Companies, unsurprisingly, are slashing budgets for market research and competitive intelligence even though the insight from research can dramatically improve the return from larger expenditures on new products or services and marketing programs.
According to Harvard Business School professor John Quelch,
“Yet, to conserve cash, most firms are reducing spending on the market research that would help manage that uncertainty. In the United States, spending on market research has dipped for four consecutive quarters, and chief marketing officers don't expect the situation to turn around soon. Most big consumer marketers are seeking to shave 10 to 20 percent off of research budgets.” (http://hbswk.hbs.edu/item/6183.html, “Improving Market Research in a Recession” on HBS Working Knowledge 5/26/09 newsletter)
Unfortunately, many firms are attempting to respond quickly instead of intelligently to the sudden downturn in the economy. They adopt a “peanut butter” approach to reducing costs; they spread cuts evenly across the organization.
Instead, Quelch says they should, “Stay focused. Savvy marketers focus their research on the products, brands, and markets that are key to their marketing strategy. In a recession, it's essential to get a clear read on existing core customers, including those who are most loyal to the brand and those who are most profitable, rather than fritter away research resources on potential or peripheral consumers.”
He adds, “Don’t cut across the Board.” He suggests adding a few questions to a standard tracking study and making pretesting more rigorous. “For key products, running conjoint studies to check on shifts in price elasticities of demand and price-attribute tradeoffs can usefully improve the profitability of pricing decisions at a time when cash is king.”