Many organizations find the markets they serve are dynamic with customers, competitors and market conditions continually changing. And marketing efforts that work today cannot be relied upon to be successful in the future. Meeting changing conditions requires marketers have sufficient market knowledge in order to make the right adjustments to their marketing strategy. For marketers gaining knowledge is accomplished through marketing research.
In this part of the Principles of Marketing Tutorials we begin a multi-part discussion of research in marketing. We explore what marketing research is and see why it is considered the foundation of marketing. This tutorial also looks at the elements of good research including factors that distinguish good research from poor. We examine the risks associated with marketing research and see why it should be used to aid decision-making, but never used as the sole reason for making decisions. Finally, we look at the trends shaping marketing research.
Note: In this tutorial we use the terms “marketing research” and “market research” interchangeably. Many feel there is a distinct difference, with “marketing research” covering a broader array of research efforts associated with marketing decisions while “market research” is specific to understanding nuances of a particular market. For the purpose of this tutorial we treat these as the same.
Importance of Marketing Research
Research, as a general concept, is the process of gathering information to learn about something that is not fully known. Nearly everyone engages in some form of research. From the highly trained geologist investigating newly discovered earthquake faults, to the author of best selling spy novels gaining insight into new surveillance techniques, to the model train hobbyist spending hours hunting down the manufacturer of an old electric engine, each is driven by the quest for information.
For marketers, research is not only used for the purpose of learning, it is also a critical component needed to make good decisions. Marketing research does this by giving marketers a picture of what is occurring (or likely to occur) and, when done well, offers alternative choices that can be made. For instance, research may suggest multiple options for introducing new products or entering new markets. In most cases marketing decisions prove less risky (though they are never risk free) when the marketer can select from more than one option.
Using an analogy of a house foundation, marketing research can be viewed as the foundation of marketing. Just as a well-built house requires a strong foundation to remain sturdy, marketing decisions need the support of research in order to be viewed favorably by customers and to stand up to competition and other external pressures. Consequently, all areas of marketing and all marketing decisions should be supported with some level of research.
While research is key to marketing decision making, it does not always need to be elaborate to be effective. Sometimes small efforts, such as doing a quick search on the internet, will provide the needed information. However, for most marketers there are times when more elaborate research work is needed and understanding the right way to conduct research, whether performing the work themselves or hiring someone else to handle it, can increase the effectiveness of these projects.
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Examples of Research in Marketing
As noted, marketing research is undertaken to support a wide variety of marketing decisions. The table below presents a small sampling of the research undertaken by marketing decision area. Many of the issues listed under Types of Research are discussed in greater detail in other parts of the Principles of Marketing Tutorials.
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Doing Research Right
Marketing research is a process that investigates both organizations and people. Of course, organizations are made up of people so when it comes down to it, marketing research is a branch of the social sciences. Social science studies people and their relationships and includes such areas as economics, sociology, and psychology. To gain understanding into their fields, researchers in the social sciences use scientific methods that have been tested and refined over hundreds of years. Many of these methods require the institution of tight controls on research projects. For instance, many companies survey (i.e., ask questions) of a small percentage of their customers (called a sample) to see how satisfied they are with the company’s efforts.
For the information obtained from a small group of customers to be useful when evaluating how all customers feel, certain controls must be in place including controls on who should be included in the sample. Thus, doing research right means the necessary controls are in place to insure it is done correctly and increase the chance the results are relevant. Relying on results of research conducted incorrectly to make decisions could prove problematic if not disastrous.
As one might expect, the trade-off for doing research right is the increase in cost and time needed to conduct the research. So a big decision for marketers, when it comes to doing research, is to determine the balance between the need for obtaining relevant information and the costs involved in carrying out the research.
Risk in Marketing Research
The discussion above regarding doing research right shows that good marketing research, especially when it involves formal research projects, requires strict controls in order to produce relevant information. Being relevant means the probability is high that the research results reflect what is happening now or might happen in the future. But following the right procedures to produce a relevant study does not insure the results of research will be 100% correct as there is always the potential that results are wrong.
Because of the risks associated with research, marketers are cautioned not to use the results of marketing research as the only input in making marketing decisions. Rather, smart marketing decisions require considering many factors, including management’s own judgment of what is best. But being cautious with how research is used should not diminish the need to conduct research. While making decisions without research input may work sometimes, long-term success is not likely to happen without regular efforts to collect information.
Additionally, risk in research extends to research produced by others. As we discuss in the Planning for Marketing Research Tutorial, the research process often includes using information initially gathered by other sources, such as market research firms. However, in many instances the methods for collecting this information may not be fully disclosed, thus questions exist regarding research validity and reliability. Marketers using research collected by third-party sources should do so with a reasonable level of skepticism. In fact, it is wise for marketers to always make an effort to locate multiple information sources that address the same issue (e.g., two or more sales forecasts reports). A good rule-of-thumb for all marketers is never to rely on one source for making definitive statements about a market.
Research Validity and Reliability
As we discussed, not all research requires undertaking an elaborate study. But even marketers conducting small, informal research should know that any type of research performed poorly will not yield relevant results. In fact, all research, no matter how well controlled, carries the potential to be wrong. There are many reasons why research may not yield good results (a full discussion being beyond the scope of this tutorial), however, most errors can be traced to problems with how data is gathered. In particular, many research mistakes occur due to problems associated with research validity and research reliability.
This problem with data gathering represents several concepts that to the non-researcher may be quite complex. But basically, validity boils down to whether the research is really measuring what it claims to be measuring. For instance, if a marketer is purchasing a research report from a company claiming to measure how people prefer the marketer’s products over competitors’ products, the marketer should understand how the data was gathered to help determine if the research really captures the information the way the research company says it does.
While research validity is measured in several ways, those evaluating research results should keep asking this simple question: Is the research measuring what it is supposed to measure? If the marketer has doubts about the answer to this question then it is possible the results should also be questioned.
This problem relates to whether research results can be applied to a wider group than those who took part in a study. In other words, would similar results be obtained if another group containing different respondents or a different set of data points were used? For example, if 40 salespeople out of 2,000-person corporate sales force participate in a research study focusing on company policy, is the information obtained from these 40 people sufficient to conclude how the entire sales forces feels about company policies? What if the same study was done again with 40 different salespeople, would the responses be similar?
Reliability is chiefly concerned with making sure the methods of data gathering leads to consistent results. For some types of research this can be measured by having different researchers follow the same methods to see if results can be duplicated. If results are similar then it is likely the method of data gathering is reliable. Assuring research can be replicated and can produce similar results is an important element of the scientific research method.
1. Information Advantage
In recent years the evolution of marketing research has been dramatic with marketers getting access to a wide variety of tools and techniques to improve their hunt for information. For instance, in its role as the foundation of marketing, marketing research is arguably marketing’s most important task. Today marketers not only view research as a key ingredient in making marketing decisions they also consider information to be a critical factor in gaining advantage over competitors.
Because organizations recognize the power information has in helping create and maintain products that offer value, there is an insatiable appetite to gain even more insight into customers and markets. Marketers in nearly all industries are expected to direct more resources to gathering and analyzing information especially in highly competitive markets. Many of the trends discussed below are directly related to marketers’ quest to acquire large amounts of customer, competitive and market information.
2. Internet and Mobile Technologies
To address the need for more information, marketing companies are developing new methods for collecting data. This has led to the introduction of several new internet and mobile technologies to assist in the information gathering process. Many of these developments are associated with measuring the activities of website visitors or users of mobile device applications (“apps”) and include:
Enhanced Tracking – Internet and mobile technologies offer an unparalleled ability to track and monitor customers. Each time a visitor accesses a website or uses a mobile application they provide marketers with extensive information including:how many are using a service (e.g., visit a website), what areas of the service are used (e.g., pages viewed within an app), how they arrived at the service (e.g., via a search engine), where in the world users are located (e.g., geographic location), and many other types of information. With tracking software becoming more sophisticated, many marketers now view it as an indispensable research tool.
Improved Communication – Internet and mobile technologies offer a significant improvement in customer-to-organization communication, which is vital for marketing research. For instance, the ability to encourage customers to offer feedback on the company’s products and service is easy with popup notices on websites and apps, text messages, and email reminders.
Research Tools – A large number of internet websites and mobile app developers offers services to assist with the collection of information. These include tools for conducting online surveys, virtual focus groups, and access to large databases containing previous research studies (i.e., secondary research).
3. Other Research Technologies
In addition to the internet and mobile technologies, marketing research has benefited from a number of other technologies including:
Global Positioning Systems (GPS) – GPS enables marketers to track inventory and even track sales and service personnel. GPS is also becoming a common feature of customers’ communication devices, such as smartphones, offering marketers the potential to locate and track customers.
Virtual Reality and Simulations – Marketers can use computer-developed virtual worlds to simulate real-world customer activity, such as in-store shopping. While this research is mostly performed in a controlled laboratory setting, there are emerging research applications involving virtual reality that enable marketers to test new product concepts and gain more insight into customer buying behavior.
Eye Tracking – Technologies that track eye movement have been around for some time, and most notably have been used in evaluating customer response to advertising and website layout. Recent advancements have led to the development of special glasses that offer the advantage of conducting research in real-world environments, such as in real stores, rather than in a controlled laboratory setting.
Data Analysis Software – As we will see in the Planning for Market Research Tutorial, the research process not only includes gathering information, it also involves a full analysis of what is collected. A number of software and statistical programs have been refined to give marketers greater insight into what the data really means. In fact, everyday spreadsheet programs, such as Microsoft Excel, now offer advanced statistical tools that previously were only available with more expensive computer programs.
Neuro-Research – Companies have begun to explore the use of brain-imaging technology for marketing research. Using such technologies as Magnetic Resonance Imaging (MRI) and Electroencephalogram (EEG) sensors, researchers scan the brains of research subjects as they are exposed to neuro-stimuli, such as imagery and sound, in order to detect the effect the stimuli.
4. Affordable Research
For many years formal research projects were considered something that only the largest marketers could afford due to the expense of carrying out relevant research. However, the technologies discussed in the previous pages make it affordable for organizations of all sizes to engage in research that were financially prohibitive just few years ago. For instance, surveying customers (discussed in the Data Collection: Primary Research Methods Tutorial) can be done quickly and easily using one of the many online survey services which charge low fees to create, distribute, and analyze results.
5. Merging Data Sources
The wide range of technologies used to gather data has led to the creation of data centers where information is stored. Today many of these data centers are sharing information with other centers in a manner that offers the marketer a fuller picture of their customers. For instance, as we discuss in the Managing Customers Tutorial, many organizations have multiple contact points where customers can interact with the company (e.g., in-person, on the web, via phone call). In the past, the information gathered at these points was often stored separately so if a customer contacted the company through one contact point they may not be recognized if they also contacted the company through a different point. Organizations now see the value in merging data sources in an effort to know what customers do across all contact points and work to integrate customer information.
Additionally, some marketers are going outside their own data collection and seek information on their customers from other sources, such as information provided by credit card companies. This information is then merged with the company-owned information to get a fuller picture of customer activity.
6. Privacy and Cooperation Concerns
The continual demand for customer information, along with advances in technology and the merging of information sources, has lead marketing organizations to gather information in ways that raise concerns among privacy advocates. Many customers are unaware of the amount and nature of the data marketers collect. As new information gathering techniques and technologies emerge customer response to privacy may determine whether these methods are feasible or forbidden.
The growing concern with privacy is leading many customers to limit their participation in a company’s research activities. This includes customers choosing not to respond to company requests to take part in research studies that may come via telephone or email solicitation. Customers are also becoming more aware of how their online and mobile activities are tracked and are responding by using techniques to restrict marketers tracking efforts. For example, marketers can place small data files called cookies on customers’ computer and then use this to track user activity. Many customers are learning to disable the cookies and, in doing so, limit the marketer’s ability to track customer activity.
7. Research as a Promotional Tool
While most people do not equate marketing research with promotion, the fact is many companies are using research as a promotional tool. The practice of distributing company-produced research reports to potential customers and the news media has been used for a number of years in scientific and technology industries. In recent years, the practice has expanded into many other fields, particularly among firms involved in consulting, healthcare, and financial industries. Such reports often provide readers with information related to product features and benefits, comparisons with competitor’s offerings and target market perceptions. These reports are produced using high quality graphs and charts backed up by carefully created narratives that proudly emphasize the company’s strengths.
Unfortunately, many research reports produced for promotional reasons are not scientific and thus may not carry much value. While many companies claim the research supports their products, many of these claims may in fact be more fluff than substance since they are not grounded in good research methods.