Market Research Axioms – If You Remember Anything Remember This

The value of a strong questionnaire design when complemented by the task of high quality sample development is not fully appreciated. Often these two essential building blocks of market research are relegated to the back of the line on research projects.

Research Axiom One: You can never fully recover from a poorly written questionnaire.

o No manipulation of the variables, regardless of how cleverly done
o No amount of analysis, regardless of how brilliant
o No degree of insightful interpretation, regardless of intellectual prowess
Nothing can save you from a poor research foundation. The building will collapse like a house of cards!

If there is one part of the research process that I know, it is questionnaire design. It is a task repeatedly given insufficient time and attention. Clients and research professional alike often underestimate the time it will take to develop a truly well structured and concise instrument.

What amazes me most? Project leaders relegate this task to a status depicted by the attitude of: “Once the questionnaire is done we can get on with the important stuff, like analysis and reporting.” The assumption that analysis work is the essence of the research and the expectation that interpreting the results is where the mastery of research ultimately lies is a mystery to me.

Have we not pounded the concept of garbage-in garbage-out into our heads? Can new internet tools substitute for critical thinking and the hard work of aligning the research instrument to the purpose of the study to answer the business questions that sponsors paid to learn?

If this seems like a bit of a rant, well I guess I am guilty. My own research-on-research including the use of a 25-point questionnaire audit system has shown me that even well healed researchers are less diligent about quality than one would hope. Research is not only science it is a craft [perhaps an art] and if the proper fundamentals are not applied the product is less than artful.

I will end this part of my ranting with an analogy [but don’t be surprised to hear more on this topic]. If you have not studied and then practiced writing poetry, would you expect to publish a book of poems simply because your marketing department asked you to? Designing a good quality research instrument probably takes less talent than being a good poet, but it’s close.

Wait, not so fast, we are not done, there is another mistake from which you cannot fully recover. A poor questionnaire design is one possible fatal mistake, but not the only one. Good solid sample development is also necessary. Here is another Research Axiom worth your consideration.

Research Axiom Two: You can never fully recover from a sample that lacks validity; and once again:

o No manipulation of the variables, regardless of how cleverly done
o No amount of analysis, regardless of how brilliant
o No degree of insightful interpretation, regardless of intellectual prowess
Nothing can save you from a poorly developed sample!

The value of sample development is also underappreciated, as are the skills related to creating a valid sample. Project managers, research analysts, and all those who lose sleep over the quality of the sample sources they have available and who work hard to provide the best possible sample for each research project they conduct, are worth their weight in gold.

With numerous challenges to good sample development always hovering over us, if the research team conducting the study does not pay close attention to this critically important task the chances of deriving useful results are likely to diminish rapidly. One of the worst situations to be in, is standing in front of a room full of executives and presenting the research implications when from off in the far corner an executive vice president (EVP) asks you, “Are you sure about that finding? Who were these respondents? They don’t appear to have any knowledge about the market or our products.”

If you can definitively reply, “We believe the respondents in this sample are qualified” and then give a crisp response about the quality control (QC) steps used to verify the validity of the sample, you have saved the day. If on the other hand, you hesitate and cannot defend the validity of the sample, you have lost your audience – there is nothing more they want to hear from you because in their minds the voice of the respondents do not reflect the people they are trying to reach – the day ends badly.

If you do not care about the quality of the research you conduct, well shame on you, but at least recognize that a sample of good quality is a necessity for self-preservation – enough said.

Business Analyst Roles

Business Analyst Roles:

There are many types of roles that are required of a modern Analyst. It depends greatly on the type of industry you are in, but some fundamental aspects remain. Let’s break the term Business Analyst down for a second. The term Business implies the goal of making money. But there are many types of organizations that are in business not just to make money. Take non-profit organizations or community groups for example. And Analyst means a person who analyzes something. So some people may argue that a better term for a Business Analyst is a “Organization Analyst”. The most key roles for a Analyst include:

  • Superior attention to detail
  • Great interpersonal skills
  • Excellent communication both written and verbal
  • Understanding of the company’s business practices and familiarity with the industry.

You should notice that these skills are not just confined to one type of industry. The main goal of any organization analyst is to define the solution that helps the organization reach its goal; it is that simple. Now days more and more people feel that the Business Analyst is involved in just I.T. solutions. This is not the case. There are many different types of business analysts and they can have varying degrees of responsibility.

Here are just a few of the titles that encompass the role of modern Analyst’s.

  • Business
  • Systems
  • Data
  • Business Systems Analyst
  • I.T. Business Analyst
  • Product Development Analyst

This is just a small list of the types of roles that business analysts can occupy. If you are looking to become a business analyst in the I.T. field then you may be required to know software development or understand the structure of how networks are built. A business can be a very integral part of an organizations success or failure. It is not the type of job that you can assume has entry level positions. These types of people are usually experts or have high competency in their field.

There are however courses and certifications that you can receive to help you with credentials. I have done lots of research and have found very few formal business analyst training programs. It is hard to set up programs for roles that experts in a particular field will employ. Although there are some online courses and universities that do offer such course work. The roles of BA’s are always changing and will continue to do so. As long as business is going on organizations will need people who know how to analyze what they are doing and help them achieve their main goals. These people are usually very well compensated for what they know and many can earn over 100k/year. There is no standard work week for a business analyst as many work way over 40 hours. These people sometimes have the fair of the organization in their hands and it can be very pressure driven.

Even though it can be a very high stress job most BA’s get satisfaction in knowing that what they are doing really makes a difference. It can be a stressful profession, but also a very rewarding one. Imagine if you knew that your work was helping an organization succeed in the market.

Sprott Analyst Has Zero Doubt on Higher Natural Gas Prices

Introduction: We talked with Sprott Asset Management Research Analyst Eric Nuttall about the natural gas situation in Canada and the fate of many CBM gas producers and developers. Since our last conversation spot natural gas prices have dropped by 15 percent. Natural gas storage levels are about 2.5 trillion cubic feet, some 423 billion cubic feet higher than a year ago.

Eric Nuttall told us, “Nearly all small-cap natural gas producers have taken it in the teeth this year. The price decreases in their stocks have been absolutely brutal. There are now companies whose stocks are down 40 percent year-to-date, and yet are still strongly growing production on an adjusted share basis.” How will the CBM and natural gas sector pan out through the end of this year? He believes the gas storage surplus will correct itself.

StockInterview: How are the lower natural gas prices impacting Coalbed Methane producers?

Eric Nuttall: For many CBM or shallow gas producers, this means their current drilling program is likely uneconomic, suggesting deferrals in drilling programs until natural gas prices strengthen. It is this very supply response that we need to balance storage levels, so it should not come as a complete surprise.

StockInterview: What, then, should investors do while storage levels are rebalancing?

Eric Nuttall: I would view this period as an opportunity for medium to long-term minded individuals to start building positions in not just unconventional gas producers, but conventional ones as well. The long-term fundamentals are still extremely bullish for natural gas. Many quality names are down 20 to 40 percent year-to-date.

StockInterview: How do you view the long-term fundamentals for gas?

Eric Nuttall: North American natural gas production has been in decline for several years. Most incremental production is coming from smaller, more expensive-to-drill, thinner economic, higher decline pools and reservoirs. Over the past five years first-year decline rates on natural gas wells have doubled to 50 percent. The base decline rate has also doubled to approximately 25 to 30 percent. Pool size has also decreased materially over that time frame. The Western Canadian Sedimentary Basin and much of the US producing basins are mature. Consequently, higher and higher natural gas prices are required to create incentive for producers to drill increasingly marginal wells.

StockInterview: And you expect a continuation of declining natural gas production? And that is that your premise for higher natural gas pricing?

Eric Nuttall: Conventional gas production has been in decline for many years, and the growth areas have largely been unconventional, such as the Piceance Basin (tight gas), the Barnett Shale (shale gas), and the Jonah Field (tight, deep gas). Also, many of the growth assets, such as the Barnett Shale, are already a few years into development, and because the wells have such a steep decline rate in the first few years, it is only adding to the depleting base that we have to make up. It is unlikely that over the next three years, the increase in unconventional gas can offset the decline in conventional, because the depleting base is so much larger. The major natural gas basins in North America are mature. Decline rates are increasing. Pool size is decreasing. Rig count is increasing yet production is at best flat. Until LNG imports increase in a material way, which is not expected for at least four or five more years, I think the case for healthy natural gas prices is intact.

StockInterview: Earlier, you noted drilling was more expensive.

Eric Nuttall: Over the past year, onshore drillings costs are up over 15 percent while operating costs are up over 10 percent. A recent Wall Street Journal article commented on how rig rates for the Gulf of Mexico, on very deep drilling platforms, are as high as $520,000 per day, up from $185,000 a few years ago. And the drilling platforms are still leaving the Gulf of Mexico! Although many are leaving the Gulf of Mexico to go to more prospective areas such as the West African Coast, the current rig situation is still somewhat tight in the Gulf. We have only begun to see signs of moderating rig rate pricing.

StockInterview: How would bad weather, such as a hurricane, impact natural gas prices?

Eric Nuttall: Short term, you would see both natural gas and related stocks surge. If a hurricane strikes the producing area of the Gulf, and we almost need one to – to correct the surplus supply situation. Initially, you’ll have an emotional upward response. Only after assessing the status of production platforms and sub-sea infrastructure would we know the longer-term impact.

StockInterview: Should investors be watching the Weather Channel and ready to phone their stockbrokers?

Eric Nuttall: Timing on any natural gas investment right now is tricky. You need to have a medium- to longer-term focus. We probably have another two months of volatility. There are two camps right now on natural gas. One camp is saying that due to bloated storage levels companies are going to increasingly lay down their drilling rigs, cut production guidance, and stress their balance sheets. Then in the fall, when companies set their 2007 budgets, they will be using low gas prices and presenting moderating production growth profiles to their investors.

StockInterview: What does the other camp say?

Eric Nuttall: Another camp says that the current natural gas strip already discounts the present and forecasted storage levels. Also, stocks are cheap on a price-to-cash flow and price-to-net asset value ratios, and now is the time to load up on the stocks. I lean towards this viewpoint. But I am also admitting that until the fall, barring a severe hurricane, it is likely that the stocks are going to trade sideways, as opposed to in any clear direction.

StockInterview: One equities strategist, whom we interviewed, suggested some time in August we might start to see the natural gas stocks moving higher.

Eric Nuttall: There is the potential that we might endure another month or two of flat trading in small cap natural gas stocks. By the end of August, it is likely that we will have had both a supply and demand response – worries of massive laying down of rigs, forced well shut-in’s, and overleveraged balance sheets should have subsided. Investors will begin to focus on the natural gas strip rather than spot prices, which currently are around $9.00 for the upcoming winter and $8.00 for next summer.

StockInterview: And until then?

Eric Nuttall: Until that time comes, I think it likely, as a group, the large caps will outperform. They are more weighted towards oil, and have recently been catching a bid on the heel of a huge $22 billion all-cash takeover by Anadarko of Western Gas and Kerr-McGee. Importantly for unconventional gas investors, Anadarko paid around $2.00 for 3P (Possible) Mcf, which is very healthy (Western Gas was predominantly tight gas in Wyoming and coalbed methane in the Powder River Basin). It speaks to Anadarko’s view of strong long-term natural gas fundamentals. These all-cash transactions likely set the bottom in the large caps.

StockInterview: What do you see for the near-term?

Eric Nuttall: Many people have been hoping that warm weather or hurricanes would assist in working off the excess supply, but Mother Nature hasn’t been terribly helpful so far this summer. It appears that we will exit the natural gas injection season at least 10% over last year. Barring any incredible heat waves or significant hurricanes, natural gas prices are likely to remain sub-$6.50 until the fall. Unless we have a serious hot spell or a significant hurricane, it is likely that natural gas stocks will be very volatile without clear direction over the summer into the fall. I would think not until the fall, probably September – October, when people begin to focus not on natural gas spot prices, but on the strip pricing for the winter, which is still over C$10. Until that time comes, I wouldn’t see any clear direction in the stocks. The market is now providing opportunities to buy companies with high quality management for below-average multiples, commonly measured on a price-to-cash flow metric.

StockInterview: Have you given up on the CBM sector or is it coming back?

Eric Nuttall: There is zero doubt in my mind that natural gas is an excellent long-term investment. We’ve peaked in our ability to increase production meaningfully, just as we have with light oil. I think for there to be an increase in long-term natural gas supply, you have to provide incentive to producers to go drill wells that increasingly have lower economic rates of return. And to do that, you need higher natural gas prices. One of the few remaining growth prospects in Canada for natural gas production is coalbed methane. At current gas prices, the economics are very challenging. So to get a supply response from coalbed methane producers, you again need higher gas prices. The current surplus in gas storage will correct itself, and investors should position themselves ahead of natural gas stocks reacting to this inevitability.

COPYRIGHT © 2007 by StockInterview, Inc. ALL RIGHTS RESERVED.

Productivity is Not a Bad Thing

Productivity is a great thing. I do not believe that you have to schedule every minute of your day or that you have to be in work mode 24/7. I do believe that it is important to do our jobs and do them well — whether you are an investment banker, an office manager, an artist, a stay at home parent, or a research analyst.

I read a lot of books and blogs and I have seen people on both sides of the productivity issue. Some people say “get as much done as possible.” Others have a “who cares about productivity?” or an anti-“life-hack” attitude. Of course, there is everything in between.

The dictionary defines productive in the following ways:

productive

–adjective

1. having the power of producing; generative; creative: a productive effort.

2. producing readily or abundantly; fertile: a productive vineyard.

3. causing; bringing about (usually fol. by of): conditions productive of crime and sin.

It is not a bad thing to produce, to generate, to create. Most everything we have in life was produced–the food we eat, the clothes we wear, the movies we watch, the music we listen to. I would be pretty let down if musicians stopped producing great music for me to listen to. I do not plan on being a hunter or farmer any time soon, so I appreciate the productivity of people who help produce the food that is on my table.

While we often have to go the extra mile at work, or put in more time at certain points, do not work yourself to death. Work is important–but if it kills you, what good is that? Step back for a minute if you feel overwhelmed. Take time for yourself. Relax. Have fun. Take a vacation–even if it means not leaving town, but just spending time at home with family and friends–or alone.

Once you adopt a healthy view of productivity, you will stop seeing it as the enemy. You will not feel as pressured to always be in “go!” mode or to shun the idea entirely.

What is your view of productivity and how does it impact you?

Copyright 2008, Alaia Williams. All rights reserved. No portion of this article may be reproduced without the express permission of the author.