Ralph E. Grabowski - marketingVP - fact-gathering, analytical Marketing to steer the enterprise

 

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"The Board's Fiduciary Responsibility To Market Research"
 

The Board's 
Fiduciary Responsibility 
To Market Research

20 questions for the Board to guide the CEO and the corporation

 
Contents

Abstract
The Evidence is in
The data
Old strategies
New Ratio
Market Research is the upstream process
The Board and strategy
M/E Ratio™ tool
Twenty questions
Reviews and reaction
about The Corporate Board
About the
author

Reprint - PDF, 9 pages, 0.15 MB

 

The Evidence is in

"Who is going to buy the darn thing?"  We ultimately measure a company’s success by its ability to design and deliver standard products and services that others will buy, and at a profit.

Why do some new products take off, while others don’t sell at all?  What makes companies successful?  What is the origin of super success or outright failure?  Market research is a process of ascertaining needs which customers are willing spend money to satisfy, thus guiding engineering to design the right products.  How much shall we invest in market research to enable success, and when?

A new metric has been developed to answer these questions, the Marketing/Engineering Investment Ratio™ (M/E Ratio™).  This model separates marketing (market research) from the functions of promotion and selling.  Formulating a ratio of marketing to engineering installs market research concurrently with engineering, and sizes the marketing budget with a readily identified number (engineering investment).

Evidence is available to confirm the recommendation that technology-based enterprises invest more in market research than in engineering.  To an engineering audience, to the technologists, that might seem outrageous.  This author is often asked, "How can you possibly suggest that we devote our precious capital to marketing, much less more to market research than to engineering, when we have this heavy-duty technology to develop?"

In fact, the evidence shows that commercially successful technology-based enterprises do just that.  "Super successes" have an M/E Ratio™ greater than 1, investing, on average, about two dollars in marketing for every dollar invested in engineering.  They invest up-front, before the product is ready.  They maintain a higher investment in market research even at the extremes of technology where you might expect more investment in engineering.

Every business basket case, termed a "Flaming Failure," suffers from an M/E Ratio™ of 0.1 or lower, averaging less than a nickel invested in marketing for every dollar in engineering.

 
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