Market Research An Update on Sources and Techniques for Your Strategic Planning Efforts

by Steven A. Rutan

Strategic planning faces one huge challenge: How does your team perform the market and competitive studies that will give them the information they need to make the best decisions?  With an " up" orientation, asking questions and seeking the answers will make for a skilled management team who will know the right critical questions to help facilitate each year's efforts.

So you have finally held your first strategic planning meeting: Congratulations! You have now set the stage for the many potential benefits of disciplined analysis and decision-making. Expectations from your management team are high. Whether you are a first time strategic planner or you are a veteran of many cycles of the process, you realize that you need good information if you are going to make good decisions.

Then comes the biggest challenge: How do we perform the market and competitive studies that are necessary to equip the team with the information they need to make good decisions?

Few of us in management have ever had the task (not to mention the job description) of a market research specialist. In spite of the ever-increasing access we have to information today, it is still a daunting challenge for the uninitiated to find the sources and quickly distill the information required for good planning. In this article, we will identify the easiest and most direct ways to get your research off the ground.

You’ve Got to Pay to Play (Well, Probably)
A recent visit to the Management Library at the University of Rochester put me in touch with Suzanne Bell, a Management Data Librarian. She assured me that when it comes to market and competitive research, the amount of available information is truly staggering, but (like a tried and true formula for an old joke), there’s some good news and some bad news.

 

The good news is that many useful sources of information are available on the Internet. This is good news if you enjoy the prospect of conducting this effort from the comfort of your office chair. For many of us, just the thought of "doing research" is enough to ruin several workdays merely anticipating the sub-optimally productive time we might spend in the unfamiliar aisles of our nearest local business library.



The bad news is that many of the best sources, like the best things in life, are not free. For the most part, the most complete sources of information on the web are available through subscription services. Almost all of the sites will provide basic information teasers for free, but to get the good stuff, one has to either sign up for a year’s worth of usage or pay on a per use basis.

The favorites in this category are among a list of prominent, long-standing information providers: Dow Jones Interactive, Hoover’s Online, Lexis/Nexis, FISonline, Value Line, Investext and S&P’s Industry Surveys. It is no big surprise to discover that most of the information from these services concerns public companies and their markets.

It may be well within your company’s resources to join one or several of these services. Subscription rates typically run a few thousand dollars per service per year. Fees for single use depend on the level of detail that you seek. For example, on Dun & Bradstreet’s CommerceInc Research Center, the price for a single report for a small private company ranged from $25 for a simple "Business Background Report" on up to $105 for a "Comprehensive Report". Industry and product category reports from services like FISonline and S&P Industry Surveys can run from a few hundred dollars on up to several thousand. For some companies, this would not be too much to pay if it provided them with a few critical pieces of information about an important direct competitor or market opportunity. The price tag becomes high, however, if you take this approach for a dozen competitors and a handful of market segment analysis.

If all of this is beyond your budget, do not despair: Contact your nearest university’s business library and inquire about their policies concerning use of their subscriptions to these fee-based databases. If you are lucky, they will allow a limited amount of use of their subscriptions through a community membership arrangement. Armed with a list of your major competitors and market segments, a volunteer from your firm could gather a significant amount of information in a single afternoon for free!

Straight from the Horse’s Mouth
For competitor analysis, the first logical step is to go right to the source: the company’s home page. It is safe to say that, today, most companies have established their own Internet presence. To find them, try the online Yellow Pages or use any number of web Directories (Google and Northern Light are good options). If all else fails, try guessing the address using the format www.companyname.com. Even the most basic website usually contains information about the company’s location, business background and most exciting new product or service offerings.

Beyond this, of course, one may find all sorts of other interesting data (e.g., descriptions of their various office or plant locations with the products and/or services offered there, sales revenue, number of employees, product specifications, pricing, etc.). Of course, one must keep in mind that the information provided there is primarily for marketing purposes. Claims that the company makes on its own behalf concerning product superiority or outstanding customer service should be measured against indicators from other, more objective sources.

Who Wants to be a Millionaire?
Often, the most difficult challenge is to find information concerning your competitors who are small, private companies. They are not large enough to warrant attention in the usual databases and they are almost universally private in the truest sense - unwilling to share any of their company’s details with the market at large. In fact, many of these companies see this "invisibility" as, perhaps, their most significant advantage in their ability to outmaneuver their opponents.

A very useful source to check in these instances is Dow Jones’ Million Dollar Database. The listings here are usually brief: Estimated sales, number of employees, a list of executives, some biographical information, etc.. The informational "diamond in the rough" from this source may turn out to be a detailed SIC code for the company in question. This specific classification of an unfamiliar target can then be used to query industry information from a number of perspectives.

A typical complaint of the amateur researcher (present company included) is that SIC codes cited in common sources are not detailed enough to make possible a penetrating enough analysis of a company or business segment. The degree of detail provided by the SIC code in the Million Dollar Directory can not only provide an entré into studying an evasive target, but also form the stimulus for other questions about the industry.

  1. Who are the other companies in this Industry?
  2. How many of them are there in my geographical region?
  3. Who might be an alliance partner in another part of the country or who could perform sub-contracting work for us?
  4. What other markets might we be able to enter?

A Print Source for Your Perusal
The shortest path between two points is not always a straight line. A case in point is the Standard Directory of Advertisers. At the time this article was written, this resource was not available online - only in print. The primary thrust of this publication is to provide information on a specific company’s expenditures on advertising in a given fiscal year. This particular tidbit may or may not be critical in your research.

The more useful part of the presentation is the fact that it also usually includes significant data about the company in question. A quick scan of a typical entry reveals such facts as company location, website, approximate sales revenue, number of employees, listing of products and services, SIC code(s), company officers and advertising agencies employed. The important distinction here is that many of the entries are for private companies - even those with only a few million dollars in sales. This could be the one resource that aids your quest for background on private, niche-focused players in your sphere of interest.

Of course this information comes with the usual disclaimer: there is no guarantee that all of the details in this publication are correct, but each observation can be weighed along with the rest of your explorations to synthesize a reasonable portrait of your competitors’ characteristics.

Beware of "Net Disease"!
Let’s not forget that, in spite of its convenience, online research does not always fill in all of the blanks. In an article appearing in the September ‘99 issue of Competitive Intelligence Magazine, "Net Disease" is described as "a condition that allows otherwise rational business people to think that Competitive Intelligence begins and ends with the World Wide Web". The author of the article, Chuck Klein, is managing partner of Amcon Marketing Strategy International. He goes on to explain the three powerful reasons why many managers "WANT the Internet to be the one and only information source":

  1. It does not require them to speak - no need for interviews with unknown or unfriendly people
  2. It does not require them to travel - saves limited financial and time resources
  3. It reduces or eliminates the need for consultants - why bother when all one needs is available on the net?

Granted, Klein’s paycheck is dependent on convincing people that they just cannot do an adequate research job without him and his colleagues. To a certain extent this is true. "Interviews with primary information sources such as industry experts, distributors, reps, dealers, suppliers, and the competitors themselves could all provide pieces of the puzzle needed to make strategic decisions".

For one client engagement, Klein’s company found that they could not assemble the requested information from the readily available, internet-based and other published sources. So, in addition to checking the online publications and databases, they performed interviews with the following primary sources:

  1. The former president of a major retail chain
  2. Sales reps in the field of interest
  3. A retail chain buyer
  4. Two trade magazine writers
  5. A stock analyst
  6. A competitor product manager
  7. A competitor’s investment relations department
  8. The former president of one of the key competitors
  9. The business editor of a newspaper in the town where a major player is located
  10. An independent consultant who specializes in the industry they were researching

This is certainly an impressive array of sources and a sample of the creative techniques used by the "pros" of market and competitive intelligence. It is, however, just the sort of activities that lie well within the comfort zone of professional researchers (perhaps many of us could get used to these activities through repetition and familiarity) and absolutely outside the comfort zone of the typical business manager. As a result, it is likely to involve more time and effort than your management team might want to spend on Strategic Planning research.

Klein’s point is valid: "managers who fail to recognize [the Internet’s] limitations will overlook opportunities to find outstanding vital data to aid in making key business decisions". It is, however, also valid that one must balance the value of having one more piece of information (valuable or not) with the resources consumed in the attempt get it.

Fast Times Ahead
We hope that this presentation has been an informative introduction to both the "cheap and cheerful" approach to industry and competitive research as well as the more expensive attacks (in terms of both time and money) on this critical step in the strategic planning process.

One final thing to keep in mind is the fact that the market and competitive intelligence arena is changing very rapidly. During my trip to the library, Ms. Bell recommended a website called DeepCanyon. They had a unique approach to aggregating information from several top databases and search facilities. A site highlight was a somewhat unique feature called Market Sizer which, according to one of the library’s research guides, allowed one to specify the parameters of a market and calculate the number and names of companies in that market. It provided significantly less detail than, say, the Million Dollar Database, but often proved useful for generating a quick list -for free.

It’s gone! When we tried to log onto the site, we were greeted with a message stating that the site founders had failed to secure a critical second round of financing and closed up shop. Perhaps someone else will step in and provide similar functionality in a "for fee" site. By the time you read this, it may already be available. One thing is certain: The amount of information available to us will continue to grow and search techniques will continue to improve.

Key Competitor Questions

  1. Who are the other companies in this Industry?
  2. How many of them are there in my geographical region?
  3. Who might be an alliance partner in another part of the country or who could perform sub-contracting work for us?
  4. What other markets might we be able to enter?

If at First You Don’t Succeed...Try Again Next Year!
It is very unusual that you will be able to satisfy your need for information and fill in all of the blanks in your first cycle of strategic planning. It is essential, however, that you collect enough information to form an impression of your marketplace and your position in it - so you can make some useful decisions, formulate strategy and initiate an implementation plan that will move you forward.

Do not let deficiencies in your market and competitive information discourage you. Remember that good strategic planning has a time horizon extending beyond next year - and it may take a few cycles of the process to fully understand your place in the world.

In second and subsequent iterations of the process, it is almost certain that the team will be better prepared to undertake the research activities. Having lived with the plan for several months, the team will be naturally attuned to the information needs. This "antennas up" orientation will lead the astute management team to ongoing habits of asking questions and seeking answers. You will also become more skilled with each year’s effort at knowing which are the critical questions for your particular products and services, markets and competitive situations.

Therefore, your mastery of the strategic planning process, along with your ability to complete the market and competitive research will improve with time!

 Researching a Company
Bold = online database    Italic = print source

Type of Information Source - Public Companies Source - Private Companies
Corporate Information: financial data Dow Jones Interactive
FISonline
Lexis/Nexis Universe
Moody's Manuals
Value Line
Moody's Manuals (possibly, if company is listed)
Corporate Information: in-depth analysis Annual Report, 10K
FISonline
Investext (analyst reports)
Moody's Manuals
Moody's Manuals (as above)
Use sources under "news"
Investext (analyst reports)
- sometimes mentioned in industry reports
Corporate information: subsidiary information Investext (analyst reports)
Dow Jones Interactive
 
Directory information or quick overview CareerSearch (Simon Intranet)
Million Dollar Database
Value Line
Company's web page
CareerSearch (Simon Intranet)
Million Dollar Database
Company's web page
Standard Directory of Advertisers
Industry information Dow Jones Interactive
S&P's Industry Surveys
Investext (analyst reports)
 
News Dow Jones Interactive
Lexis/Nexis

ABI/Inform Global
Company's web page
Dow Jones Interactive
Lexis/Nexis
ABI/Inform Global
Business & Industry
Company's web page
Product information Standard Directory of Advertisers
Business & Industry
Standard Directory of Advertisers
Business & Industry
SEC documents 10-K 10-Q, Proxy, Annual Report FISonline
Lexis/Nexis
Dow Jones Interactive (most recent only)
Not applicable

Copyright, Center for Simplified Strategic Planning, Inc., Southport, CT, 2001. 
The Center for Simplified Strategic Planning, Inc. is a consulting firm with a strict focus on Strategic Planning Services for the small to mid-size company. Reprinted with permission. http://www.cssp.com.

 
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