New York – Over the past few years, we have seen signs that market research and channel checking is increasingly becoming a part of the buy side’s research process. As we have worked to help clients find market research and channel checking firms that are best suited to their needs, however, we have discovered that there is no consistent, industry-wide definition of what a market research or channel checking firm is. This blog will provide some insight as to how Integrity classifies firms in these segments.
Integrity tends to view a company as a market research firm if and only if it conducts surveys of end user communities to determine product penetration and/or customer attitudes. Some market research firms provide custom survey work for their clients; others perform syndicated consumer studies. Either way, they fall within Integrity’s definition of market research, so long as they survey consumers.
Market research firms can provide unique insights for buy side investors who are looking to get a pulse on consumer attitudes, which can be predictive of earnings and share price performance. They can provide both qualitative insights and quantitative data points, and are useful for both quantitative and fundamental money managers. They can usually execute large-scale, statistically significant surveys at affordable rates. Some higher-end market research firms can provide additional value-added services, such as survey design consulting and results analysis.
Channel checking firms are like market research firms in that they are geared towards obtaining insights on product penetration and customer attitudes. Whereas market research firms typically conduct standardized surveys, however, channel checking firms employ an open-ended investigative approach that is designed to draw out unique and often unexpected information. Moreover, channel checkers generally seek to interview all supply chain participants, rather than just consumers.
Channel checking firms are great for obtaining anecdotal evidence that can help define or clarify and investment issue. They often undertake a range of tactics to find relevant information, including store/plant/office visits, phone calls, etc. On a per interview basis, channel checking is generally more time intensive than market research. As a result, channel checking is often not the most economical method for obtaining statistically significant data samples.