Why Do Research?

Benefits of Doing Research

Research can help you uncover the factors that drive product choices and customer satisfaction. While these may seem obvious, they often are not. For example, one recent study showed that even trivial attributes influence consumer choices.

Research can also help you understand differences in attitudes and purchase patterns of different groups of people, so that you can allocate your marketing budget efficiently and craft your messages effectively. Even if you have a good understanding of your market, research can help you fine-tune your approach: small changes can lead to big increases in profitability.

Is It Worth It?

The answer depends on how much you stand to gain by getting additional information or lose as a result of not having some critical piece of data and on the costs associated with doing the research. Even a tiny gain in market share can justify the cost of research for a large organization. The gains required to recover costs increase for smaller organizations, but since such organizations start with less information, research can often pay for itself very quickly.

Costs of Not Doing Research

Many managers make decisions based on intuition rather than formal analysis. A large body of evidence that suggests that when they do, they tend to over-estimate the extent to which others share their beliefs, over-estimate the uniqueness of their own abilities, and be over-confident in their projections.1 These tendencies often lead to bad and frequently costly decisions. It’s also harder to defend a decision (to a boss, a board or shareholders) made based purely on “gut instinct”, than one backed up by solid evidence.

Experts and people who own their own businesses are not immune from these decision biases.2 In fact people who own their own businesses are even more prone to them!

1 Cross, Robert and Susan Brodt (2001), “How Assumptions of Consensus Undermine Decision Making”, Sloan Management Review, Winter, 86-94.

2 Busenitz, Lowell (1999), “Entrepreneurial Risk and Strategic Decision Making”, Journal of Applied Behavioral Science, September, 325-340.

Can You Do It Yourself?

It depends on a number of factors including:

  • The time you have available
  • Your training and experience
  • The likelihood that respondents will respond to you differently than they will to someone else.
  • The likelihood that you will interpret the results differently than an impartial party would.

Collecting data from existing sources (the Web, magazines, directories, etc.) is typically easier to do yourself than survey research is. However, bear in mind that by obtaining assistance, you may be able to identify more data sources and get additional value from the data you do locate.