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Pitfalls of DIY Market Research

In these uncertain times companies on a tight budget are apt to consider undertaking market research internally. Think again. Desk research is not as clear cut as it may at first seem. Take published production statistics. These do not necessarily cover a total market or category.  In the case of beer such statistics may well exclude boutique and craft breweries due to the limited size of their output. But added together they may well represent a sizable chunk of production.  Industry associations may provide both production and consumption statistics (e.g. the Verband der Brauereien Osterreichs in Austria). However, such data will, in all probability, only record member input and often there is no compulsion for all brewers, soft drink/spirit producers or wineries to sign up. Even where association members provide a pretty full coverage of branded production, as in the case of bottled water in Belgium (via FIEB) private label volumes are generally excluded and these can make a sizeable contribution to category volume. If retail audit data is affordable this is not necessarily representative of the total market, only the specific channels it covers.

A brief word on internet trawling. Often you will come across snippets of data that, on the face of it, seem to provide good insight into market size and trend, but what does it really mean?

–          When a company claims a specific market share what market /category, or time period is it actually referring to?

–          Is it a national share or regional?

–          In respect of category share is it including private label or just brands?

–          Does it relate to production or consumption (which may be calculated as  ex factory shipments or merely production +imports – exports)

–          Is market data based on published industry statistics, association members, retail audit data or scan data?

–          Is market share a volume share, a unit share or a value share?

–          When yearly performance is referred to is it really annual, 48 weeks, YTD, MAT or a  financial year?

–          When a category is referred to who is defining the category. For example, does bottled water cover sweetened products (e.g. Glaceau from Coca-Cola) or are such products actually seen as part of the still drink market?

–          Are syrup volumes reported in concentrate form or diluted (and if the latter, at what concentrate to water ratio?)

–          Does the beer market include non-alcoholic beer and all other beer types (domestic and imported)?

–          Is a case 9 litres, 8.4 litres, 5.678 litres (24 servings of 8 U.S. ounces) or actual?

And another thing.  Don’t assume that where you can afford to hire an external research company that the more they charge the better will be the quality of the research. A few years ago a company I was working for bid for a major beverage project. For one reason or another we did not have sufficient  “street cred” for the client despite being a specialist in our field. The project was subsequently given to a more globally recognised, but broader based, organisation. This said organisation subsequently sub-contracted to the company I was working for and took a major cut of the project fee for no more input than client liaison. Be warned.

On a related subject and for further reference take a look at “How to lie with statistics” by Darrel Huff. It may be dated but it’s a good bath time read.

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