Marketing Research

This article concerns marketing research, that is, the methods a business utilizes to gather and analyze information regarding the market for a company's products, its customers and competitors. Essentially, the purpose of marketing research is to sell products at a profit as well as to develop new products by making effective marketing decisions. There are a number of considerations in making those decisions including economic trends, technological advances, and government regulations. The following is a brief study of some of the methods utilized in conducting this research, emerging trends in marketing research, as well as a discussion of privacy and ethical concerns affecting consumers.

Keywords Advertising; Brand; Brand Name Testing; Business Cycle; Business-to-business; Concept Testing; Consumer; Customer Surveys; Database Marketing; Direct Marketing; Economic Trends; Government Regulations; Loyalty Marketing; Market Structure; Marketing Research; Products; Sales Forecasting; Technological Advances; Telemarketing; Test Marketing

Marketing > Marketing Research

Overview

Factors Affecting Market Structure

Marketing research enables companies to advertise and sell their products as well as to develop new products. In this way, marketing research is similar to advertising research, product research and business-to-business research. This is so because marketing research is essentially aimed at gathering and compiling information about the market structure of a particular business enterprise, its consumers and its competitors. There are a number of factors that can influence the structure of a market and these include economic trends, technological advances and government regulations.

Due to economic trends, a company must rely on forecasts for the economic prospects of a particular line of business as well as general economic indicators to determine how these trends will affect the company's market. For example, energy prices are a significant factor that serve as a leading indicator for the economy at large and also affect a number of other consumer products. As oil prices rise, energy companies have greater profits and these, in turn, can be invested in research and development of new energy sources and the creation of new energy refineries. On the other hand, as energy prices fall, energy companies will not be as profitable and the resulting investment in research, development and refinery capacity will also decline. It is therefore clear that a company in the refinery business must follow the economic trends in oil prices.

Oil price fluctuations also influence other segments of the economy. Falling energy prices are beneficial to consumers since they will have greater purchasing power (the ability to purchase other goods and services). Moreover, companies will also be able to deliver their products to the market at a lower cost. Obviously, one industry that is greatly affected by the rise and fall of oil prices is the automotive industry due to the way oil prices affect consumers' driving patterns. The fluctuation in oil prices can affect consumer demand for fuel-efficient vehicles like compact cars and hybrid gas-electric vehicles. In order to determine the demand for these products, automakers need to research the economic trends of oil prices as well as consumer demands for new products that are a result of those trends.

Technological Advances

Another factor in marketing research is technological advances. For example, the development and expansion of the Internet has had a tremendous impact on how consumer goods are marketed. In fact, the Internet has become a new marketplace in and of itself. Companies like Amazon and EBay have applied longstanding techniques of direct marketing to online marketing and in so doing have become quite successful. These companies have also created a new field of business opportunities for many businesses and entrepreneurs. In order to be successful in today's economy, any business enterprise must provide some access to its products, or information about its business, to its customers via the Internet. Further, in order to determine the potential for a product to be successfully sold via the Internet, businesses must also have an understanding of the market structure of the Internet, and the buying patterns of its customers who shop online. This is a new and growing field of marketing research that will invariably lead to new techniques and methods for conducting that research such as cookie tracking, data mining and tracking social media (Hall, 2012).

Government Regulations

Finally, marketing research must also consider government regulation. Many businesses are subject to extensive regulatory oversight. In particular, companies in the financial services sector must navigate a variety of federal and state laws that impact the company's cost of doing business. As a result, companies seeking to expand into new markets or to offer new financial products must have an understanding of the regulatory framework governing these markets and products. This information will enable them to make a risk based determination if it will be profitable to enter that market or offer a product. In some cases, a banking entity may determine that a regulatory environment is so onerous that it poses too many risks for such an initiative to be profitable.

As it relates to marketing specifically, one of the most significant regulatory developments in recent years has occurred in the telemarketing sector. In June 2003, the Federal Trade Commission's Telemarketing Sales Rule went into effect. Prior to this, a number of states had already established laws limiting the ability of telemarketers to make unsolicited sales calls to consumers' home phones. The FTC's rule established a Federal "do-not-call" registry aimed at protecting consumers from receiving these calls. Basically, a person can enter their phone number on the registry and telemarketers are required to search the registry every 31 days and delete any numbers on their call lists that appear on the registry. Disregarding the registry can result in significant fines; however, the law does not apply to a telemarketer that already has a business relationship with a customer (Simon, 2004).

In addition to the telemarketing sales rule, there are also legislative initiatives aimed at curbing unwanted solicitations on fax lines as well as to limit spam mail that finds its way onto customers personal computers. At the same time, technological advances in this regard already enable customers to purchase software that blocks unwanted solicitations in electronic mail. Federal regulators are also currently legislating marketing via mobile phone and text message (Gekas, Gilley, & Moskowitz, 2012).

Applications

Conducting Marketing Research

By tracking the aforementioned trends and regulations, companies are provided with useful information about the structure of a market. In addition, businesses must also be able to acquire information about customers. In this regard, there are a number of methods for conducting marketing research and some of these methods include customer surveys, test marketing and brand name testing (Lubin, 2005).

  • Customer surveys simply require a business to contact its existing customers to determine their satisfaction with a product, to determine how it might be enhanced or the degree to which customers would be interested in new products. In light of the changes brought about by the Internet, many surveys are now even conducted online.
  • Test marketing is a process whereby a new product is launched in a small-scale market in order to determine its potential to sell in a larger market. Many of the new soft drinks and vitamin-enhanced bottled waters that are now widely popular were initially brought to the marketplace in this fashion.
  • Another type of consumer marketing research is brand name testing. Essentially, this testing investigates how customers respond to the names of products. Today, companies long to illustrate that their products stand for something. Brands are not only attached to the products being sold, but to high profile public personalities who are hired pitch the products. In fact, it is argued that these personalities are becoming brands in themselves so that the line between entertainers and branding is not so clear (Tischler, 2004).

Loyalty Marketing

There is a common link that ties customer surveys, test marketing and brand name testing together. This is an emerging marketing research strategy known as loyalty marketing. In essence, the purpose of loyalty marketing is to retain customers by offering them enhancements to products that they have already consumed as well as to alert existing customers to new products. Moreover, by retaining the loyalties of past customers, it is possible to gain new consumers through satisfied customer referrals and word of mouth. Loyalty marketing is not only a new trend; there are even new means and approaches to the methods of loyalty marketing. One such trend is called customer relationship management or CRM. Customer relationship management is a strategy aimed at enhancing the customer's experience with the product and the company. Automakers, video and electronics providers and sellers of audio components are increasingly involved in this strategy. Loyalty marketing can also assist a company in determining why customers are not being retained.

There are a number of reasons customers are not retained. In some cases, consumers may be able to purchase similar products elsewhere at lower prices. In today's marketplace, thanks in large part to the Internet, customers have greater access to information about products. A host of websites make information about products easily accessible. Because of this trend, customers have more knowledge and are more sophisticated about pricing, product quality and customer service. Aside from more informed customers, dissatisfaction with a companies' status can also lead to lost customers. It is important to acknowledge the effect that mergers and acquisitions have on a customer's relationship with a company. Because mergers and acquisitions often result in a company changing its name, brand names and product loyalty are adversely affected as loyal customers look to other companies for alternatives (Moloney, 2003).

Business-to-Business Research

Once a company has an understanding of the market structure, the forces affecting a market for a particular product, and the customers that are purchasing a product, a business enterprise also needs to have an understanding of other businesses that offer similar or like products. The method of gathering and compiling information about other companies is known as business-to-business research. Conducting this type of research provides useful information about competitors in the marketplace and also allows a business to establish successful relationships with similar businesses, vendors and channels of distribution for its products. One of the key developments affecting this aspect of marketing research is enhanced corporate accountability. Such accountability has arisen in the wake of the high profile accounting scandals and bankruptcies. These incidents have resulted in increased regulatory scrutiny by federal and state government agencies. Further, there has also been an increase in pressure from shareholders who are increasingly concerned about the effectiveness of marketing research (Maddox, 2005).

There are a number of other trends affecting how businesses measure each other.

  • One of these trends has been termed efficacy. Here, businesses are investigating how effective ad campaigns are in attracting and retaining customers.
  • Another trend that businesses are following is developing strategic alliances with similar businesses. These alliances enable a company to draw on the strength of marketing partners and their distribution channels.
  • As with customer marketing research, technological advances are also affecting the way in which companies compete for consumers. This can be seen in the growing use of on-line video ads and instant messaging. As technology has improved the graphics of online content, businesses are able to better create online ads that attract customers. Moreover, companies with e-commerce sites have found that sending an instant message to a customer is more likely to be received than an attempt to call the customer on the phone (Maddox, 2005).

Other Market Research Methods

There are other methods for conducting market research in addition to those referred to above. Some of these include concept testing, sales forecasting and advertising and promotion research.

  • Concept testing is the simple process of determining if certain consumers will accept a concept, and this method is similar to test marketing.
  • Sales forecasting enables a company to determine the level of demand for a product as it relates to the cost of delivering it to the consumer.
  • Advertising and promotion research allow a business to determine the effectiveness of advertisements. In order to do so, a company needs to determine if consumers recall the ad, comprehend the message and if the ad influenced the consumer's decision to purchase the product. This type of research is directly related to the emerging trend towards measuring efficacy in business-to-business research.

Analysis of Data

In addition to the different types of methods used for conducting market research, there are also a number of ways to analyze this data. Regardless of the methods of marketing research a business employs and the qualitative and quantitative factors used in assessing this data, technological advances have enabled businesses to better analyze the data that has been complied on consumer behavior. One method for assessing this information is called database marketing. In short, database marketing is a technological means for conducting market analysis that enable a business enterprise to limit their marketing research to consumers who are most likely to purchase their products (Pizzolato, 2004).

Not only have technological advances given businesses enhanced means for compiling and analyzing data about consumers and other businesses, technology offers enhanced means for reaching consumers by providing access to information about the business and its products via the Internet (Mace, 2012). At the same time, the Internet has enabled consumers to become more knowledgeable about products and the companies that provide these products.

Viewpoints

Benefits & Detractors of Technology

Marketing research has undergone dramatic changes in the past 15 years. The most significant change has been the way in which companies gather and use information about markets, customers and other businesses. Technological advances have enhanced their ability to determine if there is sufficient demand for particular products and to devise formulas for determining market trends even before these trends manifest themselves. In order to do so, businesses must be able to develop databases that identify potential opportunities. By having an enhanced method for analyzing data, businesses are now able to know more about the behavioral patterns of potential customers as well as their competitors. This knowledge has the potential to enable a business to influence the choices that consumers make. Further, enhanced means for conducting business to business research enables a company to gather knowledge about other companies' business strategies. This knowledge can be helpful in devising different methods for marketing a product and in determining if there is the possibility for strategic alliances (Pizzolato, 2004).

Consumer Privacy & Ethical Responsibilities

While there may be benefits for both businesses and consumers because of technological advances, there are some matters that require careful consideration. Essentially, consumers are becoming increasingly concerned about their privacy rights since a great deal of personal information can now be compiled, retained and shared by businesses (Zid, 2004).

Although there has been legislation at the federal and state level aimed at protecting personal information, especially as it relates to the financial and medical records of consumers, privacy laws cannot prevent security breaches, and there have been a number of incidents where private consumer information has been illegally obtained by computer hackers. In addition to consumers' rising concerns about the protection of personal information being retained by companies, there are also ethical considerations that must be acknowledged (Nunan & Di Domenico, 2013). This is especially relevant because some studies have shown that marketing has been a business sector frequently charged with unethical practices and marketing research presents particular ethical challenges. The essential question here is the extent to which a society can protect consumers from becoming mere research objects used for the sole purpose of creating increased consumption (Michaelides, 2004).

At the same time, consumers in a free society are ultimately responsible for these considerations. There are steps that they can take to ensure their privacy is maintained and that the companies with which they conduct business have measures in place to protect personal information from being shared with third parties or from becoming the target of security breaches. Further, consumers should exercise a reasonable degree of discretion when providing information to marketing research firms. By virtue of the do-not-call registries that have been created by government regulations, consumers can protect themselves from unsolicited calls from telemarketers and therefore have no need to provide any information over the phone about their purchasing behavior. Further, while consumers are increasingly purchasing goods through e-commerce sites of companies with whom they conduct business, there are steps a consumer can take to protect his or her privacy. In this regard, it is a prudent idea to limit the amount of personal information provided in online surveys. In order to protect personal financial information, rather than paying for products with credit cards, there are alternative means for doing so such as paying upon delivery or use of an on-line payment vehicle like pay-pal.

In the final analysis, these privacy and ethical considerations are a question of values and the extent to which people have a sense of balance as it relates to being consumers. Consumers have choices about providing information about their purchasing habits. At the end of the day, marketing research serves a valuable purpose as it allows businesses to develop methods to more efficiently deliver consumer products to the marketplace. Ultimately, consumers have the power to choose which products they will purchase and that choice is a matter of deciding if products are necessities or if they serve some other purpose.

Terms & Concepts

Advertising: The public promotion of a consumer product, good or service.

Brand: The link between a consumer product and its name.

Brand Name Testing: The method used to discover how consumers relate to the names of products.

Business-to-Business: The way in which businesses interact, develop alliances, and conduct marketing research on each other.

Business Cycle: A predictable long term pattern of alternating periods of economic growth and decline.

Concept Testing: Process of determining if certain customers will accept a certain concept — similar to test marketing.

Consumer: The purchaser of a good or service intended for personal or household use.

Customer Surveys: Method of obtaining consumer information directly from customers.

Database Marketing: A technological means for conducting market analysis that enables a company to limit its research to customers most likely to purchase its products.

Direct Marketing: A promotion mechanism that allows focused messages to be received by a targeted audience.

Economic Trends: The forces affecting the economy at large and the market for a particular product.

Government Regulations: Federal and state laws and rules that govern a business and the products it sells.

Loyalty Marketing: An emerging marketing research strategy for determining if customers are being retained.

Market Structure: The forces that shape the market for a particular consumer product.

Marketing Research: The methods used to gather and analyze information regarding a company's market for its products.

Products: Consumer goods purchased for personal or household use (as distinguished from producers' goods which goods are used by businesses to produce other goods).

Sales Forecasting: A marketing research method used to determine the level of demand for a product.

Telemarketing: The use of the telephone to market goods or services directly to prospective customers.

Test Marketing: The introduction of a product into a small market to determine its potential to sell in a larger market.

Bibliography

Gekas, J. A., Gilley, C. A., & Moskowitz, A. Z. (2012). Keeping current: FCC clarifies that a text confirming "opt-out" does not violate the TCPA. Business Law Today, 21, 1-2. Retrieved on November 15, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=90337462&site=ehost-live

Hall, K. (2012). Gathering retail intelligence. (Cover story). Computer Weekly, 20-22. Retrieved on November 15, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=85656046&site=ehost-live

Larson, M. (2005). Trends point to increasing value from Internet sales and meeting specific needs of customers. Electronics Weekly, (2221), 26. Retrieved January 5, 2007, from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=19405621&site=ehost-live

Lubin, P.C. (2005). Is your research any good? Bank Marketing, 37, 39-43. Retrieved January 9, 2007, from EBSCO Online Database Business Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=17085819&site=ehost-live

Mace, T. (2012). Developments and the impact of smart technology. International Journal of Market Research, 54, 567-570. Retrieved on November 15, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=78072527&site=ehost-live

Maddox, K. (2005). Top trends. B to B, 90, 1-29. Retrieved January 8, 2007, from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=15842112&site=ehost-live

Moloney, C. (2003). Top 10 trends in loyalty marketing. Credit Union Newsletter, 29, 3-4. Retrieved January 4, 2007, from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=9987320&site=ehost-live

Nunan, D., & Di Domenico, M. (2013). Market research and the ethics of big data. International Journal of Market Research, 55, 2-13. Retrieved on November 15, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=89072042&site=ehost-live

Pizzolato, R. (2004, January). Is your marketing department stuck in 1989? Direct Marketing, 1-4. Retrieved January 4, 2007, from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=15038273&site=ehost-live

Simon, E.Y. (2004). Do-not-call compliance causes confusion. Hotel & Motel Management, 219, 20. Retrieved January 5, 2007, from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=13832682&site=ehost-live

Tischler, L. (2004). The good brand. Fast Company, , 47-49. Retrieved January 4, 2007, from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=13660252&site=ehost-live

Zid, L., Abu-Shalaback. (2004). Too much information? Marketing Management, 13, 4. Retrieved January 9, 2007, from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=12123025&site=ehost-live

Suggested Reading

Green, P. Johnson, R. Neal, W. (2003). The journal of market research: Its initiation, growth, and knowledge dissemination. Journal of Marketing Research, 40, 1-9 Retrieved January 8, 2007, from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=9190673&site=ehost-live

Hempel, J. Lehman, P. (2005, December 12). The Myspace generation. Business Week, (3963), 86-96. Retrieved January 8, 2007, from EBSCO Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=19025357&site=ehost-live

Michaelides, P. & Gibbs, P. (2006). Technical skills and the ethics of market research. Business Ethics: A European Review, 15 44-52. Retrieved January 8, 2007, from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=20506667&site=ehost-live

Edited by Richa S. Tiwary, Ph.D., MLS

Dr. Richa S. Tiwary holds a Doctorate in Marketing Management with a specialization in Consumer Behavior from Banaras Hindu University, India. She earned her second Masters in Library Sciences with dual concentration in Information Science & Technology, and, Library Information Services, from the Department of Information Studies, University at Albany-SUNY.