To Research or Not to Research in a Recession, That is the Question

by Bob Chua
I am extremely pleased to start a monthly column for MARKETING Magazine surrounding issues, trends, and observations about the research industry and consumer behaviour. More fortunate is the fact that the ABC (Audit Bureau of circulations) has recently retracted the endorsement of the logo to MARKETING until their subsequent publication, and as a result I can’t be blamed for any loss of readership as a result of this inaugural contribution. This said, I hope you do enjoy…

Now, I thought that the most talked about topic right now (besides the break-up of Madonna and Guy Ritchie) was the economic situation, so I thought that this would be an opportune time to share my two cents. First of all, I’m sick and tired of the ‘we’re-already-in-a-technical-recession’ analysis, by everyone and their grandmother, as it’s pretty obvious that things are indeed not looking too rosy.

A recent survey that we conducted found that 74% of Malaysians plan to cut spending and travel, and tighten their belts in the coming months due to the economic meltdown. From a marketer’s perspective, the most crucial question, however, is whether or not our clients will follow suit and slash marketing and research budgets accordingly. As a researcher and business owner myself, I spent some time thinking about the (non-biased) reasons why one should continue to spend on ‘Market Research’ in tough times. I will list five of them here:

1. When economies constrict - Costs rise, and consumer confidence dips. When consumer confidence falls, demand slows. From a domestic standpoint, when consumer spending lessens, brand owners will compete for a smaller share-of-wallet. Developing the upper hand in terms of product or service offerings in such times sets you apart from the rest.

2. Media 2.0 – More brands, more mediums, more clutter, less share. Gone are the days when mass marketing, on TV, print, radio or outdoor were adequate for a brand owner’s marketing mix. Now, let’s add about a hundred extra cable channels, the Internet, social networking sites, mobile advertising, MMS, WOM, blogs, and the list goes on. Where should you place your brand, and how would you best get your message across to the right audience?

3. The Paradox of thrift – Back in business school, one of the very few things I remember from ‘Economics 1’ (or Business School in general for that matter), was the ‘Paradox of thrift’. The hypothesis theorised that during a recession, most people scale back spending, and similar to the recent trend of governments guaranteeing deposits and injecting fluidity back into the markets in fear of mass withdrawals, the opposite suggests that what we should in fact be doing is ‘Spending more!’… Yes, you heard me, S-P-E-N-D-I-N-G M-O-R-E! The theory suggests that on a macro-economic level, when there’s more spending, be it from consumers or governments, we stimulate the economy, and thus provide more taxes, jobs, and growth to the market. A similar theory could be argued for market research. During a downturn, the more spent on research, marketing, and advertising could in fact stimulate consumer spending, which means you should prepare yourself to gain an immediate advantage as soon as the market improves.

4. Niching – The 21st century has introduced the highest level of individuality and niching of products and services. For example, both Starbucks and Apple’s iPod have been runaway successes due to the ability to cater for very individualistic needs; for example, listening to whatever one wants, while sipping the exact sweetness, flavour, and temperature of one’s favourite frappacino. Gone are the days of mass marketing, and hence, understanding our consumers needs in these times, is extremely challenging… recession or not.

5. New Technology – “I want more research, I want to start yesterday, and I want it as cheap as chips!” Okay, so it’s not that bad, but very close. Clients (especially in more developed markets) have experienced the recent tsunami of new research tools such as online panels, free survey software, online qualitative platforms, blog text-mining, SEO, SMS poll’s and a whole gamut of cool new tools to obtain ‘real-time, cost and time efficient research’. While I may exaggerate how easy it is to navigate through this labyrinth of Research 2.0 offerings, the simple message here is that consumers are spending more and more time online, ‘representativeness’ of yesterday, looks very different to ‘representativeness’ today, and while we question the possibility of marketing dollars dwindling before our eyes, our clients are already pushing towards online initiatives as a means to seek faster, cheaper, and higher quality data.

Until next month……