We are continually advised to do research to connect with the market place, improve performance, or check out whether an idea has a good chance of working.
Market research is indeed critical, but the information gathered needs to be interpreted with care.
Two examples of how market research can be misleading appeared in the last few days.
We heard from Cohn and Wolfe, a subsidiary of WPP the biggest advertising company in the world. Headlined “Recession spells the end of ethical shopping”, their most recent research says that UK shoppers are turning away from organic, Fairtrade and eco friendly products in favour of cheaper versions. More importantly, they also found that in future, recession or not, 73% of shoppers will try and pay less for premium lines such as Tesco’s Finest and Sainsbury’s Taste the Difference, 69% will buy less organic food, and 61% will pay less for Fairtrade. At which point anyone either in, or thinking about going in to premium or ethical foods might give up.
But the Cohn and Wolfe survey was followed about a week later by a press release from Tesco headlined “More confident consumers boost sales of premium and ethical foods”. They report that Finest, organics and Fairtrade products are all returning to growth. In the last 8 weeks their sales of organic mince are up 60%, organic cheddar up 70% and organic blueberries up 79%. In the upmarket Finest range, Cumberland Sausage has grown sales by 159%, and Wiltshire Cured Ham by 51%. Tesco specifically says that the news flies in the face of the Cohn and Wolfe survey, and attributes the growth to their policy of “offering customers great value for money”.
To be fair to Cohn and Wolfe they do say that the challenge for higher priced food producers and retailers is to make their products more affordable, but you have to get into the fine print of their release to catch this.
The other recent example of misleading market research comes in the shape of a new report called “Fresh Lamb - A Local Opportunity”, prepared specifically for sheep farmers by Kent University. The report is sponsored by the NFU, and the Institute of Grocery Distribution.
The report says that lamb sales have been steadily increasing, and that last year they grew by 15%. This rosy picture is in direct contrast to figures from Taylor Nelson Sofres, the market research firm, published every couple of months on the BPEX/EBLEX websites. These figures show that in the year to April, lamb sales have in fact dropped by 5% year on year, and have been dropping for nearly two years as retail prices have increased.
So what’s going on?
It turns out that the Kent University report is based on sales of lamb through Tesco, not sales in the total market which is what the levy board numbers are based on. The levy board numbers are of course more representative of what is really happening to lamb sales. It would have been helpful if the Kent report mentioned that its numbers are based on Tesco shoppers.
Accurate interpretation of market research matters. Just glancing at the Kent University report might lead sheep farmers to conclude that demand is rising and so prices for their stock might well rise too. They might even think that the recent buoyancy in stock prices is all due to British consumers wanting lots of lamb when in fact they are due mostly to the strength of the Euro, and may well fall back sharply if the Euro declines, and there is no home demand to offset exports.
Threading a true path through all the information available can be difficult, but there are a few actions which can help avoid wrong conclusions.
First, examine the fine print of any research report, and don’t rely on headlines. Second, try and collate information from various sources to check for consistency, and investigate anything that does not make sense. Third, gather data over time rather than rely on a snapshot. And fourth, don’t rely entirely on what the public say they will do, but check out what they actually do when faced with a buying decision in the shop.
Ps. Farmers Weekly and the IGD have both been alerted to the lamb figures issue, although no response has yet been received.
No comments:
Post a Comment