Why Market Research is Like Drilling for Oil

Imagine that you work for an oil company and the president of Uzkagesia asks you to drill for oil in his country. You are not familiar with the country and no one has ever drilled for oil there. How would you tackle this?

One possible approach is to start drilling at random locations. At some stage you will know whether or not there is oil. But because exploratory drilling is costly, this is an expensive approach. Besides, this leaves the discovery of oil entirely up to chance. And the disadvantage of this approach is that you have no idea how deep you have to drill for oil and you have no clue as to what you might find. Maybe Uzkagesia is rich in natural gas instead.

There is another approach. You collect information about the country, the soil and the local geology. You also look at neighboring countries. You talk to local and international experts. Based on all that information you can decide where the chance of finding something in the ground is the greatest. You start drilling there. You already have some idea what you may find and how deep you will have to drill. However, you might also conclude, before you even start drilling, that the chance of finding mineral resources is minimal. You could advise the president accordingly and thus do him a great service.

Market research is similar to drilling for oil. You are looking for something unknown and you usually have only one chance of finding it. Before you start doing research, you review all information that is already available. You should give considerable thought to what you want to research, why, where, what the possible outcome will be and the consequences thereof. This is what we call problem analysis.

Over the years, thorough problem analysis has gradually lost importance in market research. One reason for this is that it has become a lot easier to design and carry out a research study. If exploratory drilling were to become a lot cheaper and easier, then the strategy of random drilling would become increasingly appealing. Doing a thorough analysis prior to drilling would become seemingly less relevant. Companies would pop up that focus on quick and cheap exploratory drilling. However, the chance of drilling a test hole that strikes oil would remain slim without doing a thorough analysis beforehand. And this is exactly what is happening in our industry.

This is the last in a series of 7 blogs. All of them deal with some aspect of ‘problem analysis’. Together they form my plea for giving more attention to this crucial element of any market research study. Invest time in finding out what question you should really answer and in what way, instead of merely talking about tools and methodology. About this subject I wrote the book ‘What’s the Question?’. It is available on March 15. See www.whatsthequestion.online.