Editor’s note: Larry Chiagouris is managing director, CDB Research & Consulting Inc., New York.

It’s not surprising that utility companies are devoting more resources than ever to their marketing communications programs, given the state of today’s energy industry. Open markets and technological innovations are well on their way to recasting traditional energy supply chains, putting additional pressure on marketing managers, investor relations professionals and public relations agencies to communicate changes in the marketplace to their customers. In an ideal world, this dynamic would produce more opportunities for market researchers to provide communications professionals with the answers they need about consumer, media and investor perceptions of their companies. Unfortunately, we have seen that this is not always the case.

A Chinese scholar once said, "Ask a question and risk looking foolish for a minute; fail to ask a question and risk looking stupid for a lifetime." Many marketing managers in the utilities industry would do well to note this proverb. Despite evidence to the contrary, some communications professionals persist in the belief that research is a luxury for most communications programs. This despite the fact that market research conducted on the front end of new service announcements clarifies program objectives before utilities make a substantial investment in the programs themselves. As any savvy marketer will attest, research provides assurance not only that there is adequate demand for a proposed product or service, but also that the communications initiatives generated to support the program are targeted to the correct audience.

This said, why do communications professionals avoid using research to fine-tune business strategy? It is undeniable that most people prefer to make decisions that are backed by hard numbers rather than gut instinct. The answer often lies with the managers themselves. Managers, like most human beings, tend to fear that which they do not understand.

It appears that many managers do not understand market research. Utility company executives suffer from the "Seven Deadly Fears of Market Research." "Deadly" because failure to conduct market research can often produce more problems - at a greater expense - than the research itself. It is our job as market research professionals to help clients overcome these fears to achieve their business objectives.

Fear #1: Market research doesn’t work.

American businesses spent billions of dollars on market research last year. Is it likely that so many people spent so much money on a valueless proposition? Research defines the existing perceptions, needs and opinions of a product’s target audience. In the process, it provides a benchmark from which to judge the success of any business program. Companies that conduct consumer research prior to offering new billing services, for example, have already determined the innovations that consumers would like to see in the next incarnation of the company’s billing statement prior to revamping the existing template. By conducting research, management can understand the needs of their target audience before opening the question to debate.

In short, market research clarifies, educates and empowers managers to make strategic decisions with confidence. Research supports these decisions with hard numbers that back up the communications professional. It also provides insight into distribution practices, pricing plans and customer service programs. The pages of Quirk’s Marketing Research Review and the files of the American Marketing Association and the Advertising Research Foundation contain example after example of the role research has played in almost every successful business endeavor. Research works.

Fear #2: Market research is too expensive.

 Not every market research study requires extensive expenditures of time and money. The size and scope of the research study should be commensurate with the size of the opportunity or problem to be investigated. There are a variety of tools and methodologies available to market research professionals that help minimize costs. Such tools range from small-scale qualitative studies to soft-soundings with industry opinion drivers and analysts. Generally, a detailed demographic breakout of the results necessitates a more expensive research program. However, most marketing issues can be addressed with a modest commitment of resources.

Fear #3: It’s difficult to sell research projects to superiors.

Before conducting any kind of research program, managers must convince their superiors that the program has merit. For those who are not well versed in market research techniques, selling a new research program to senior management is a daunting task at best. Some executives feel that failure to win over superiors will lead to diminished credibility with their colleagues. Fair enough. But what about the loss of credibility associated with slow sales growth due to a poorly planned communications program?

Research programs are best sold to management as one of two basic categories. The first, called proprietary research, is conducted for a company’s internal purposes at its own expense. Also referred to as strategic or tactical research, this kind of research yields actionable results that help managers make decisions concerning marketing and sales programs. If it is determined that strategic research would best serve the utility company, a cost-benefit approach helps managers demonstrate to their superiors how the research will contribute to the bottom line.

The second type of research is publicity-driven research or "research for ink." This kind of research is designed to generate favorable publicity by providing insight into a strategically important issue or topic. If publicity-driven research is best suited to a specific company issue, "soft-soundings" with informed journalists and analysts will provide an excellent indication of editorial interest in the intended research topic. The documentation of such interest is an important component of selling the research program to management. Superiors listen to educated proposals.

Fear #4: How do I conduct market research?

Many marketing managers are reluctant to organize strategic research proposals because they are inexperienced in the medium. If this is the case, it is time to enlist the aid of an in-house research professional or a market research firm. The majority of utility executives lack the training necessary to design a research program. Both Quirk’s and the American Marketing Association, however, publish directories that list hundreds of firms in the United States that are capable of addressing a utility company’s market research needs. In addition to asking for references from such firms, management should explore the type of affiliations the firm has had in the past. Hire the firm that understands your company’s agenda.

Fear #5: Market research takes too much time.

Concerns about convergence and marginal competitive advantages dominate the utilities industry. Pressure to respond quickly to changing market conditions limits the amount of time communications professionals can devote to a given product launch or service announcement. This pressure to keep up with the competition shortens the time marketing managers have to design communications programs. The result? Utility companies frequently eliminate market research initiatives that are perceived by management to be superfluous and time intensive.

But when the time comes to make an important business decision, it is critical to conduct research to confirm that decision. Even start-up companies with fast production cycles and limited resources should take time to confirm business strategies prior to implementation. Doing so prevents costly mistakes before companies invest time and manpower on the project. Avoid acting in haste and repenting at leisure.

Fear #6: Market research can yield unfavorable results.

No executive wants to learn that the hot new technology being developed does not address customer needs. While unfavorable research results will certainly put a dent in a manager’s day, they are in his or her best interest over the long term. Poor results allow utility executives to proactively identify and eliminate problem areas before they come to the attention of senior management. It is in any manager’s best interest to capitalize on research results rather than working without the benefit of market knowledge, further committing company’s reputation to a project that is off-strategy. Research results, whether favorable or not, inform and empower managers.

Fear #7: I’m unsure when market research should be used.

Lack of knowledge regarding when to use market research is the easiest fear to overcome. Market research should be utilized whenever a business needs to make a decision where the stakes are high. When counseling clients in challenging marketing situations, research professionals should advocate placing a dollar value on the cost of failure and then weighing it against the benefits of success. This exercise provides any management team with the perspective to assess the long-term impact the decision will have on the company’s future. Research should be conducted before making major business decisions.

Overcoming the fears

Market researchers need to make it clear to managers how research contributes to strategic decision-making. Without this understanding, utility companies will continue to relegate market research to the realm of the superfluous. Many executives at utility companies are unaware that market research can provide reasonably priced answers to their most complicated questions. By allowing businesses to take risks on paper rather than in the marketplace, research minimizes the risks associated with a project. After fine-tuning business strategy in this way, managers can make proposals to their superiors with confidence.