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The problem with market research

By September 1, 2008 September 3rd, 2008 11 Comments

I am part way through reading Herd – How to change mass behaviour by harnessing our true nature by Mark Earls (hats off to JP for the tip) and wanted to pick this piece which shows the limitations of traditional market research.

The central premise of Herd is that our behaviour is much more affected by what other people are doing than we in the west like to think. Moreover the influence of other people on our thoughts and actions often operates at the level of the subconcious. Hence asking people in surveys to predict what they will do or buy in the future makes the mistake of assuming the individual is well equipped to make that analysis – as an individual.

I have long felt uncomfortable with some of the results that market research produces and this goes some way to explaining why. Fortunately, I am not alone. Earls quotes Simon Clift, CMO and Group Vice President of Unilver’s Personal Care Division:

I just don’t believe in predictive research. And we don’t use it.

Earls actually goes further than this to argue that an individual’s analysis of his past actions is also likely to suffer from a bias towards assuming that he decided to make those actions on his own.

I guess that market research has it’s place, at least in the absence of better ideas and for large existing markets, but in startup land I would be very careful. The companies that we back are more often than not operating at the beginning of new markets and the only interesting analysis is to predict demand – and as per the quote from Clift above I’m not sure how often survey or focus group data tells you anything useful.

Instead I would focus on the reasons why people should want your product or service and how you can cost effectively reach them with your messages. If you can answer both those questions you will be off to a great start.