Can market intelligence be taken too far? The answer is yes. In 2001, Procter & Gamble admitted it had engaged in “dumpster diving” by sifting through a competitors’ garbage to find out about its hair care products. Although the practice isn’t necessarily illegal, it cast P&G in a negative light. Likewise, British Airways received a lot of negative press in the 1990s after it came to light that the company had hacked into Virgin Atlantic Airways’ computer system. 1
Gathering corporate information illegally or unethically is referred to as industrial espionage. Industrial espionage is not uncommon. Sometimes companies hire professional spies to gather information about their competitors and their trade secrets or even bug their phones. Former and current employees can also reveal a company’s trade secret either deliberately or unwittingly. Microsoft recently sued a former employee it believed had divulged trade secrets to its competitors. 2It’s been reported that for years professional spies bugged Air France’s first-class seats to listen in on executives’ conversations. 3
To develop standards of conduct and create respect for marketing professionals who gather market intelligence, the Society of Competitive Intelligence Professionals has developed a code of ethics. It is as follows:
- To continually strive to increase the recognition and respect of the profession.
- To comply with all applicable laws, domestic and international.
- To accurately disclose all relevant information, including one’s identity and organization, prior to all interviews.
- To avoid conflicts of interest in fulfilling one’s duties.
- To provide honest and realistic recommendations and conclusions in the execution of one’s duties.
- To promote this code of ethics within one’s company, with third-party contractors and within the entire profession.
To faithfully adhere to and abide by one’s company policies, objectives and guidelines. 4
Marketing research is what a company has to resort to if it can’t answer a question by using any of the types of information we have discussed so far—market intelligence, internal company data, or analytics software. As we have explained, marketing research is generally used to answer specific questions. The name you should give your new product is an example. Unless your company has previously done some specific research on product names—what consumers think of them, good or bad—you’re probably not going to find the answer to that question in your internal company data. Also, unlike internal data, which is generated on a regular basis, marketing research is not ongoing. Marketing research is done on an as-needed or project basis. If an organization decides that it needs to conduct marketing research, it can either conduct marketing research itself or hire a marketing research firm to do it.
So when exactly is marketing research needed? Keep in mind marketing research can be expensive. You therefore have to weigh the costs of the research against the benefits. What questions will the research answer, and will knowing the answer result in the firm earning or saving more money than the research costs?
Marketing research can also take time. If a quick decision is needed for a pressing problem, it might not be possible to do the research. Lastly, sometimes the answer is obvious, so there is no point in conducting the research. If one of your competitors comes up with a new offering and consumers are clamoring to get it, you certainly don’t need to undertake a research study to see if such a product would survive in the marketplace.
Alex J. Caffarini, the president and founder of the marketing research firm Analysights, believes there are a number of other reasons companies mistakenly do marketing research. Caffarini’s explanations (shown in parentheses) about why a company’s executives sometimes make bad decisions are somewhat humorous. Read through them:
- “We’ve always done this research.” (The research has taken on a life of its own; this particular project has continued for years and nobody questioned whether it was still relevant.)
- “Everyone’s doing this research.” (Their competitors are doing it, and they’re afraid they’ll lose competitive advantage if they don’t; yet no one asks what value the research is creating.)
- “The findings are nice to know.” (Great—spend a lot of money to create a wealth of useless information. If the information is nice to know, but you can’t do anything with it, you’re wasting money.)
- “If our strategy fails, having done the research will show that we made our best educated guess.” (They’re covering their butts. If things go wrong, they can blame the findings, or the researcher.)
- “We need to study the problem thoroughly before we decide on a course of action.” (They’re afraid of making a tough decision. Conducting marketing research is a good way to delay the inevitable. In the meantime, the problem gets bigger, or the window of opportunity closes.)
“The research will show that our latest ad campaign was effective.” (They’re using marketing research to justify past decisions. Rarely should marketing research be done after the fact.) 5