The difference between market research & market intelligence

So, what’s the difference between market research and intelligence? We get asked this question a lot.

Most business people are familiar with market research that is based upon focus groups, questionnaires, interviews, and surveys. This type of research usually describes past customer behavioural and future intentions. Market research is helpful on a tactical level to determine basic metrics such as competitors’ pricing and market share, and to identify key features.

The collection and analysis of such data is an activity conducted at one point in time. On-going monitoring efforts are provided by holding a series of activities (such as surveys) over time. Larger companies may budget for an annual market research survey, while SMEs often find that they are missing information and make an ad-hoc decision to conduct a survey.

How is market research conducted?

The survey etc. work is usually out-sourced to a market research firm that specialises in the field. This is called “primary research” since it is new research, carried out to answer specific questions.

The cost of primary research is usually a function of two factors: the number of questions asked, and the size of the survey sample. Add questions and the cost increases. Increase the sample size for better accuracy or multivariate analysis, and the cost increases.

For example, asking “how many women buy our products” is a question with two variables. Asking “how many women who live in the GTA and have incomes above $100,000 buy our products” is a question with four variables. The survey sample has to be large enough to be statistically valid for each such combination of variables, or the results can be unreliable.

Market research firms can provide considerable expertise in developing survey instruments, conducting focus groups and surveys, and performing statistical analysis upon the results. However, in general, market research firms cannot be relied upon to produce strategic insights beyond the survey questions. This is because both the market research and the firm have inherent limitations.

First, results are limited to an analysis of a limited number of survey questions answered by a random sample of people. Don’t ask the right questions, and you won’t get the answers you need. Second, obtaining a truly random sample is logistically difficult, so the sample may be skewed in some manner. Remember that market research firms have to find people (who usually require compensation) willing to participate in your focus group or survey. Ask the wrong people and you get incorrect answers.

The final issue is that most people at market research firms are either in customer service functions or statisticians, and so are challenged to add value that requires expertise in your specific industry. To be fair, some market research firms specialise in a specific market and are quite knowledgeable, but such firms typically only serve mature industries that are large enough to support a specialised firm.

In recent years, a major trend in the field of market research is that it is being increasingly conducted on-line, both through on-line versions of the above techniques and by monitoring how customers and prospective customers search for products and navigate web sites. These developments can offer cost and time savings, but creating a random sample is still a challenge. Web-site monitoring activities are often called “web analytics” since navigation and conversion data is automatically collected and reported by the web site itself.

How is market intelligence different?

Market intelligence creates a broad, more strategic perspective of your overall industry and its stakeholders by considering customers, competitors, suppliers, and investors. It can help formaulate or improve your business and product strategies, and even be used to predict a competitor’s behaviour.

Market intelligence is concerned with creating a comprehensive view of all aspects of your market. Just as financial analysts try to consider all relevant information when valuing a stock, market intelligence analysts try to consider all relevant information when analysing your market.

How can you use market intelligence?

In practice, factors usually considered in a market intelligence analysis include:

• Corporate strategy and capabilities
• Mergers and acquisitions, and alliances with third parties
• Executive teams
• Cost structure
• Market size, segments and growth forecasts
• Market trends
• Pricing strategy
• Product advantages and differentiators
• Promotions and advertising
• Distribution networks

Market intelligence has the potential to answer higher-level strategic questions because it is based on multiple sources of data to provide context and create a more balanced, accurate view of the market.

It is also not confined to a limited set of survey questions. Once the analysis has been conducted, an informed analyst can provide answers to, or at least informed opinions about, future questions as well. Specific questions that might be answered include:

• How does our company’s performance compare to industry benchmarks?
• What are the strengths and weaknesses of our competitors?
• Where do customers buy?
• What is the replacement cycle for our products?
• What different pricing strategies are used by our competitors, and what is industry-average pricing?
• Does anyone else already offer this new product we are developing?
• What are the primary drivers of value in our market?

How is market intelligence conducted?

Large enterprises may have an on-going market intelligence program that collects, analyzes, and reports intelligence to executives and other decision-makers on a regular basis. This can be done by a dedicated department or outsourced. Results are communicated via internal newsletters, intranets, wikis, and/or presentations at quarterly business reviews and strategy workshops.

SMEs more commonly outsource the development of a custom market intelligence report highly focused on their business. They either have the report updated every year or two, or else contract a strategic marketing firm to monitor their industry and provide on-going information in the fashion described above. This decision is partly determined by the intensity of competition and maturity of their market.

Where can you find high-quality market intelligence?

Intelligence gathering involves the use of secondary research, meaning existing information previously researched for other purposes. Examples of secondary research are census data, annual reports, investor calls, product brochures, competitor’s advertising and sales promotions, executive interviews in the business news media, etc.

Sifting through data and secondary sources requires a significant investment of time. While much of the basic information can be obtained by an experienced analyst through public sources, it is more complex than simply spending an hour or two on Google. Information needs to collected, its quality assessed, organized in some fashion so it can be found and re-used in the future, analysed, and then used to formulate answers that satisfy a company’s information needs.

Often a data point creates a new question and need for further information. The best analysis is based upon multiple data points. This increases reliability of the analysis and reduces risk. Sometimes multiple data points must be “triangulated” to obtain an estimate of the desired information.

Not all necessary information may be publicly available or easily accessible. There is almost always a trade-off between time and cost, and this is where the skill level of the analyst can play a role in efficiency. To get in-depth research quickly and benefit from an objective third-party view, many analysts use off-the-shelf market reports that allow them to access key benchmarks and data points. With this information, they can more easily assess how your company is faring.

Market Metrics – Your Market Intelligence Specialist

Conducting a rigorous process of data-gathering, analysis, and reaching objective conclusions for these types of strategic questions is often simply not feasible for entrepreneurs and executives, who are already busy with a long list of urgent, day-to-day responsibilities.

For this reason, Market Metrics is often contracted to develop customised market intelligence, either on a one-time or on-going basis. We have successfully executed dozens of such projects to the complete satisfaction of our clients. We specialise in technology marketing where business, customer, and technological issues intersect, but our approach is well-proven and can be applied to most industries, with the most notable exception being retail.

The knowledge created by our projects is typically packaged as a comprehensive report with substantiated analysis based on a variety of reputable sources. A report may range from 25 pages, for a situational analysis, up to 200 pages for a comprehensive industry analysis, depending upon the level of detail and the information sought. At Market Metrics, we deliver reports in both hard and soft copies, and a supplemental “evidence binder” of all material used to prepare the report. The evidence binder (also provided in soft copy) is often over 500 pages in length, and clients find it to be a valuable reference resource.

Upon request, we can also create customised electronic solutions such as web sites and Evernote notebooks, handy for mobile reference by sales and marketing staff.

About Market Metrics

Market Metrics Inc. helps knowledge-based businesses with strategy, planning and innovation. We offer our clients a unique combination of top-shelf professional skills, competitive pricing, and real-world industry experience in business planning, marketing, and technology.

The consultancy was founded in 2003 by Greg Graham, a seasoned strategic marketing professional. Greg is a Certified Management Consultant (CMC), a Fellow of the Ontario Institute of Management Consultants (FCMC), and an Accredited Small Business Consultant (ASMEC) in the United States. He holds MBA/BEE degrees plus a Certificate in Strategic Management.

Prior to founding Market Metrics, Greg's 21 years of corporate experience encompassed tech start-ups through Fortune 500 companies. He is an expert in subscription-based business models (including SaaS). Greg frequently performs consulting engagements on behalf of the National Research Council's Industrial Research Assistance Program (NRC-IRAP).