As we enter the fall season, many companies are beginning to focus their internal efforts on preparing the 2022 strategic plan. This “all hands on deck” annual exercise typically requires significant time and effort from every functional area of the business: finance, operations, sales, marketing, supply chain, and HR, just to name a few. However, there is one critical element of the strategic planning process that is often missing from the process, market research.
Based on 30 years of experience conducting market research and developing countless strategic plans for both small and Fortune 500 businesses, PMG has learned that creating a strategic plan without a component of research is like navigating a ship without a compass. You may define a destination (business goal). And you may ultimately arrive at your destination. But without a compass, the route may be longer, costlier, and more challenging than anticipated.
Conducting the right research can provide invaluable strategic insight into setting revenue targets, developing potential new products and services, uncovering competitive threats, understanding shifting market conditions, pinpointing supply chain improvements, and identifying potential acquisition targets. To further explore the power of injecting insight from market research in developing your strategic plan, here are 6 specific areas where research can play a critical role.
Developing Sales Projections
For many companies, setting sales and revenue forecasts is both an art and a science. In most instances, sales goals are set based on a combination of historical customer sales data, internally generated customer intelligence, and an internally generated sales bogy based on what is needed to reach an overall budget. In all of these scenarios, no one actually asked the customer. In our research we often ask the customer if they plan on purchasing more or less than the previous year, and to quantify the increase or decrease. In addition, asking the question “what can we do to increase your purchases next year?” can also provide great strategic insight into projecting revenue and identifying ways to grow.
Innovation (New Products & Services)
Research and development (R&D) priorities are typically driven by three factors; (1) improved operational efficiencies, (2) incremental product enhancements, and (3) new product development. In the case of product enhancements and new product development, most of the of the R&D efforts are driven by a few customers that are commonly the most engaged or vocal. This creates a situation where the R&D priorities are less market driven and more driven by a handful of customers. Market research around current and future unmet needs and pain points can temper this issue. This ensures these specific customer needs are also representative of the market as a whole, while also uncovering broader needs that R&D can focus their efforts on to develop solutions that are market driven and have higher rates of success.
Much like in sports, it is difficult to create a game plan without a deep understanding of your competition. In most B2B markets, the purchase decision is not “do I purchase”, but “from whom do I purchase”. A plastic molder must purchase resin as a raw material for their product. So the “strategy” must focus less on creating need and more on positioning against competition. Critical areas of competitive insight that are important in developing a winning strategy include:
- How am I positioned vs. competition in delivering on critical product and service attributes?
- Are there new competitive technologies that could be disruptive?
- Where may competitors be vulnerable?
Leveraging Market Conditions
Winning B2B strategies often deliver solutions to pain points and challenging market conditions. Therefore, early identification of pain points and challenges through market research can create competitive advantage. A good example of this is the continuing market pressure for developing sustainable products in many industries. Many of the companies that identified this trend early on and developed sustainability messaging and directed R&D investment to create sustainable products and services are now leaders in delivering sustainable solutions. The ability to uncover developing market shifts early-on and deliver solutions can be a formidable competitive advantage for the future.
Optimizing Your Supply Chain (Sales and Distribution Channels)
Are your distribution channels optimized? Distributors are an extension of your delivery system as well as your sales team. They are often the supplier’s face to the customer (and in many cases they “own” the customer relationship). Market research can provide valuable information on the performance of your distributor base, enabling your organization to tailor and deliver the right training and support to areas of the distribution network where it is needed the most. This may include sales support and training, marketing collateral, on-time delivery, inventory needs, and customer service. In addition, research can also provide the insight needed to better determine which customers should be serviced on a direct basis and which should be serviced by distributors.
Identification of Acquisition Targets
If your organization has targeted specific market(s) in which to grow via acquisition, competitive market assessments can be a valuable research tool to identify potential acquisition candidates. Research can determine which competitors are service leaders, product leaders, value leaders, new entrants, and potential disruptors.
Don’t allow input for your 2022 strategic plan to be 100% inwardly focused. A timely investment in targeted market research can provide the insight needed to develop a winning strategy for 2022 and beyond.