Observing both the Client and Provision Firm sides of Pricing Market Research it is clearly evident that there are pitfalls which can lead to very questionable outputs. Alternatively, a high quality output can be poorly utilized due to a knowledge gap. In reality, quantitative pricing research can be a very valuable and effective tool.
The failings can come from either: the Client; the Research Provision firms; or both.
Typically whilst marketing personnel may be highly skilled in certain facets of the marketing function, they can have a shallow knowledge of the workings of market research techniques. The following are the main issues with the Client firm:-
- Poor quantitative skills leading to incorrect execution and poor understanding of outputs/limitations from a research study, including:-
- The marketer may not have the skill to understand and trust good quantitative research. This can result to err on a conservative side by introducing a product at a lower (or higher) price than was appropriate.
- They may not be equipped to ask pertinent questions to correctly structure a study or their implications to the output. It may not be enough to ask and feel satisfied with a sample size of 150!
- They may drive the researcher to use a perceived superior technique such as conjoint analysis not understanding its appropriateness for answering the question at hand.
- The marketer may not have the skills to discern between a good and poor service provider.
- The Client firm may not support, employ or train personnel to have adequate skills to mitigate the points above.
The following are the main issues with the Providing firms:-
- With the advent of perceived easy to use statistical software, poorly skilled operators can easily provide quantitative research services with little depth of knowledge and experience with the techniques.
- Low experienced firms make the more experienced and skilled providers less attractive to the Client firms.
- Experienced market researchers who are smaller low cost players in the industry may not have the marketing budget or selling skills of the large high cost players.
What can a Client firm do to maximise its market research budget?
A Client firm by improving its internal skills to discern between quantitative techniques, their uses and limitations; can help significantly improve the utilization of a marketing budget. By improving this knowledge they can correctly utilise a service from a low experience firm and discern when they need to allocate more budget to a higher cost experienced firm. Alternatively, increased skills can help a marketer discern between the capabilities of low cost service providers.