The Value of Research: More Navigating, Less Drifting. (Feature)

By Sablosky, Tanja Lian | ABA Bank Marketing, March 2003 | Go to article overview

The Value of Research: More Navigating, Less Drifting. (Feature)

Sablosky, Tanja Lian, ABA Bank Marketing

Since you know your local marketplace, you can save money by playing your hunches when developing a new product.

Right? Wrong!

Relying on intuition without doing market research is like sailing without a chart and compass.

Let's say frontline personnel pass along some comments they have heard from women customers. The information suggests that these customers would benefit from a new type of service. The question: Do you immediately develop and launch a program based on the remarks of a handful of customers? Or, do you wait and conduct market research to corroborate the hearsay evidence?

If you're like many banks, you'll try to save money by skipping the research. You'll develop a program based on your own knowledge of the marketplace with the help of a few calculated hunches.

Marketer's intuition can work--but it's a risky proposition. It's like a mariner who tries to sail through tricky shoals by "dead reckoning." Just as the sailor needs to supplement his experience with the judicious use of charts and scientific instruments, the marketer should supplement his personal knowledge and expertise with appropriate market research.

According to George Morvis, Jr. of Financial Shares Inc., Chicago, research is essential to sound business decisions. Banks need research to identify target markets and, once they are identified, to gauge the success of market penetration. Even if you know your market well enough to manage without research, a well thought-out, well-conducted research campaign always pays dividends.

Here are some of the things that research can do. It can:

* Confirm your hunches.

* Reveal additional customer information that can have a impact on your business plan.

* Identify opportunities.

* Clarify advertising campaign targets and the media needed to hit them.

"Market research is the process of acquiring, analyzing, and sharing the implications of relevant information for the purpose of making decisions and taking appropriate actions that will maximize business performance," says Teresa Ziebarth, a senior employee with Wells Fargo & Co. and a board member and an adviser for the ABA School of Bank Marketing and Management. "Research is not just used for marketing purposes; it is also used to further define and clarify strategies. Market research is focused on providing information to achieve bottom-line results."

Dr. Tom Fusso of Synovate, a market research firm in Vancouver, Canada, with 76 offices in 43 countries, says research helped a smaller bank he recently worked with claim a larger market stake. The smaller bank was struggling to survive in the same market as a larger bank. The smaller bank conducted market research in the form of a segmentation study and identified two target segments that potentially constituted a profitable niche. The bank tapped its MCIF using the descriptors from these two segments and began targeting these customers. The bank now feels that it is in a stronger competitive situation.

Common types of market research

Market segmentation is just one of four common types of market research, says Fusso. A segmentation survey looks at the entire market and studies customer perceptions and ratings of banks in the area. It collects a great deal of consumer information, too: needs and the benefits they seek from financial services institutions. Once the information is gathered, the segments are clustered into groups according to consumers needs or net worth. These surveys can also provide valuable information on consumer media use: who listens to radio and when, who reads the newspaper and more.

"We also worked with a larger bank that was considering entering a new market by purchasing 20 branches," says Fusso. "First they conducted focus groups o learn what current customers would think of the purchase and how they would react. Most said they would be willing to stay. …

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