Hang The Innocent
by
Jerry W. Thomas
The restaurant industry at times seems to be largely made up of wild-eyed,
seat-of-the-pants, roll-the-dice entrepreneurs. Success has led some to believe
that the axis of the universe runs down their spinal columns; arrogance is the
coat they wear; they know what consumers want; God tells them what consumers
want. Ignorance has led other high-level executives in the industry into a
self-delusional over-confidence that they—and they alone—know what is
best for their restaurant businesses. Both the arrogant and the ignorant (and
these are not mutually exclusive) don’t believe in marketing research.
They don’t do marketing research. They claim to be totally innocent of
marketing research. To these chieftains of the food service industry, the
following thoughts are respectfully submitted.
You are all guilty of marketing research. You’ve committed marketing
research yourself, by looking, tasting, smelling, walking around, asking
questions. You’ve sought your mate’s opinions, and those of your
friends and employees. And some of you have actually paid a professional to do
marketing research. Thus, none of you are innocent. You have all committed
marketing research—even though you might not have thought of it as
“marketing research” at the time.
So what is marketing research? All of the above, and all are valid to some
degree. Marketing research consists of both informal and formal research.
Marketing research is listening, looking, reading, asking
questions—let’s call this informal research, and there’s nothing
wrong with informal research. Marketing research is collecting data in an
unbiased manner and translating that data into information, which can help
solve marketing problems—let’s call this formal research. And
there’s nothing wrong with formal research. Marketing research includes
experiments, surveys, product tests, advertising tests, promotion tests,
motivational research, strategy research, customer satisfaction monitoring, and
many other techniques.
Do you really need formal marketing research? Maybe, maybe not! If you are
totally objective, a good listener, extremely patient, and have lots of time to
personally perform these functions informally, you might not need any formal
research. Ask your mate or a close friend if you are objective, a good
listener, extremely patient . . . I know of one company whose sales will
approach one billion this year, and its decisions are based almost entirely
upon informal research, but that company’s leaders are very, very good at
listening to their customers, and everyone in the organization is trained to
listen to customers. Still, this company is very much the exception. Typically,
most companies can benefit from at least some formal research.
What types of formal research are most valuable, and when should you consider
research? It depends, of course, but here are some general rules:
- Strategy research is critical. What’s the
grand scheme? Where are you going? What’s the optimal target market for
your restaurant concept? What is the optimum strategic positioning for your
concept? How will you differentiate your concept from other restaurants? What’s
the best product line for your concept? What’s the best package (store
design)? Answers to these fundamental questions are essential to the long-term
success of a restaurant chain.
- Product testing is the single most important research you’ll
ever do. Everyone tends to think their menu items are wonderful,
much better than those of competitors. Rarely is this self-delusional assumption
true. If you are not regularly and systematically testing your products, you
don’t know if they are any good or not. It doesn’t matter if they
taste good to you. What’s important is how they taste to your customers.
Most of the time customers will not tell you that your products are not very
good. They’re too polite, too concerned about hurting your feelings.
Test the most important items on your menu first, to make sure they are as
good as you say they are. Then, test the menu items of lesser importance.
When you develop new products, test them to make sure they are good. You can
even use product testing as a technique to monitor food quality over time.
Product testing is a never-ending quest for continuous improvement of your
menu.
- Advertising pretesting is extremely important.
Much media advertising is wasted because the commercials are simply not very
effective. Advertising directors, marketing directors, and advertising agencies
exhibit a tendency to fall in love with their creative “offspring,”
and sometimes are very resistant to subjecting their “delicate art”
to the crucible of consumer opinion. Our pretesting of advertising over the
years reveals that much of it can be greatly improved, often at relatively
little incremental cost. Advertising is simply too important to trust creative
decisions to the opinions of a few executives. The only reliable jury is the
consumers who make up the target audience for a restaurant.
- Operations research is a very important type of research within
the restaurant industry, and I don’t mean “operations
research” in the classical sense, but research that evaluates and improves
service levels, as perceived by your customers. What are key elements of perceived
service? How can perceived service be improved? How can you recruit better
employees? How should your employees act? These and similar questions can
all be answered by marketing research. Operations are absolutely critical
in the food service industry because they are intertwined with the product
itself. A great product served late, cold or by a surly employee doesn’t
help your business.
- Customer surveys conducted in-store are relatively inexpensive
and can provide good information about who your medium to heavy
users are, which can help in target market identification, site selection,
and sometimes media planning.
- And there are many other types of research that might be valuable,
depending upon your specific needs, such as awareness and usage surveys, promotion
testing, media evaluation, menu development, architectural design optimization,
site location evaluation, store density optimization per market, etc.
When should you do research? Research should have a purpose, a reason. Do
research to help you make decisions. Do research when you can’t afford to
be wrong on a decision. Do research when the risks are great. Do research when
the opportunities are big. Do research when you must convince your management
or your employees. Do research only when benefits exceed the costs of research.
Don’t spend $20,000 researching a $10,000 decision. For whatever reason,
let’s assume you’ve decided your company might benefit from some
marketing research. How do you go about choosing a research company?
You might start the process by calling companies in your area that do a lot of
marketing research (large packaged-goods companies, advertising agencies) and
ask for recommendations. Call others in your industry for suggestions. Look in
the Yellow Pages. Once you’ve identified several
possibilities, arrange to visit the research companies to meet their employees
and see the facilities. Ask to see quality-control manuals. Describe your
problems or research needs, and ask the research companies to submit proposals
along with costs. Typically, proposals are free. Look for quality of thinking.
Do they really understand what you want? Does their approach seem to make
sense? Chemistry is important. Honesty and integrity are supremely critical. Do
you feel good about the people who will be working on your account? Will they
be willing to tell you things you don’t want to hear? In a way that you
can tolerate? Based upon the visit, the chemistry, and the proposal, choose a
research company and give them a small project first. If they do a good job,
then trust them with more important jobs.
Never, never choose a research company just because its prices are the lowest.
Typically, research costs are a small part of the marketing budget or a
project’s budget. Don’t save $2,000 or $3,000 on a research project
and run the risk of making wrong decisions that could cost your company several
hundred thousand dollars, or several million dollars.
What should you avoid? What are the danger signals when evaluating research
suppliers?
- Magic techniques. Exotic approaches. Revolutionary
technology. Let them experiment on your competitors. Rule One: If you don’t
understand it, don’t buy it.
- Guaranteed solutions. They guarantee to solve your problem.
They are absolutely certain they are right. They are in possession of the
Holy Grail. Let them bring salvation and ultimate truth to your competitors.
Rule Two: not every problem can be solved by marketing research.
- Astronomical prices. If the prices quoted for
research are extremely high, you should be wary and careful. Make sure you
are getting extra value for the extra price. Equally risky are the companies
that quote extremely low prices; be especially careful in using these companies.
Rule Three: Make sure you get good value for your money.
How do you get the most from the research company you choose?
- Build a relationship. Involve the research company
in your business. Generally, the more you work with one company, the better
the job that company will do for you.
- Set forth clear objectives. Tell the research
company what decisions you wish to make. Be sure the research firm understands
your objectives.
- Look in on the research while it is in process.
Listen to some of the telephone interviews. Observe the focus groups or depth
interviews. Watch the interviewers at work.
Once a study is completed and you’ve reviewed a draft of the report
and its recommendations, ask the research company to present the results of the
study to all of your key people in one room, at one time. This is an absolutely
essential step for two reasons: first, many people don’t read research reports;
second, even if they do read them, many people don’t understand research
reports. A real live presentation with all the key decision makers in one room
allows the researcher to explain the results, answer all questions, and clear
up any confusion or misunderstandings. A great added benefit of a presentation
is that it helps your key executives reach a consensus on what the research results
mean and what actions need to be taken.
If you heed some of this advice and do some of these things, then you just
might escape the economic gallows that await the arrogant and the ignorant.
Copyright ©1997 by Decision Analyst,
Inc.
This article may not be copied, published, or used in any way without written
permission of Decision Analyst.
About the Author
Jerry W. Thomas (jthomas@decisionanalyst.com)
is President/CEO of Dallas-Fort Worth based Decision Analyst. He may be reached
at 1-800-262-5974 or 1-817-640-6166.
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