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What to say when your boss says there's no budget for research

"Sorry, there's no budget for market research. We will just have to go ahead without it."

You may hear that and wonder if the tight purse strings will in fact result in savings.

Perhaps you are the boss and you are considering scrapping a proposed research investment.

Maybe you're in a similar situation to a potential client who called me recently.

In that case, we had arranged to discuss research requirements in detail, but the meeting was cancelled "because the boss says there's no budget for research".

The company, a medium-sized operation whose market is corporates, was considering extending its offering to small-medium businesses.

Before doing so, it wanted advance information about SME owners' awareness of what was available, how they perceived the company's value proposition, how they compared competing brands, and their likely uptake at various price points. All that sounded to me like essential intelligence with which to plan marketing.

But without that essential intelligence, how do you proceed? What do you say when the boss says there's no budget for market research?

In my view, the first thing to be addressed is the boss' assumption that trial-and-error is a cheapest and most effective form of research.

In simple situations it can be. Split-run tests are used daily by marketing managers to fine-tune campaigns.

But in more complex situations there are too many variables for test-and-measure to be useful. It takes too long and costs too much to get the mix right.

With trial-and-error, the market can only respond (or not) to what is pitched to it. The issues involved in entering a different and untested market segment are more complex than a single question with yes/no answer options.

Trial-and-error is also a very public process. If you are looking for first-mover advantage, you will quickly lose it as competitors see what you are doing.

Generally with the trial-and-error approach (some call it test-and-measure) only one element can be tested at one time. To try the next possibility - say, different pricing - means another test.

While all the tests are being tried, revenue is not covering costs.

Murphy's Law says "There's never time to do it right, but there's always time to do it over."

A more specific version for these situations would say "There's no budget to do market research, but we're happy to pay extra to find out the hard way."

Entering a new market segment without vital information to guide marketing strategy risks reputation and profitability.

Just because a business is successful in one market is no guarantee the same will apply in another.

With trial-and-error, the worst-case outcome is not immediate failure, but partial success.

Testing a new market and facing marketing costs and diversion of focus for nil profit is bad enough. However, you can cut your losses and re-focus.

Partial success is worse. It shows there is room for improvement but with trial-and-error you can't know what to try next. A lot of time and money can be spent testing the wrong changes.

Research can probe deeper than any trial-and-error method, gaining insights and identifying key considerations without wasting marketing budget, alerting competitors or risking a business' reputation.

Yes, there is an investment. But usually this is much less than the cost of multiple test marketing exercises.

More importantly, market research often finds why there's no budget for market research - i.e. marketing which has minimal or no effect - areas where budget can saved to be better applied elsewhere.