MARKETING RESEARCH

Accelerating product cycles, easy access to information on products and services, highly discerning consumers, and fierce competition among companies are all a reality in the world of business. Too many companies are chasing too few consumers. Therefore, knowing, understanding, and responding to one's target market is more important than ever. And this requires information—good information. Good information can lead to successful products and services. Good information is the result of market research. Marketing gurus Kevin Clancy and Peter Krieg in their book, Counterintuitive Marketing, wrote, "Marketing research, we believe, poses many dangers and many opportunities. Bad research can, and often does, lead companies in the wrong direction. Good research, on the other hand, is the sine qua non of the counterintuitive approach to great marketing" (quoted in DeVries, 2005).

WHAT IS MARKETING RESEARCH?

According to the Marketing Research Association, "Marketing research is a process used by businesses to collect, analyze and interpret information used to make sound business decisions and successfully manage the business" (2005). Marketing research is a $6-billion-a-year industry. Marketing research provides, analyzes, and interprets information for manufacturers on how consumers view their products and services and on how they can better meet consumer needs. The ultimate goal is to please the consumer in order to get, or keep, the consumer's business.

HISTORY OF MARKETING RESEARCH PIONEERS

Marketing research as an organized business activity began between 1910 and 1920. The appointment of Charles Collidge Parlin as manager of the Commercial Research Division of the Advertising Department of the Curtis Publishing Company in 1911 is generally noted to be the beginning of marketing research. Parlin's success led several industrial firms and advertising media to establish research divisions. In 1915 the U.S. Rubber Company hired Dr. Paul H. Nystrom to manage a newly established Department of Commercial Research. In 1917 Swift and Company hired Dr. Louis D. H. Weld from Yale University to become manager of their Commercial Research Department.

In 1919 Professor C. S. Duncan of the University of Chicago published Commercial Research: An Outline of Working Principles, considered to be the first major book on commercial research. In 1921 Percival White's Market Analysis was published; the first research book to gain a large readership, it went through several editions. Market

Research and Analysis by Lyndon O. Brown, published in 1937, became one of the most popular college textbooks of the period, reflecting the growing interest in marketing research on the college campus. After 1940, numerous research textbooks were published and the number of business schools offering research courses grew rapidly.

Following World War II (1939–1945), the growth of marketing research increased dramatically. By 1948 more than 200 marketing research organizations had been created in the United States. An estimated $50 million was spent on marketing research activities in 1947. Over the next three decades this expenditure level increased more than tenfold.

Methodological Development

Major advances in marketing research methodology were made from 1910 to 1920. Questionnaires, or surveys, became a popular method of data collection. With the growth of survey research came improvements in questionnaire design and question construction. During the 1930s sampling became a serious methodological issue. Modern approaches to probability sampling slowly gained acceptance in this period.

From 1950 through the early 1960s, methodological innovations occurred at a fairly steady pace. At this time, a major development occurred: the commercial availability of large-scale digital computers. The computer was responsible for rapidly increasing the pace of methodological innovation, especially in the area of quantitative marketing research. As the field of marketing research attracted increasing interest, two new journals began publication in the 1960s: the Journal of Marketing Research and the Journal of Advertising Research. Technological advances have had a major impact on many aspects of the marketing research profession. These innovations have included checkout scanners in supermarkets, computer-assisted telephone interviewing, database marketing, data analysis by computers, data collection on the Internet, and Web-based surveys.

The second decade of the Internet age has confirmed the Internet as a consumer and business communications medium. In 2005 companies were projected to spend more than __BODY__.1 billion on online market research, a 16 percent increase over 2004. The advantages of online research are self-evident: There is no need for data entry or interviews, and responses are collected automatically, saving time and money while eliminating coding errors and interviewer bias. Also, respondents may feel more comfortable in answering sensitive questions with their anonymity ensured. Ultimately, the Internet, if used properly, can provide the quickest path to valuable insight into a customer's mind.

TYPES OF MARKETING RESEARCH

Marketing research can be classified as exploratory research, conclusive research, and performance-monitoring research. The stage in the decision-making process for which the information is needed determines the type of research required.

Exploratory Research

Exploratory research is appropriate for the early stages of the decision-making process. This research is usually designed to provide a preliminary investigation of the situation with a minimum expenditure of cost and time. A variety of approaches to this research are used, including use of secondary data sources, observation, interviews with experts, and case histories.

Conclusive Research

Conclusive research provides information that helps the manager evaluate and select a course of action. This involves clearly defined research objectives and information needs. Some approaches to this research include surveys, experiments, observations, and simulation. Conclusive research can be subclassified into descriptive research and causal research.

Descriptive research, as its name suggests, is designed to describe something—for example, the characteristics of consumers of a certain product; the degree to which the use of a product varies with age, income, or sex; or the number of people who saw a specific television commercial.

Causal research is designed to gather evidence regarding the cause-and-effect relationships that exist in the marketing system. For example, if a company reduces the price of a product and then unit sales of the product increase, causal research would show whether this effect was due to the price reduction or some other reason. Causal research must be designed in such a way that the evidence regarding causality is clear. The main sources of data for causal research are interrogating respondents through surveys and conducting experiments.

Performance-Monitoring Research

Performance-monitoring research provides information regarding the status of the marketing system; it signals the presence of potential problems or opportunities. This is an essential element in the control of a business's marketing programs. The data sources for performance-monitoring research include interrogation of respondents, secondary data, and observation.

THE MARKETING RESEARCH PROCESS

The marketing research process is comprised of a series of steps called the research process. To conduct a research project effectively, it is important to anticipate all the steps and recognize their interdependence.

Need for Information

The first step in the research process is establishing the need for marketing research information. The researcher must thoroughly understand why the information is needed. The manager is responsible for explaining the situation surrounding the request for information and establishing that the research information will assist in the decision-making process. Establishing the need for research information is a critical and difficult phase of the research process. Too often the importance of this initial step is overlooked, which results in research findings that are not decision-oriented.

Research Objectives

Once the need for research information has been clearly defined, the researcher must specify the objectives of the proposed research and develop a specific list of information needs. Research objectives answer the question "Why is this project being conducted?" The answer could be as broad as the determination of the amount of effort needed to increase the company's market share by 5 percent or as specific as the determination of the most preferred of five moisturizers by women in southern California. Only when the researcher knows the problem that management wants to solve can the research project be designed to provide the pertinent information.

The difficult part of establishing research objectives is the conflict that often exists between the value of information and the research budget. Because each piece of information has some cost associated with it, whether it is the cost of the account manager's travel expenses or the cost of having an outside agency perform a telephone survey, each piece must be evaluated in terms of its value with respect to the needed decision.

Research Design and Data Sources

The next step in the research process is to design the formal research project and identify the appropriate sources of data for the study. A research design is the framework that specifies the type of information to be collected, the sources of the data, and

the data-collection procedures. Although there are many different ways to classify designs, one that gives a clear overview of the various procedures is based on three methods of generating primary data: experimentation, observation, and survey.

Experimentation involves establishing a controlled experiment or model that simulates the real-world marketing situation being investigated. In the observation method, the primary data result from observing the respondents doing something. The survey method involves collecting the primary data by questioning a certain number of people. Survey questioning may be done in-person, over the phone, through the mail, or online.

To determine the data sources for the research project, an assessment must first be made of the amount and type of data currently available. These data are called secondary data—data already gathered and available, having been accumulated previously for a different purpose. Although these data are assembled quickly and often at a low cost, sometimes they do not satisfy the research objectives.

There are two types of secondary data: internal (data originating within the firm) and external (published data originating outside the firm). Internal secondary data are all the data originating within the firm that were collected for some purpose other than the objective currently being addressed. Two of the most important types of internal data are sales and cost data.

After the internal secondary data have been examined, additional information can be obtained from published external secondary data. The main sources of external data are the Internet; the government; trade, business, and professional associations; the media; trade journals; universities and foundations; corporate annual reports; and commercial data services. Information obtained from any of these sources must be examined carefully to make sure that it fits the particular needs of the researcher.

Internet—The Internet can provide links to many sources of information, quickly and easily. Searching the Web or visiting a business library's Web site are ways to become familiar with the types of resources available. Two Web sites that are useful in evaluating potential research resources are the New York Public Library's Science, Industry, and Business Library (http://www.nypl.org/research/sibl/index.html) and the University of Michigan's Documents Center (http://www.lib.umich.edu/govdocs).
Government—The federal government is by far the largest source of marketing data. Although the data are available at a very low price, if any, once they are located there is often a cost and time commitment in obtaining the data. Some government publications are highly specialized, referring to specific studies of products. Other data are more general in nature. State and local governments also provide information. Data such as birth and death records and information on real estate sales and assessed values are public information and can be obtained from the specific state or local agency.
Associations—Trade, business, and professional associations also have general data on the various activities and sales of their constituency. For example, the National Kitchen & Bath Association has general information on kitchen and bath design professionals, research design strategies, and remodeling. Although such data will not be company-specific, they are useful in gaining an overall perspective on the industry. Address and membership information for all associations can be found in the Encyclopedia of Associations, updated annually.
Media—Most magazines, newspapers, and radio and television stations have marketing data available on their audience. Also, media perform periodic market surveys of buying patterns and demographic information in their market area. For example, the Boston Globe does a demographic study of its readers in order to give advertisers a better understanding of the marketing potential of their area.
Trade journals—Trade journals also provide a wide variety of marketing and sales data on the areas they cover. For example, if market research were needed in the area of computers, then trade journals such as Computerworld, InfoWorld, and ZDNet should be checked for any pertinent information.
Universities and foundations—Universities and foundations perform a variety of research projects. In addition to special studies supported by grants from the government, universities publish general research findings of interest to the business community through their research bureaus and institutes.

Corporate annual reports—Corporate annual and 10-K reports are also useful sources of information on specific companies or general industry trends. These reports may not provide great detail; nevertheless, a general picture of the nature and scope of the firms in an industry as well as their general direction can be constructed.

Commercial data services—Many firms offer marketing research and commercial data services. Some provide custom research; they design the research project specifically to meet the client's needs. This can be expensive. Others, such as Nielsen Media Research, offer standardized information, compiled regularly and made available to clients on a subscription basis.

After all the secondary data sources have been checked and the needed data have not been found, the third aspect of a research projected begins—the collection of data through primary research. Primary research can be best looked at in terms of three areas: data collection, sample design, and data processing and analysis.

Data Collection

If it has been determined that the required data are not currently available, then the next step is to collect new data. To develop the data-collection procedure, the researcher must establish an effective link between the information needs and the questions to be asked or the observations to be recorded. The process of collecting data is critical because it typically involves a large proportion of the research budget. The most widely used methods of data collection are focus groups, surveys, or interviews.

Focus groups are often used to collect primary data. A focus group consists of a discussion, usually lasting one and a half to two hours, with eight to twelve individuals and a moderator who is intent on encouraging in-depth discussion of a topic or product. The discussion allows for flexibility and provides broad, in-depth knowledge that cannot be obtained through any other research method.

Surveys, also known as questionnaires, are the most common instrument for data collection. A survey consists of a set of questions presented to respondents for their answers. Surveys need to be carefully developed, tested, and debugged before they are used; they can be administered over the phone, through the mail, via e-mail, or online. Web-based surveys and other forms of online research are popular choices because of their many advantages—timely, reliable data collection providing real-time, instant access to target audiences' opinions at reduced costs. Web surveys do not replace the traditional techniques, but they can be an effective choice for companies big and small.

Primary research data are often obtained by interviews, either in person or over the telephone. For example, one might personally interview consumers to determine their opinions of a new line of low-fat foods or personally interview a few executives to determine their opinions of a nationally known advertising agency. An advantage of personal interviews is that the interviewer can adapt the question to the specific situation at hand. A limitation to this method is that the interviewer can introduce bias into the process by asking leading questions or by giving some indication of the preferred answer. A lot of time, supervision, and interviewer training are needed to implement personal interviews successfully.

Sample Design

When research is being conducted, it is important to determine the appropriate target population of the research—the group of people possessing characteristics relevant to the research problem from whom information will be obtained. Although this may appear to be easy, it is often one of the most difficult tasks in a marketing research project because of the wide variety of factors entering into the determination. For example, it might be important that only recent users of the product be surveyed. Or perhaps the purchasers of the product, not the users, should be the focus of the research.

Once the target population is determined, a decision is needed on how best to represent this population within the time and cost constraints of the research budget. Because there are many different methods used to draw this sample—the group of units composed of nonoverlapping elements that are representative of the population from which it is drawn—the best one needs to be chosen for the specific research project.

Data Processing and Analysis

After the data are collected, the processing begins, which includes the functions of editing and coding. Editing involves reviewing the data forms to ensure legibility, consistency, and completeness. Coding involves establishing categories for responses or groups of responses so that numerals can be used to represent the categories.

It is important that the data analysis be consistent with the requirements of the information needs identified when the research objectives were defined. Data analysis is usually performed with an appropriate software application. This data analysis, whether done by simple numeric counting or by complex computer-assisted analytical techniques, should provide meaningful information appropriate for managerial decisions.

Presentation of Results

After the data have been collected and analyzed, the final aspect of the research project can be generated—the development of the appropriate conclusions and recommendations. This is the most important part of the project, but it does not always receive the proper attention. The research results are typically communicated to the manager through a written report and oral presentation. The research findings should be presented in a clear, simple format and be accompanied by appropriate support material. The best research methodology in the world will be useless to managers if they cannot understand the research report. Some preparation guidelines for the written and oral reports are:

Consider the audience
Be concise, yet complete
Be objective, yet effective

The findings should address the information needs of the decision situation. The final measure of the value of the research project is whether the findings are successfully implemented in the company.

THE VALUE OF MARKETING RESEARCH

Marketing research has, in a way, pioneered the move toward the broader view of marketing. Marketing research serves as a coordinating factor between marketing and the other functions of a business, such as engineering, manufacturing, accounting, and finance. This integration has the effect of enhancing the importance of marketing research to the corporation as a whole.

Marketing research continues to play a key role in organizations in the twenty-first century. Technology does and will continue to enable marketing research to take the lead in providing useful information for effective business decisions. The Internet's role in marketing research will continue to grow because it provides a quick, cost-effective way of collecting and disseminating data. Market researchers will continue their evolution from supplying "market and opinion research" to a more strategic position of supplying information, consulting, and exchanging information with consumers. Companies that take advantage of marketing research and view it as a valuable business component will be the companies that survive and thrive.