Answer to Question #27239 in Management for Jairus Aina

Question

examine reasons for appointing a market research agency in preference to using in-house staff and summarise the information to be included in the market research agency brief

Answer 1

Marketing research captures the data needed to help shape product features, production counts, customer-service needs and effective advertising strategies. Without accurately assessing marketing conditions, customer preferences and product demand, companies may encounter low sales, unhappy customers and unprofitable product campaigns. Companies can opt to outsource their marketing research efforts, or they can use an internal marketing research department to conduct surveys, polls, focus groups and other market research activities. Understanding the advantages and disadvantages for using in-house staff to conduct marketing research allows company executives to select the most effective group for their current and future product research needs.

Disadvantage: Groupthink
An internal marketing department is exposed to employee beliefs about company offerings from the time products are conceptualized. This exposure makes it difficult to break away from the groupthink mentality and conduct research from a neutral framework. Relying on internal staff may cause survey question bias and inadequate customer satisfaction research.
Disadvantage: Resources
External marketing research firms may have access to proprietary software, research pools and expert analysis not available within the company. These firms employ doctorate-level experts for statistical analysis, survey preparation and research analysis in addition to maintaining a large roster of customer research pools. Limited resources and employee knowledge gaps may hamper the effectiveness and thoroughness of in-house research efforts.
Disadvantage: Geographic Limitations
Centralized marketing departments have difficulties conducting research in all markets where their products may be placed. External marketing firms have contacts in multiple geographic locations that can localize and conduct effective marketing research targeted at current or potential customers.
Advantage: Agility
Working with research firms requires somewhat rigid guidelines and research requirements. Companies using an internal marketing research department obtain built-in agility to modify research during the course of the investigation. Internal marketing teams can also move at the pace set by business needs.
Advantage: Expenses
Hiring external firms for marketing research may be more expensive than using corporate employees. Costs, expenses and resources can be tightly monitored and controlled when an in-house staff conducts investigations.
Advantage: Customization
Internal employees tap product, development and support staff for in-depth product knowledge, questions and advice. This resource advantage allows internal marketing teams to customize and maximize research efforts. For example, marketing staff could discuss product feature options with engineering staff to help craft a survey to establish customer product preferences for future models.