promotional activation and seasonality, among other factors.
- Analytics: it provides the statistical framework to measure sales sensitivity of volumes/transactions/market share to price changes in one or more products. These models are certainly complemented by primary and secondary sources to predict and also recommend specific actions at the strategic and also or day-to-day planning levels.
All of the former examples illustrate opportunities for synergy between primary and secondary sources of market research and analytical techniques to characterize relevant information of the marketing mix and be able to generate actionable recommendations from its variables. These synergies will be increasingly powerful to the extent of greater data processing and visualization and correlation capabilities, which will definitely be supported by information processing and mathematical modeling technologies.