Market Intelligence: Data-Driven Profit Growth

It should come as no surprise that data enables us to minimize risk and make more effective business decisions. Where does that data come from, though, and how is it interpreted? Market intelligence, the process of collecting, analyzing, and leveraging data on markets, competitors, and customers to maximize profit opportunities and reduce threats, is a major factor empowering companies to respond to changing conditions and succeed in today’s fluctuating market environment.

There are several different methodologies within market intelligence—qualitative interviews, quantitative surveys, secondary research—and all of them reveal unique actionable insights. This data can be used to answer critical business questions like willingness to pay, key purchasing criteria, and price perceptions relative to competitors.

We sat down with Andy Banyas, Director of Market Intelligence, to discuss the ways collecting market intelligence can enable strategic decision-making. Over his career, Andy has led more than 200 market intelligence consulting engagements, supporting some of the largest companies globally in gaining value-added insights to guide their business. He has experience across a wide range of industries, including various industrial markets, business services, and consumer products.

How Can Market Intelligence Drive Profit Growth?

Andy: Obtaining a clear understanding of how customers perceive a specific business and its offerings allows for formulation of a go-to-market strategy that leverages client strengths and exploits market opportunities and competitor vulnerabilities. Understanding the key elements customers consider when choosing a supplier provides the insight necessary to build a compelling market positioning and messaging strategy that leverages these key drivers, and the ability to price based on value to the customer to extract the full return from each sale.

Knowing how customers evaluate their purchases, what is most important to them, and how they perceive competitor offerings helps build the foundation for making sound and confident decisions on product, pricing, marketing, and channel strategies, all built on the knowledge of what is most important and compelling to customers, allowing the client to move forward with confidence.

What Are Some Examples of Key Questions Businesses Have About Customer, Competitor, and Supplier Behavior That Market Intelligence Can Help Answer?

Andy: While each situation is unique, there are several broad categories of inquiry that market intelligence can address, including:

• What are the key drivers of a purchase decision – including the importance of product/service performance; price; availability; ease of use; and channel options?
• How is the business and its offerings perceived in the market? Are they seen as a commodity, a low-price offering, or a high quality but high-priced provider? How is the business perceived across key criteria compared to leading competitors?
• What is the role of price in the buying decision? Is it the most important consideration or are there other factors at play? And what is the level of willingness to pay more across each key market segment if specific additional value is provided?
• Where are the key leverage points in the value chain? What role and level of importance does each node in the chain fulfill, and what is the impact of the value chain on customer behavior and the business?
• How are competitors perceived in the market? What value do they bring; what is their key point of differentiation; where are their weak spots that can be exploited?

How Can Market Intelligence Help Solve Price Increase Uncertainty?

Andy: The best way to explain how market intelligence can help solve price increase uncertainty is with an example:

Problem: One of INSIGHT’s clients was considering a price increase but was concerned about the reaction in the market and potential loss of volume. They were also unsure as to the reaction among their key distributors to a price increase, so they wanted to gather data to better understand the role of price in the purchase decision as well as distributor perceptions.

Approach: INSIGHT designed a custom data-collection approach that included one-on-one interviews of end users conducted across two different market segments, and interviews with various large distributors serving those segments.

Result: End-users indicated that price played a minimal role in the purchase decision, and the product/provider chosen was based primarily on the strong performance of the product; a history with the product and provider; ease of use; and strong support from the provider sales rep.

Additionally, distributors reinforced this information regarding end users and also indicated that they didn’t see a price increase as affecting the market, and in fact were questioning why increases had not already occurred.

The takeaway here is that the client could increase prices significantly (10-15%) across key market segments with no risk of losing unit sales volume, while still maintaining a strong presence in the market and relationships with key distributors.

What Research Methods Does INSIGHT Use to Help Businesses Gather Market Intelligence on Topics Like Willingness-To-Pay, Purchasing Criteria, And Demand/Market Trends?

Andy: The methods employed differ by project and are customized for each specific need. Generally, though, there are two methods for gathering information:

• Primary research, which involves collecting insights directly from people in the market, such as customers or competitors. Primary research may take two forms:

a. In-depth interviews, consisting of one-on-one conversations with key constituents in the market that obtains more qualitative data than surveys.

b. Surveys, with an appropriate sample size to ensure appropriate confidence levels that obtain more quantitative data than interviews.

• Secondary research, which is focused on searching information already in the public domain for insights on industry trends, emerging technologies, government regulations, key competitor data, and macro-economic factors.

In addition, research will often include interviews with key stakeholders and SME’s within the client organization to gain their perspectives and insights on key topics.

Once Information Is Collected Through Interviews, Surveys, And Secondary Research, How Does INSIGHT Analyze and Interpret That Data?

Andy: All the information gathered is analyzed in its entirety to build a complete understanding of the key topic areas. For the interviews, INSIGHT will look for commonality of answers to build a consensus on certain key topics, as well as divergence in answers to reveal any confusion in the market or differences by segment or customer type.

For the survey analysis there are multiple analysis methods available including the comparison of numerous cross tabs of the results to compare responses across different criteria. In addition, tools such as Gabor-Granger may be used to determine the price elasticity of products and services.

A Van Westendorp analysis can be used to understand the ranges of prices offered that allow a determination of an optimized price point(s). Also, conjoint analysis can be done to help determine how people value different attributes that make up an individual product or service. The specific analysis tool INSIGHT chooses is dependent on the problem being addressed and the goal of the research.

Regardless of the tools used, the outcome is a detailed summary of the information obtained and the impact this market intelligence has on the client business, as well as clear recommendations on how the client should proceed considering the intelligence gathered.

What Are Some Examples of Market Intelligence in Action? How Have INSIGHT’s Findings Directly Contributed to A Business’s Strategy Going Forward?

Andy:

Example #1: Market intelligence on end users and competitive offerings allowed for the development of competitor profiles that sales reps could utilize to counter competitor positioning and offerings. This same market intelligence helped guide the development of customer profiles that segmented the market on key variables associated with perceptions of value and usage. Such prospects/customers could be prioritized based on opportunity, and specific messaging and sales outreach strategies could be developed for each profile.

Example #2: Market intelligence on distributor pricing of client products indicated a price position well below many leading competitors, providing the client the opportunity to increase prices on multiple products while still maintaining a competitive price advantage. Research methodologies were developed and introduced to the client so that they could regularly monitor distributor pricing to be alerted to any competitive price changes and/or changes in distributor pricing of both the client and competitor products.

Example #3: Primary interviews revealed a customer beginning the process of retooling their operations and in turn evaluating the potential purchase of all new equipment. Client sales team was alerted to the opportunity and were successful in beginning the conversation on selling equipment to this customer.

Example #4: Client was provided overwhelming evidence that end user customers had limited awareness of or sensitivity to product pricing, allowing the client to immediately increase prices with little risk of volume loss, and increased margins on sales to existing customers.

Leveraging Data to Maximize Profit Growth

At INSIGHT, we believe in the power of data. As an industry leader, we are committed to using raw data and advanced market intelligence practices to improve our clients’ bottom line. We’ve helped hundreds of companies develop innovative solutions that enable them to stay competitive in today’s marketplace. If you’re ready to see what INSIGHT can do for you, schedule a time to talk to one of our advisors. Together, we can define your road to increased profitability.