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Abstract
The
evidence is in. Super successful
technology-based enterprises average about two dollars in market research for
every dollar invested in engineering. Business disasters invest less than
a nickel in upstream marketing for each engineering dollar. The
implication for the board of directors is that prudent oversight of a company’s
affairs must include a commitment to invest resources in decisive, up-front
marketing.
The
Marketing/Engineering Investment Ratio™ (M/E Ratio™), was developed as a new
ratio to guide technology-based enterprises. In this metric, created
for the MIT Enterprise Forum, marketing is defined as the market research
process that comes before the product is ready, and excludes promoting or
selling. The M/E Ratio™ should be a minimum of 1. The magnitude of
the challenge simply requires it.
Understanding
a company’s place in its market is the fundamental intellectual discipline
underlying the creation of effective business strategy.
If the board is to be ultimately concerned with strategy, and it should be, then
the board must be concerned with the amount and relevance of the company’s
market research activities. Strategy must be based on facts, not on
wishes.
Twenty
questions are posed as a method for the Board to guide the CEO and the
corporation. Market research is not a commodity that can be purchased by
the ton. Inquire not only about the quantity of marketing, but also about
the relevance of the market research, the caliber of the market research staff,
and the quality of their activities.
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