In our experience, most companies do not have a well-planned and budgeted research program at the beginning of each year. The result of this lack of planning is typically less than adequate research and wasted research dollars. The question then is, how do you plan and budget for research? The following gives a step-by-step process for planning your research.
The Planning Process for Marketing Research
- Review your marketing plan for the upcoming year and list all the critical decisions to be made.
- Based on this list of decisions, determine the information necessary to make those decisions.
- Based on the informational needs of each decision, determine which decisions require research.
- As a check, circulate among product managers a list of decisions they feel may need research.
- Prioritize the research studies based on how important the decisions to be made are.
- Develop budgets for research based on a hierarchy of research priorities.
- Develop timelines for the research based on marketing decision deadlines, and detail exactly how the research information will be used in the marketing decision.
- Develop a short list of 3 – 4 research firms from which you will request RFP’s for research in the upcoming year.
Categorizing and Prioritizing Research Studies
Critical: Studies deemed absolutely essential in helping carry out marketing strategies or tactics, and which merit specific funding.
High: Studies deemed as important, but not so critical that they merit immediate funding. These studies are viewed as high on the want list, and for which you will be lobbying or looking for funds throughout the year.
Medium: Studies deemed as “nice to have,” but ones for which such information could possibly be obtained through alternative, lower-cost methods. If funds become available, however, these studies are important enough for you to do them.
Low: Studies to be done only if a windfall of funds become available after funds for higher priority studies have been allocated.
Following is an example of how a research manager might categorize and prioritize all the potential research studies for the upcoming year. These have also been broken by their place in the overall decision framework; that is, whether they are more strategic or tactical in nature.
Strategic in Nature
Customer satisfaction monitor – Critical
New product concept test – Critical
Positioning analysis – High
Attitude and awareness study – High
Segmentation study – Medium
Needs/demand assessment – Low
Tactical in Nature
Advertising concept testing – Critical
Price testing – Medium
Design/Logo testing – Low
In addition to these “pre-planned” research studies, most companies should also have budget set aside to conduct “opportunistic research.” This research is that which is deemed critical, but only arises with unexpected changes in the marketplace, or from the findings of other research you have conducted. Because markets and competitors can often change unexpectedly, or results come out of your other research that reveals a large opportunity, you can’t always know all of the research you’ll need throughout the year. Thus, you need to allow yourself the flexibility to take advantage of changes and opportunities by budgeting a specific amount for such opportunistic research. How much to allocate to this type of research varies by industry, but a rule of thumb is 25-30% of your total budget, and no less than 10%.