Tools for Predicting the Market
The art and science of accurate forecasting is the holy grail of business, and marketing management in particular. Comprehensive data collection and sophisticated data analysis using tools such as an enterprise marketing information system (both technical and personnel), a data cube, and statistical and financial modeling are just some of the examples of the vast information available in order to project future potential demand and ultimately earnings. Such tools enable not only tracking of data as with the case of Wal-Mart, but also as with the example of Wells Fargo, to offer very targeted, customer specific offerings,
When transaction data are combined with personal information provided by customers, Wells Fargo can come up with targeted offerings to coincide with a customer’s life-changing event. As a result, compared with the industry average of 2.2 products per customer, Wells Fargo sells 4.8 (Kotler & Keller, 2009).
The example of Wells Fargo is far from unique. In a market where social networking for the purpose of reviews, searching for bargains, sharing innovative ideas is becoming more and more common, the implications for today’s firm to act on this specificity of consumer knowledge is an imperative. This is demonstrated negatively with the example of Best Buy where they have a massive database containing more than 7 years data on consumers (Kotler & Keller, 2009), yet are struggling in our present time as they have missed the market by “underestimating competition from players like Wal-Mart and Amazon” (Trefis; Rickman, 2011). A very interesting footnote to this news is the example of consumer behavior where mobile computing is hurting brick and mortar stores like Best Buy, where shoppers have access instantly to competitor’s offerings, rather than being bedazzled by the large store and its displays. Best Buy can attribute this all they want to weak electronics sales, which is a plausible, yet not entirely true reason for their struggles. There is a clear shift still occurring in consumer behavior, and part of this may be the continued drag on the economy due to a slow job market. This is the type of information that must be interpreted for strategic planning – such as the eBook note under “Megatrends” in the text (Kotler & Keller, 2009), which should now be updated since eBook sales have eclipsed hard bound sales at stores like Amazon (Hachman, 2011).
Trends and Where to Find Them
Tools for analysis are plentiful, and limited only by budget constraints. But there are plenty of sources of data readily available at no cost, such as the decennial census results, websites such as Data.gov, and of course the mighty Google with its remarkable repositories of information and datasets located at Google Public Data. I created a peer review data set comparison for every credit union in Idaho using free public information from the NCUA website which included operating results and financial indicators for every financial institution. Another source that I personally find interesting is the American Customer Satisfaction Index (ACSI). ACSI includes many subsets of research, information and a knowledgebase reflecting consumer’s convictions regarding various causes, social issues and organizational approaches toward business. These studies often use focus groups for source data.
Narrowing the Focus
Marketing research has become a systematic activity that not only collects an impressive amount of knowledge, but the output of this data is analyzed and presented in a useful format ultimately meant to drive decisions on the part of leadership. The research process is relatively straightforward, although the output process is complex in its several steps and potentially comprehensive in scope depending on the data being collected. But ultimately, the information is leading toward a decision in response to a challenge that was defined in the problem and research objectives. When I was still in college, my wife worked for a technical firm, then called Philips Airvision. This was 20 years ago before LCDs and the internet. Their tagline was, “seatback and relax,” as the product was a flat screen monitor on the seatback in front of you. What a terrific idea for high-end and long distance travel. But he firm and the ideas were way too in front of the technology, and it eventually sold for a mere $12 Million (LA Times, 1993). It seems there was more demand for comfortable seating than built-in video products. This was a market failure in my opinion based on “ready fire aim” research. But as with any data analysis, judgment is ultimately what might make or break a decision, as with past examples of television shows such as All in the Family, Seinfeld, and Lost, which rank with some of the most successful shows in television history, yet they “would have hit the cutting room floor if marketers had listened to the test results” (Kotler & Keller, 2009). Perhaps the ultimate example of the same scenario is the recollection of the predicted market failure of Star Wars, which demonstrates that data alone cannot predict a market winner, “what this researcher delivered was information, not insight. He failed to study the script itself, to see that it was a fundamentally human story of love, conflict, loss, and redemption that happened to play out against the backdrop of space” (Kotler & Keller, 2009).
(2011). Best Buy Struggles 16% Decline Q4 Net Income Weak Flat Screen TV Notebook Demand. James Rickman’s Instablog. Retrieved April 19, 2011 From http://seekingalpha.com/instablog/321507-james-rickman/153352-best-buy-struggles-16-decline-q4-net-income-weak-flat-screen-tv-notebook-demand
(2011). Best Buy Struggles to Gain Ground. The Street. Retrieved April 19, 2011 From http://www.thestreet.com/story/11027763/1/best-buy-struggles-to-gain-ground.html
(1993). Firm to pay $12 Million for Philips Airvision Assets. Los Angeles Times. Retrieved April 19, 2011 From http://articles.latimes.com/1993-09-28/business/fi-39998_1_philips-electronics-b-v
Johnson, S. (2011). Best Buy Announces Q4 Results. Tech 24. Retrieved April 19, 2011 From http://www.tech24.org/50961best-buy-announces-q4-results.html
Hachman, M. (2011). Amazon’s Sales Grow 36%; Sells More E-Books than Paperbacks.PCMag.com. Retrieved April 19, 2011 From http://www.pcmag.com/article2/0,2817,2376836,00.asp
Kotler, P., & Keller, K. (2009). Marketing Management (13th ed.). Upper Saddle River, NJ: Pearson Education, Inc.