Does that mean that organizations that conduct market research will perform better than organisations that does not?

Does that mean that organizations that conduct market research will perform better than organisations that does not?

Over recent years, academics and practitioners alike have been taking a growing interest in the evaluation of market research activities. Discussions of the relationship between market research and business performance emphasise a logical link between useful information and good decisions (Ganeshasundaram and Henley 2007). While many marketers agree with this logic, and think that market research and business performance are positively related, the sole empirical study conducted so far did not confirm this. A possible reason for the lack of confirmation is different ways to conduct a marketing research will have different impact on company performance (Graham J and Christopher J 1984).

If researcher enables to acquire appropriate information or use it effectively, it will benefit company by increasing productivity, innovation, and improving competitiveness (Köksal 2008). For example, the CEO of a major European firm has found that a 10 percent improvement in the quality of information could improve the quality of the business decision by at least 10 percent and improve corporate performance. Hence, this shows that there is a positive relationship between the use of marketing research and business performance (Köksal 2008). Another example, in 2005, Toyota’s marketing research about Generation Y drivers found that they practically live in their cars, and many even keep a change of clothes handy in their vehicles. Thus, Toyota used the information and developed a “Scion” project to target Generation Y. It created a new product called “Scion tC” as a “home on wheels,” with a 15-volt outlet for plugging in a computer, reclining front seats for napping, and a powerful audio system, all for $12,500 price tag (Totally Scion Autos n.d.) .Overall, the Scion project had helped Toyota increase 12.2% of its market share and 7.1% [2] in consolidated revenues (Positioned for the Future with a Focus on Growth and Efficiency n.d.).

In contrast, if company uses marketing research inefficiently, it will directly reduce business performance. The New Coke debacle is a classic example of misinterpreted and misapplied market research (Anne B 1985). In 1986s, Pepsi was starting to increase its market share and Coca-cola begun increasingly concerned by the success of Pepsi challenge. Subsequently, Coca-cola conducted a taste test among consumers as to which one they would prefer, Coke or Pepsi. This taste tests revealed that consumers preferred Pepsi because its taste was sweater. Coca-Cola then introduced a new and sweater formulation of Coke called New Coke. However, New Coke failed and in less than six months of it launched (MacDonald and Staff 1986). One of the reasons for New Coke failure is the marketing research conducted to test the new formulation is inadequate. Coca-cola conducted research for new coke focused on the taste of the product but failed to consider the attitudes of consumers toward a change in the product (Anne B 1985). Moreover, Coca-cola misinterpret on Pepsi’s growing success. There are other potential reasons for Pepsi’s success rather than just taste. For example, Pepsi had worked to established a youth-oriented brand indentify since the 1960s and was starting to reap the rewards of people growing up loyal to the brand. Eventually, New Coke creates low sales performance and increasing negative publicity toward Coca-Cola. (MacDonald and Staff 1986).

Summary, marketing research is a very invaluable weapon in modern marketing era. However, this does not mean that organisations that conduct market research will perform better than organisations that does not. There are pros and cons of marketing research. Marketing research can be an advantage tool to company if managers have conducted the research correctly and interpret the research data in an appropriate way. Conversely, if managers misinterpret research data or using misleading data, marketing research may become a threat to company performance (Hart and Diamantopoulos 1993). Overall, managers have to read and analyse the research data repeatedly to reduce the risk of using wrong information and make sure they have interpreted the data correctly.                                                       

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