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TODAY'S ONLY LEG UP IS CONSUMER DATA SO WHY IS RESEARCH SO OFTEN CUT BACK?

By Published on .

Does this scenario sound familiar to you? We're given our company-out marketing objectives; now we need to devise a marketplace-in strategy. So we propose to study the customers and prospects whose behavior we need to affect in order to achieve the desired results. We want to know who they are, how and where they buy, and most important, why. We want to understand what they need to hear before they act, so we'll know what to say. Sounds reasonable, doesn't it? Until we present the budget and hear: "We can't afford it."

There goes the market research budget-especially the primary qualitative part that helps us really understand people. So we jump right to creative (after all, we already know what we want to say, don't we?).

Why is it that the ceo readily agrees to buy machinery to improve manufacturing productivity, but balks at spending money on research to improve marketing productivity? Because he or she perceives the first as an investment, and research as a cost.

Maybe we've never made the case very well.

Here it is: The only sustainable source of competitive advantage in the 1990s and beyond is superior knowledge of the customer or prospect.

B.C. (before computers), many companies thought their competitive advantage was technological superiority. When they invented a product, they expected to have something like seven years to harvest a return.

Today, as folks in Silicon Valley know, "If it's on the market, it's obsolete." Competitors catch up in months, not years. Maybe weeks. What does that do to the yield on investments in manufacturing productivity, which may require years to pay out?

Other companies relied on proprietary marketing skills for competitive advantage. They devised innovative planning methods, training systems, distribution efficiencies, promotional ideas. Today there are no secrets. Who doesn't know how to write a four-page Procter & Gamble marketing plan? And where can you hide to test a marketing program? Sioux Falls? Everything you're doing will be public knowledge by nightfall. Consultants will have scoped out your program, detailed your methods, projected the results and sold the information to your competitors before you've even made your presentation to the board. So nobody can maintain a marketing cleverness edge for long, either.

What's a poor marketer to do?

Invest in the only sustainable source of competitive advantage left to us: superior knowledge of the customer. Not just names and addresses and job titles or simplistic psychographic clustering but a genuine understanding of buyer behavior and its logical, psychological and emotional underpinnings.

Think about it. Competitors can't copy what they can't see. And they can't see into your database.

Sure, they can copy bits and pieces of your integrated marketing communication executions; but they don't know exactly who you're talking to and, more important, they don't know what you know about those people that makes what you're doing work.

By the time they can guess, even if they're right, you've planted your flag at the top of the positioning hill at a much lower marketing cost than they'll face if they want to dislodge you.

That's how an investment in customer insight pays off. It increases marketing productivity, lowers marketing costs and accelerates the return on marketing investment.

Substitute "capital equipment" for customer insight and "manufacturing" for marketing and it's exactly the same argument our friends on the factory floor have made successfully for 40 years.

The ceo understands that language, but few of us use it.

New pressure for accountability says it's time we learned how to argue more effectively for the resources we need to do our jobs better.

Research to build an insightful customer database is not only a good investment, it's no longer an option for marketers who want to survive into the 21st century.M

Mr. Lauterborn is the James L. Knight Professor of Advertising at the University of North Carolina at Chapel Hill; a principal in Morgan, Anderson & Co.; and co-author of "Integrated Marketing Communications."

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