Motherhood, apple pie and market awareness - who would argue with any of those? But truly understanding your market and knowing that you must understand it can be two very different realities. Why? Because really knowing your market is hard work. And if you don't know it, bad things can happen: (1) You might get blindsided by a disruption, (2) you might make a very unwise investment, (3) you might underestimate a sleepy little competitor which is suddenly taking your share, (4) your pricing may be too low or too high, or (5) some number of other nasty surprises.

     So, how do you come to really know your market? Well, you do research, of course. But what does that mean? How should you best carry out that research? Of course - and here's the consultant's infamous response - it depends. Surely, you should hear the voices of your customers on some regular basis. You might be able to justify buying some quarterly data from a service that actually records sales transactions, if such a service exists in your industry and you can afford it. Perhaps you should buy a syndicated market update every few years from a purveyor of market research reports. Obviously, you attend your industry's trade shows and buttonhole customers or carry out some specific research at the booth. Maybe you just do a Google search every few months and hope for the best. Perhaps you know an expert in your market segment who is fully up to date on what's going on, so just ask her on occasion. (By the way, I've never met such a person.) Could be you just throw in the towel and hire a capable consultant in your industry (hard to argue with that one!).

     If you've read this far, you're ready for the punch line: What's the magic bullet, Joe? Sadly, there isn't one, at least not one optimal research approach for all purposes. But here's an example from a recently completed due-diligence engagement at Trilogy: An investor (our client) needed a measure of historical and future demand for a drug used throughout the world. But the target company (the potential investment) was a contract manufacturer who did not have the visibility of a marketer or distributor, so that company did not have an effective "knowledge pathway" to the drug's ultimate hospital users. What to do?

     We did several things, including purchasing some data, some of which was useful and some of which was inaccurate or incomplete. And we spoke to a handful of KOLs in North America, South America and Europe. But the most important thing we did was to build a worldwide market model from the bottom up, i.e. from experiences and trends in the clinical literature, consisting of hundreds of refereed publications, including scores of registry studies and clinical trials. This was a case, often encountered in life science markets, in which clinical experiences and trends "drove the bus". After much painstaking research, we got it done.

     The moral of this story is this: When you are dealing with medical markets, never underestimate the importance of the clinical drivers. Those will often tell you where you've been, what your market is all about, and where you're likely to be going. But be prepared to do some tedious work to find out!