Mindscape Communications New Answers for New Times™

Dec 2013

"If We Build it…" Well, not quite...

In my last post (which has been awhile, granted), I took up the subject of marketing research. I briefly outlined its importance to every business and organization. I described the different types of research, and alluded to the benefits of approaching research strategically, i.e., planning. Please refer to that prior blog entry if you care to catch up on my overview.

Today, I want to offer you an example of what can happen if marketing research isn't integrated into the product or service planning process early on. This is a true story with which I have firsthand experience.

This particular company had likely invested hundreds of millions of dollars designing and manufacturing the latest equipment for its market. It had produced hundreds of these expensive units, thinking that the company's likely customers would be clamoring for all the latest bells and whistles it had incorporated into this state-of-the-art equipment. Yet, all these units were sitting on the factory lot not selling. Executives were getting nervous. They had staked much of the company's capital -- and perhaps their own careers -- on this new equipment.

Why weren't these things selling, they wanted to know? The attitude was pretty much that these should be selling themselves…the "If we build it they will come" syndrome. It was a fairly quick assessment on our part: they didn't really have a good picture of who the primary market for this type of equipment was. A general idea, yes. Specifically? No. The general picture of their market had served them pretty well over the years. But that led to complacency, as did a budget that could obscure real issues. As a result, the company bet a bundle on that general picture of its market, coupled it with individual and corporate hubris…and lost.

Prior to designing and manufacturing this equipment, crafting a solid marketing research plan -- with clearly-defined goals -- and conducting a bit of secondary research would have discovered that the primary market for these products was essentially restricted to a very small segment of the overall market that was overwhelmingly located in one geographical area of North America. By knowing the size and location of that market, the company could have saved millions of dollars on manufacturing and carrying costs, lost opportunity costs, marketing expenses, and more. Couple that with some primary research to learn about acceptable price points, delivery options, preferred features and more, and you can imagine how much more successful this company could have been with this product launch.

Yes, they may have had the best piece of equipment out there. But they overbuilt for the actual market potential and ultimately struggled in their product launch. Ouch. Big-time ouch.

Further, there was really little we could offer them at this point other than the information we uncovered. That was information they needed at the start, not at the end. Things could have unfolded so much differently if only they had thought strategically and valued the role that marketing research can play in the product planning and development process, not just in the post-production sales phase.

This is a scenario I've seen repeated over and over during my career: manufacture "X" -- or create a new program or service -- and then figure out who to sell it to and how. It doesn't matter the size of the company or organization, or their line of business; it's a common problem. Doing things backwards, however, is not a very cost-effective approach, whatever one's line of business.

When you're ready to see what strategic marketing research -- and strategic marketing -- can do for you, give us a call. But please, do us both a favor: communicate early in the process…not after the die is already cast.

-- GSM