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| A member of the American Marketing Association |
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Articles
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Outsource or In-house?
What you should know about market research.
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Io Data Corporation
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June 23, 2006
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Years ago, market research was almost unknown as a business strategy. Companies shoveled most of their resources into promotion and advertising and very little into a demographic background check. Today, most corporations will agree that as marketing activities become more complex and broader in scope, promotional techniques aren't always adequate. The remaining question is whether market research is best done in-house or outsourced to a more experienced firm. |
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Some organizations, especially larger corporations, do nearly all their research in-house, including project design, multivariate analysis, and focus groups. Others choose to outsource, while others do both on a situational basis. Let's talk about some of the advantages and disadvantages of outsourcing research work. |
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| Advantages of Outsourcing Market Research |
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| - Efficiency. Market research firms specialize in gathering, analyzing and reporting information. They have specialized software. They have a comparative advantage and can probably do this type of job more efficiently and at a lower cost than the average corporation. |
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| - Objectivity. If the issues have become politicized, or there is internal disagreement among different factions, outsourcing can create an environment where decisions are based upon facts, not feelings. |
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| - Anonymity and security. Reputable market research companies never divulge the name of their client, which protects you while simultaneously increasing the validity of study findings by minimizing bias. Additionally, an impartial third-party researcher is in the best position to extract honest feedback from subjects. |
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| - Connections. Market research companies have established relationships with large-scale operatives like call centers and market segmentation firms. Large-scale research attempted in-house becomes painfully inefficient, not to mention costly. |
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Disadvantages of Outsourcing Market Research |
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| Outsourcing does have its trade-offs. A market research firm will never completely understand a client's situation or share a client's vision as well as the client's own employees. Outsourcing also means that the client has less control over the research procedures. Market research firms typically have set methods and preferences, so any variation may be met with some resistance. |
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Conclusions |
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| Organizations that conduct relatively little research are generally better off to outsource the work, as they usually lack anyone in-house with the necessary expertise to do the job properly. Reliable data is the key to getting a return on market research. If you don't have reliable data, you make assumptions - and making the wrong assumption can have devastating business consequences. |
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© 2006 Io Data Corporation. All rights reserved. |
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