Last month I gave a talk to the UK Market Research Society on how shopping is becoming an increasingly complex process where the customer is faced with an array of options to choose, experience and buy products. Conventions of purchasing behaviours are becoming less clear, consumers are starting to buy like businesses and businesses are behaving more like consumers in their purchasing. Price comparison sites, easier access to ‘trade’ deals, independent advice forums and increased remote working have led to businesses and consumers both feeling freer to do their own research and negotiate deals.
Futurologists are predicting over the next five years this blurring between business buying and consumer buying will become ever more acute. And as I wrote earlier in the year, the concept of ‘Bring Your Own Device’, where personal gadgets like your own smartphone or tablet start replacing your work PC, blurs these distinctions even further.
All of this has wide-reaching implications for businesses – products and services that you had assumed were only aimed at business audiences start to become considered and bought by consumers. The Blackberry is a classic example – a business productivity tool that somehow became the must-have phone among UK teenagers a few years ago, whilst losing the love of the business community. It’s not necessarily negative: Skype started out as a consumer instant messaging service but is now widely used by the business community as a low cost, fit for purpose voice & video conferencing service. Skype might argue there’s some merit to the ‘suck it and see’ approach, but I doubt many Blackberry executives still take a complacent approach to future core market sectors.
Knowing your customers, knowing how many there are and knowing how much they will be prepared to spend is critical to the launch of any product. Starting out, you need to know what demand to expect and where that demand is going to come from. So it’s no surprise that a good chunk of the research we do is designed around calculating this market potential for new products or services or for companies launching existing products into new markets. It’s not rocket science, it’s all on page 1 of the marketing handbook, but you’d be surprised how frequently these fundamentals are put to one side.
Page 2 of the marketing handbook says markets don’t stand still. Given how critical market sizing is I’m always surprised how few companies take the trouble to revise their estimates on any regular basis. Markets evolve with astounding pace in unexpected directions as technology changes people’s behaviour, expectations and range of choice. Assumptions made three years ago almost certainly don’t hold true today, yet few companies consider refreshing their underlying market assumptions without some immediate pressing crisis, by which time it’s too late.
The temptation to cut corners and make do with old data is a false economy. It’s about dimensioning your business, any mistakes based on false assumptions will be costly in the extreme.
How many companies are missing out on selling into new emerging market segments who might potentially love what they’re offering, but don’t know about it yet? How many companies have warehouses chock full of yesterday’s latest gadgets destined never to be sold to a target segment that has long since moved on? How many companies? Well, that’s something only market sizing research can answer…