Chapter Six
Market Research and Competitive Analysis
Authors’ Comments
We intend to reflect the reality of doing research and forecasting in markets with
relatively few customer companies, well-populated buying centers, and volatile
competitive environments. Business-to-business marketing requires different
Our experience has been that market research in business-to-business markets tends
to be less quantitative and based more on personal interviews than in consumer
market research. To do this well, building a network of reliable sources and asking the
right questions comes in handy. It also requires close attention to performing
research that’s geared to the type of decision under scrutiny. These ideas are
reflected in the first part of the chapter.
Overall, we’ve tried to show a realistic picture of intelligence gathering and learning,
taking into account time pressures, data scarcity, and the overall objective–creation of
customer value.
Opening Vignette
IBM Re-Learns its Customers’ Perspective
When IBM went through a corporate revival and rethinking effort in the early 1990s,
Lou Gerstner went to IBM’s important customers to learn their needs and perspective.
Chapter 6: Market Research and Competitive Analysis 2
His effort illustrates the need to perform market research, even at the highest level of
Learning Objective
Appreciate the rationale for market research in business-to-business
markets.
The chapter opens with a reminder of what it means to be market oriented in a
business-to-business environment. A market or customer orientation implies
that the marketer will collect information about customers and competitors, as
Market Intelligence (PowerPoint 6.2)
Portions of Market Intelligence: Exhibit 6-1 (PowerPoint 6.3)
• Formal market research involves rigorous adherence to research design,
are the ends of the continuum of “
Knowing your Market
.”
Market Research Defined (PowerPoint 6.4)
“Market research is the systematic collection and interpretation of
specific data related to the resolution of a specific problem or to satisfy a
specific objective
.”
Chapter 6: Market Research and Competitive Analysis 3
• Technologies
• Products
Secondary Data (defined) (PowerPoint 6.7)
“The results of a research effort developed for another reason,
information compiled for other purposes, such as existing sales tracking
information, as well as third party research.”
Primary Market Research (defined) (PowerPoint 6.8)
“The collection of data directly from respondents in the population in
Market Research Fundamentals (PowerPoint 6.9)
• Define the Problem and Research Objectives
Exhibit 6-2: Steps in the Market Research Process
Control the quality of data collection.
Apply appropriate analysis techniques.
Control for non-random error.
1. Define the problem and research objectives (PowerPoint 6.10)
What decisions will be supported?
What information is needed to make these decisions?
Chapter 6: Market Research and Competitive Analysis 4
Consider reinforcing with students that applying the research findings to
decisions can be difficult. One common failure, though occurring more often in
consumer markets than in business-to-business markets, is failure to apply the
findings or act on decisions in a timely manner. More appropriately, market
research should be ongoing, simultaneous with the activities that rely on it.
Implications of Types of Decision Support: Exhibit 6-3 (PowerPoint 6.15 through
6.17)
Learning Objective
Understand the differences in market research between consumer
These two learning objectives are closely related so we treat them together,
here. The essential ingredients for successful market research in business–to–
business marketing are identical, in theory, to consumer research. However,
smaller numbers of customers, more complex buying entities, and a competitive
environment (often with a heavy technology component) argue for methods
that
a) Go much deeper into customers’ internal dynamics, and
b) May focus more on individual differences between customers as much or
more than trying to generalize from a sample to the total population.
Methods used tend to be more qualitative, often relying heavily on informal
conversations with the marketer’s network of contacts.
Differences from Market Research in Consumer Markets (PowerPoint 6.18)
Chapter 6: Market Research and Competitive Analysis 5
Learning Objective
Understand how current trends influence how market research is
done in business-to-business marketing.
Market Research for Entrepreneurial Marketing
Entrepreneurial marketing …
• Can occur in either startups or established companies.
Market Research with Online Data Collection and Analytics Software
Market research is taking on new roles and new forms.
• Online researchers such as Greenfield Online and Harris Interactive offer
easier, cheaper, and faster ways to create surveys and collect data through
the Internet and World Wide Web.
o Business-to-business marketers often avoid survey research because the
Use of Analytics Software, also called Business Intelligence Software
Analytic software can help in the evaluation of marketing programs and
campaigns, using both externally and internally generated data. Uses
include:
Text Example: Milwaukee Electric Tool, Inc. adopted a system from
Hyperion Solution Corporation (now part of Oracle Corporation) to
Personal Interviews: Obstacles in Performing Qualitative Market Research
(PowerPoint 6.19)
• Small number of prospective customers within many business markets.
• Size, complexity and informality of the buying center.
Chapter 6: Market Research and Competitive Analysis 6
Exhibit 6-6:
(repeated below for convenience)
Improving Cooperation from Interview Respondents (PowerPoint 6.20)
•
Demonstrate an understanding of the respondent’s organization
•
If necessary, reassure confidentiality of source
Learning Objective
Understand the theoretical context guiding the collection of
competitor data.
Customer analysis should precede competitor analysis (even though students
will try to start with competitor analysis since it is easier to find competitive
The Nature of Competition
Innovation has the effect of changing market dynamics, sometimes radically.
An economic analysis based on equilibrium can be misleading–markets seldom
reach equilibrium, they only tend to move toward it while innovative forces tend
to undermine or change the nature of equilibrium. With this dynamism in mind,
Porter’s 5 Forces model provides a good structure for analyzing competition:
existing direct competition, competition from channels, competition from
Chapter 6: Market Research and Competitive Analysis 7
1. Existing direct competition
Learning Objectives
Know what kinds of data need to be collected on competitors and
likely sources for these data.
Understand the effect of current trends on competitive information
collection.
What to collect, how to collect it and the effects of hypercompetition and
time compression.
Information to Collect on Individual Competitors (PowerPoint 6.23)
• Goals
Sources Of Competitive Information (PowerPoint 6.24)
Should start with customers, but also include
• The Internet
Appendices
The appendices at the end of this chapter provide additional advice for
Key Terms
alpha test
Chapter 6: Market Research and Competitive Analysis 8
assumptions
beta test
capabilities
conclusive research
market intelligence
personal interviews
primary market research
response rates
sample
Answers to Questions for Review and Discussion
1. Why is market research needed in business-to–business marketing? Why can’t
decisions always be made based on the manager’s experience and intuition?
Market research is needed in business–to–business marketing because marketer’s experience is
2. What factors make market research in business–to-business markets different from
research in consumer markets? What are the resulting characteristics of business–
to-business market research?
The factors that make market research different in business–to-business markets compared to
3. Compare the data requirements for go/no-go decisions, targeting decisions and
design decisions.
Data requirements for go/no-go decisions, targeting decisions and design decisions are as follows:
Chapter 6: Market Research and Competitive Analysis 9
Go/no-go decisions
Whether or not market opportunity exists
4. What are the differences between exploratory and conclusive research? When could
exploratory research be used effectively without progressing to the use of
conclusive research?
Difference between exploratory and conclusive research:
Exploratory
5. Why do the authors assert that research for segmenting markets and research for
designing offerings aimed at target markets should be kept distinct, instead of run
in the same research study?
Research for segmenting markets should be distinct from research for designing offerings because
6. In what kinds of markets would you want to use quantitative research similar to
Chapter 6: Market Research and Competitive Analysis 10
that often used in consumer research?
Quantitative statistical research is best used in markets where there are many customers. In
7. Why is it more difficult to do competitive analysis in today’s market than it was a
decade or so ago? Explain in terms of the six forces of competition.
It is more difficult to do competitive analysis in today’s markets because (a.) real and potential
8. From a general viewpoint, what are you trying to determine about competitors
when doing competitive analysis?
9. How would you go about collecting information on each of the following competitor
characteristics: goals, strategies, capabilities and assumptions?
Information collection:
10. Describe how competitive analysis is like doing a jigsaw puzzle or creating a
mosaic. Why is it like this?
Competitive analysis can be likened to a jigsaw puzzle or crossword puzzle to the extent that there
11. Discuss the strategic implications of trade shows as sources of competitive
information. What types of information will be available?
Chapter 6: Market Research and Competitive Analysis 11
Participants in trade shows will tend to display the products and programs they see as important.
Appendices
APPENDIX 6-1: TYPICAL RESEARCH PROBLEMS TO BE OVERCOME BY ATTENTION TO
GOOD RESEARCH METHODOLOGY
Some typical problems in the use of market research that we have seen include the
following:
• Misspecifying the problem. This usually comes from misunderstanding the
general nature of the market or how the strategic management process (see
APPENDIX 6-2: USEFUL SOURCES OF CUSTOMER INFORMATION
In the new online environment, marketers can find several tools that can help
in understanding customers, users, channel members and even competitors. Some of
these resemble off-line tools that do the same thing. Usually, the online form of the
tool tends to work better or faster. Others have no off-line counterparts; they are
simply something that is unique, that can only be done online.
User groups
have been around for years (for a sampling of business-to–
Chapter 6: Market Research and Competitive Analysis 12
While user groups were principally used for customer service interactions, user
group communications can also be used for exploratory market research. Marketers,
or research companies they hire, can treat the user group as a large focus group. The
researcher asks questions and analyzes the answers. The researcher may set up the
sessions in a way that other user group members may or may not be able to read
everyone’s responses, depending on whether the researcher wants discussion answers
or not. User groups may also be used as a panel of respondents for surveys. These
are still exploratory in nature, because the generalizability of the data is unknown.
The growing popularity of
blogs
and other online forums has prompted
companies to pay more attention to what is being said about them on the Internet
and has given rise to a new kind of market research aimed at finding useful
information in the sea of online chatter. Carmaker Volkswagen AG has used a service
by Techdirt, Foster City, California, to find out which new technologies are generating
the most customer response. “The key is the ability to get a pulse quickly,” says Steve
Sommers, senior manager of market research at Sony Corp., which hired Cincinnati-
based Intelliseek Inc. to monitor what people are saying about Sony and its products
Chapter 6: Market Research and Competitive Analysis 13
The company’s own sales force is usually a good source of information. The
marketer or researcher has to be careful in using this source, though. Most sales
forces are heavily incentivized, both positively and negatively. Consequently,
salespeople tend to take actions when it is clearly in their interest–often only their
short-term interest–to do so. Consequently, it is important for the researcher or
marketer to keep information requests to a minimum, both in frequency and level of
effort required. If the marketer has enough of a budget to provide some incentives
such as a sweepstakes or other premium, the level of cooperation should rise. Finally,
SOURCES OF SECONDARY DATA
A significant amount of decision making for business marketers derives from
interpretations of secondary data. In this section we give a brief review of some of the
most prevalent and useful sources of such data.
Trade organizations
often conduct good research of general interest and make the
results available for members. Often the data are also available to the general public,
Chapter 6: Market Research and Competitive Analysis 14
The
federal government
is one of the best sources of data on domestic
industries. The Bureau of the Census, the Department of Commerce, the Department
of Labor, the Small Business Administration and all of the bureaus and agencies with
special commercial jurisdictions create a mountain of information. Two of the most
useful for business marketers are from the Bureau of the Census. These are
County
Business Patterns
and the
Annual Survey of Manufactures
.
County Business Patterns
provides a count of the number of companies, sorted by the size of company as
measured by the number of employees. Reports are generated for each county in the
State and local governments
produce research reports on similar economic and
business issues for their own states. Often, the data reuse federally reported data.
However, they may collect their own data and report it as well. For a regional or
single city-focused business, these local sources may prove to be the most useful
sources. Economic development agencies often are the best sources of this local
information.
International trade organizations,
such as the World Trade Organization, often
have good sources of data on international trade. For someone that is used to looking
APPENDIX 6-3: CHECKLIST OF THINGS TO KNOW ABOUT CUSTOMERS
1) Who is in the buying center?
Chapter 6: Market Research and Competitive Analysis 15
2) Is it the same for most companies in the target segment?
3) How does this buying center operate?
4) Is it the same for most companies in the target segment?
Can it be influenced?
What barriers will be employed to block supplier access to the process?
8) How many organizations are like this (or close)?
9) Is the number of organizations who will buy increasing? How many and how
fast?
10) Will the organizations that buy increase their purchases over time? How
much and how fast?
11) Where in the Technology Adoption Life Cycle are the current customers (or
likely first customers, if this is for a new product)?