Marketing managers' motivations for seeking research help vary, and may not always be fully evident. They may feel a real need for specific information and data by which to guide a decision. At other times the marketing research study may be authorized mainly because its presence may promote approval for a decision the managers are quite willing to make without research. At other times, research may be authorized as a measure of personal protection for the decision makers in case the decision is criticized later.
An appropriate marketing research study can help managers avoid losses and increase profits or it can be a waste. The decision- makers usually must face this evaluation question. Typically, they want a solid cost estimate for a project and an equally precise assurance that useful information will result from the research. Even if the marketing researcher can give good cost and information estimates, the marketing managers still must judge whether the benefits outweigh the costs. The evaluation is usually a subjective one, although two other approaches have been tried; they are ex-post facto evaluation and decision theory approach. These approaches are briefly discussed below.
While such a criterion is simple to state, its actual use presents some difficult measurement problems.
The effort at cost-benefit analysis is commendable, even though it is only a tentative first step. A marketing manager may be able to judge after the fact whether the research study was justified, given certain assumptions. While the results may come too late to guide the current research decision, such analysis may sharpen the manager's ability to make judgements about future research proposals. However, the critical problem remains that of marketing project evaluation before the study is done. The challenge of effective marketing research valuation is the inability of the evaluator to measure or forecast the benefits and costs of the project. For example, a proposal to conduct a thorough marketing management audit of operations in a company may be a very worthy one, but neither its costs nor its benefits are easily estimated in advance. Such decisions are sufficiently unique that managerial experience seldom provides much aid in evaluating such a proposal.
Even in these complex situations, however, marketing managers often can make some useful judgements. They may be able to determine that a management audit is needed because the company is in dire stress, and management does not understand the scope of its problems. The marketing management information need may be so great as to assure that the research is approved. In such cases they may decide to control the research expenditure risk by requesting a gradual marketing research study. They can then review costs and benefits at the end of each step, and give or withhold further authorization for marketing research grants or budgets.
An appropriate marketing research study can help managers avoid losses and increase profits or it can be a waste. The decision- makers usually must face this evaluation question. Typically, they want a solid cost estimate for a project and an equally precise assurance that useful information will result from the research. Even if the marketing researcher can give good cost and information estimates, the marketing managers still must judge whether the benefits outweigh the costs. The evaluation is usually a subjective one, although two other approaches have been tried; they are ex-post facto evaluation and decision theory approach. These approaches are briefly discussed below.
Subjective Valuation Criterion
Conceptually, the value of marketing research is not difficult to determine. In a business situation, the research should produce added revenues or reduce expenses in much the same way as any other investment of resources. The value of research information may be judged in terms of the difference between the results of decisions made with the information and the results that would be made without it.While such a criterion is simple to state, its actual use presents some difficult measurement problems.
Ex Post Facto Evaluations
If there is any measurement of the value of marketing research, it is usually an after-the-fact event. This could be in form of return on investment, that is, where an objective estimate of the contribution of each project to corporate profitability is determined after the marketing research must have been carried out.The effort at cost-benefit analysis is commendable, even though it is only a tentative first step. A marketing manager may be able to judge after the fact whether the research study was justified, given certain assumptions. While the results may come too late to guide the current research decision, such analysis may sharpen the manager's ability to make judgements about future research proposals. However, the critical problem remains that of marketing project evaluation before the study is done. The challenge of effective marketing research valuation is the inability of the evaluator to measure or forecast the benefits and costs of the project. For example, a proposal to conduct a thorough marketing management audit of operations in a company may be a very worthy one, but neither its costs nor its benefits are easily estimated in advance. Such decisions are sufficiently unique that managerial experience seldom provides much aid in evaluating such a proposal.
Even in these complex situations, however, marketing managers often can make some useful judgements. They may be able to determine that a management audit is needed because the company is in dire stress, and management does not understand the scope of its problems. The marketing management information need may be so great as to assure that the research is approved. In such cases they may decide to control the research expenditure risk by requesting a gradual marketing research study. They can then review costs and benefits at the end of each step, and give or withhold further authorization for marketing research grants or budgets.
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