Here is a truly horrifying thought: there is actually a specialist graduate degree of Master of Marketing Research, with the post-nominal letters MMR.

Nor is this a gimmick or a cash-cow for one of those otherwise unknown “universities” that offer to send you a degree in return for your “lifetime experience” and a large fee.

No, this is a proper degree offered by over a dozen serious universities, mainly in the USA.
You wonder what sort of eager young scholar, with all the mind-broadening opportunities of a university education spread before them, would choose to dedicate one or two of the most fertile years of their life to such a narrow subject.

Of course, if anyone developed a scientific system that enabled them to predict market responses with a high degree of accuracy, it would be worth the effort. It would open the doors to success not only in business but almost every other aspect of life. The world would belong to the market researchers. Not only a year or two but a decade or two would be well spent in its study.

Indeed, some of the finest minds in academia have been attracted, both by the cross-disciplinary intellectual challenges and by the potential rewards, to the study of customer behaviour.

It is a favourite subject at the Royal Swedish Academy of Sciences, who dole out the Nobel Prizes for Economics. Several Laureates, like Professor Daniel McFadden of UC Berkeley, who won the Prize for his theories on “choice modelling”, have specialised in aspects of econometrics which, whether or not they liked to put it this way, provided a theoretical basis for market research.

There is only one drawback to all this formidable academic output: it is useless.

The test of the validity of any scientific theory is not only how well it explains the past but how well it predicts the future.

If these academic theories of consumer choice were of any use, they should be able to provide models to predict future consumer choice.

We cannot help noticing the absence of such a model in the business world.
If such a model existed, Professor McFadden and his ilk would be very wealthy. While some do indeed make a tidy sum from consultancy, it is difficult to see how their clients are better off for their services.

For the bottom line on market research is that all the greatest failures in marketing history have been preceded by intensive market research using the most advanced specialist techniques available.

This is because big failures can only come from big product launches, and big product launches can only come from big corporations, because only they can afford big products and big launches. The big corporations usually spend lavishly on market research before the launch. This is not because they really believe the market research but so that the junior executives can cover themselves with the senior executives, the marketing managers with the general managers, the management with the directors, and the board with their shareholders.
Then, if something goes wrong, everyone can say, “Well, it is not my fault – I employed the most respected market researchers, who used the very latest methods, and they told me everything was going to be fine, so how was I to know?”

This means that every big product launch has been approved by advanced market research – and since a lot of big product launches end in failure, all these failures have been endorsed by market research.

Perhaps the great problem with market research is conceptual. It puts a great deal of thought and analysis into studying consumer decisions, but consumers put very little thought or analysis into their decisions.

This is why the focus group is a bad idea: it gets potential customers to spend an hour talking about decisions they would usually make in a second. This is artificial as a method and so any conclusions it reaches will be equally artificial.

As ever, wisdom is found not in academia but in The Simpsons. When Homer’s millionaire brother asks him to design the car that average Americans like him would want to buy, Homer puts in every fantasy element he can imagine and ends up designing a monstrosity that no one would want to buy.

In fact, Homer’s car is curiously reminiscent of one that was designed in response to a great deal of market research into what the public “really wanted”... the Ford Edsel.

About the Author:

Guy Kingston produces and presents the Mind Your Own Business podcast, offering free business advice to entrepreneurs and business owners. As well as audio podcasts there are more articles like this, compelling videos and a must-read blog. All at www.myobpod.com or you can network and join in discussions on the MYOB Facebook group.

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