Increasing online social networking through websites including Facebook, Twitter, LinkedIn, Second Life and YouTube is creating zettabytes of digital consumer data. Be it for socializing purposes or for professional networking, the bottom line is that people are talking and sharing information and ideas virtually. And consumer goods companies are trying to tap the information trove to get actionable insights on how their consumers feel about their products, what features they are looking for, etc. Refer to the ValueNotes presentation on using social media as a research tool.
But let us not restrict ourselves to social networking media only. In fact, the whole web 2.0 revolution (add blogs, RSS, Mashups, etc) is now being taken seriously as a medium for research studies - market research and competitive intelligence, social research, investment research, etc. In a recent assignment, ValueNotes helped a financial services conglomerate understand
1. What their financial services competitors were doing with web 2.0 communication
2. What customers were saying about their and their competitors’ products and services
3. What product innovation and marketing strategy their competitors were adopting to address consumer feedback and how successful they had been. Broadly, How do financial services firms utilize web 2.0 as a sales channel?
The underlying problem statement was: if Company A releases an innovative new product targeting internet-savvy people, and this target group then comments about this product to their friends/social communities online through various Web 2.0 platforms, how much will this affect Company A's product sales? As a business researcher it was very satisfying to find the required information by scanning all the relevant platforms and the team was able to provide a comprehensive list of examples to help the client formulate their web 2.0 communication strategy.
But while web 2.0 is another weapon in a researcher’s armour, it has its limitations. The virtual world can only capture so much. Probably such research will provide realistic results for firms operating in developed markets (and developing countries with good telecom/internet infrastructure) or for products targeted at the do-it-yourself internet savvy generation. For example, in India, only a fraction of the population (urbanization is less than 30% today) is internet savvy and of that only a portion are active on web 2.0 platforms.
I read a few articles/blogs that talked about how social media was likely to replace traditional market research. Well, research through social media will definitely have an impact on traditional market research methods but at the end of the day, they will only be complementary. The importance of on-the-ground insights through traditional market research surveys and stakeholder interactions can never be over emphasized.
Web 2.0 can be harnessed effectively to track competitor strategies and consumer preferences. For a business researcher these are very valuable tools. But sometimes there is a danger (by relying exclusively on web 2.0 analytics) of going too far (or probably not). For example, in search of that ever elusive alpha, some sophisticated investors are now using Twitter analytics to gauge consumer sentiments to determine how financial markets might move. Some hedge funds are using mood analytics (analysis of consumer moods based on more than 100 million tweets every day) to take trading bets on stocks and markets. Whether or not such trading strategies will yield returns in the long run, only time will tell. But then, this is just the beginning.