Branch of research for business management, studying markets and economic opportunities
Marketing research is the systematic gathering, recording, and analysis of qualitative and quantitative data about issues relating to marketing products and services. The goal is to identify and assess how changing elements of the marketing mix impacts customer behavior.
This involves employing a data-driven marketing approach to specify the data required to address these issues, then designing the method for collecting information, managing and implementing the data collection process. After analyzing the collected data, these results and findings, including their implications, are forwarded to those empowered to act on them.
Market research, marketing research, and marketing are a sequence of business activities; sometimes these are handled informally.
The field of "marketing research" is much older than that of "market research". Although both involve consumers, "Marketing" research is concerned specifically with marketing processes, such as advertising effectiveness and salesforce effectiveness, while "market" research is concerned specifically with markets and distribution. Two explanations given for confusing "market research" with "marketing research" are the similarity of the terms and also that market research is a subset of marketing research. Further confusion exists because of major companies with expertise and practices in both areas.
Overview.
Marketing research is often partitioned into two sets of categorical pairs, either by target market:
Or, alternatively, by methodological approach:
Consumer marketing research is a form of applied sociology that concentrates on understanding the preferences, attitudes, and behaviors of consumers in a market-based economy, and it aims to understand the effects and comparative success of marketing campaigns.
Thus, marketing research may also be described as the systematic and objective identification, collection, analysis, and dissemination of information for the purpose of assisting management in decision making related to the identification and solution of problems and opportunities in marketing. The goal of market research is to obtain and provide management with viable information about the market (e.g. competitors), consumers, the product/service itself etc.
Role.
The purpose of marketing research (MR) is to provide management with relevant, accurate, reliable, valid, and up to date market information. Competitive marketing environment and the ever-increasing costs attributed to poor decision making require that marketing research provide sound information. Sound decisions are not based on gut feeling, intuition, or even pure judgment.
Managers make numerous strategic and tactical decisions in the process of identifying and satisfying customer needs. They make decisions about potential opportunities, target market selection, MARKETING segmentation, planning and implementing marketing programs, marketing performance, and control. These decisions are complicated by interactions between the controllable marketing variables of product, pricing, promotion, and distribution. Further complications are added by uncontrollable environmental factors such as general economic conditions, technology, public policies and laws, political environment, competition, and social and cultural changes. Another factor in this mix is the complexity of consumers. Marketing research helps the marketing manager link the marketing variables with the environment and the consumers. It helps remove some of the uncertainty by providing relevant information about the marketing variables, environment, and consumers. In the absence of relevant information, consumers' response to marketing programs cannot be predicted reliably or accurately. Ongoing marketing research programs provide information on controllable and non-controllable factors and consumers; this information enhances the effectiveness of decisions made by marketing managers.
Traditionally, marketing researchers were responsible for providing the relevant information and marketing decisions were made by the managers. However, the roles are changing and marketing researchers are becoming more involved in decision making, whereas marketing managers are becoming more involved with research. The role of marketing research in managerial decision making is explained further using the framework of the DECIDE model.
History.
Evidence for commercial research being gathered informally dates to the Medieval period. In 1380, the German textile manufacturer, Johann Fugger, travelled from Augsburg to Graben in order to gather information on the international textile industry. He exchanged detailed letters on trade conditions in relevant areas. Although, this type of information would have been termed "commercial intelligence" at the time, it created a precedent for the systemic collection of marketing information.
During the European age of discovery, industrial houses began to import exotic, luxury goods - calico cloth from India, porcelain, silk and tea from China, spices from India and South-East Asia and tobacco, sugar, rum and coffee from the New World. International traders began to demand information that could be used for marketing decisions. During this period, Daniel Defoe, a London merchant, published information on trade and economic resources of England and Scotland. Defoe was a prolific publisher and among his many publications are titles devoted to the state of trade including; "Trade of Britain Stated," (1707); "Trade of Scotland with France," (1713) and "The Trade to India Critically and Calmly Considered," (1720) - all of which provided merchants and traders with important information on which to base business decisions.
Until the late 18th-century, European and North-American economies were characterised by local production and consumption. Produce, household goods and tools were produced by local artisans or farmers with exchange taking place in local markets or fairs. Under these conditions, the need for marketing information was minimal. However, the rise of mass-production following the industrial revolution, combined with improved transportation systems of the early 19th-century, led to the creation of national markets and ultimately, stimulated the need for more detailed information about customers, competitors, distribution systems, and market communications.
By the 19th-century, manufacturers were exploring ways to understand the different market needs and behaviours of groups of consumers. A study of the German book trade found examples of both product differentiation and market segmentation as early as the 1820s. From the 1880s, German toy manufacturers were producing models of tin toys for specific geographic markets; London omnibuses and ambulances destined for the British market; French postal delivery vans for Continental Europe and American locomotives intended for sale in America. Such activities suggest that sufficient market information was collected to support detailed market segmentation.
In 1895, American advertising agency, N. H. Ayer &amp; Son, used telegraph to contact publishers and state officials throughout the country about grain production, in an effort to construct an advertising schedule for client, Nichols-Shephard company, an agricultural machinery company in what many scholars believe is the first application of marketing research to solve a marketing/ advertising problem)
Between 1902 and 1910, George B Waldron, working at Mahin's Advertising Agency in the United States used tax registers, city directories and census data to show advertisers the proportion of educated vs illiterate consumers and the earning capacity of different occupations in a very early example of simple market segmentation. In 1911 Charles Coolidge Parlin was appointed as the Manager of the Commercial Research Division of the Advertising Department of the Curtis Publishing Company, thereby establishing the first in-house market research department - an event that has been described as marking the beginnings of organised marketing research. His aim was to turn market research into a science. Parlin published a number of studies of various product-markets including agriculture (1911); consumer goods (c.1911); department store lines (1912) a five-volume study of automobiles (1914).
In 1924 Paul Cherington improved on primitive forms of demographic market segmentation when he developed the 'ABCD' household typology; the first socio-demographic segmentation tool. By the 1930s, market researchers such as Ernest Dichter recognised that demographics alone were insufficient to explain different marketing behaviours and began exploring the use of lifestyles, attitudes, values, beliefs and culture to segment markets.
In the first three decades of the 20th century, advertising agencies and marketing departments developed the basic techniques used in quantitative and qualitative research – survey methods, questionnaires, gallup polls etc. As early as 1901, Walter B Scott was undertaking experimental research for the Agate Club of Chicago. In 1910, George B Waldron was carrying out qualitative research for Mahins Advertising Agency. In 1919, the first book on commercial research was published, "Commercial Research: An Outline of Working Principles" by Professor C.S. Duncan of the University of Chicago.
Adequate knowledge of consumer preferences was a key to survival in the face of increasingly competitive markets. By the 1920s, advertising agencies, such as J Walter Thompson (JWT), were conducting research on the "how" and "why" consumers used brands, so that they could recommend appropriate advertising copy to manufacturers.
The advent of commercial radio in the 1920s, and television in the 1940s, led a number of market research companies to develop the means to measure audience size and audience composition. In 1923, Arthur Nielsen founded market research company, A C Nielsen and over next decade pioneered the measurement of radio audiences. He subsequently applied his methods to the measurement of television audiences. Around the same time, Daniel Starch developed measures for testing advertising copy effectiveness in print media (newspapers and magazines), and these subsequently became known as Starch scores (and are still used today).
During, the 1930s and 1940s, many of the data collection methods, probability sampling methods, survey methods, questionnaire design and key metrics were developed. By the 1930s, Ernest Dichter was pioneering the focus group method of qualitative research. For this, he is often described as the 'father of market research.' Dichter applied his methods on campaigns for major brands including Chrysler, Exxon/Esso where he used methods from psychology and cultural anthropology to gain consumer insights. These methods eventually lead to the development of "motivational research." Marketing historians refer to this period as the "Foundation Age" of market research.
By the 1930s, the first courses on marketing research were taught in universities and colleges. The text-book, "Market Research and Analysis" by Lyndon O. Brown (1937) became one of the popular textbooks during this period. As the number of trained research professionals proliferated throughout the second half of the 20th-century, the techniques and methods used in marketing research became increasingly sophisticated. Marketers, such as Paul Green, were instrumental in developing techniques such as conjoint analysis and multidimensional scaling, both of which are used in positioning maps, market segmentation, choice analysis and other marketing applications.
Web analytics were born out of the need to track the behavior of site visitors and, as the popularity of e-commerce and web advertising grew, businesses demanded details on the information created by new practices in web data collection, such as click-through and exit rates. As the Internet boomed, websites became larger and more complex and the possibility of two-way communication between businesses and their consumers became a reality. Provided with the capacity to interact with online customers, Researchers were able to collect large amounts of data that were previously unavailable, further propelling the marketing research industry.
In the new millennium, as the Internet continued to develop and websites became more interactive, data collection and analysis became more commonplace for those marketing research firms whose clients had a web presence. With the explosive growth of the online marketplace came new competition for companies; no longer were businesses merely competing with the shop down the road — competition was now represented by a global force. Retail outlets were appearing online and the previous need for bricks-and-mortar stores was diminishing at a greater pace than online competition was growing. With so many online channels for consumers to make purchases, companies needed newer and more compelling methods, in combination with messages that resonated more effectively, to capture the attention of the average consumer.
Having access to web data did not automatically provide companies with the rationale behind the behavior of users visiting their sites, which provoked the marketing research industry to develop new and better ways of tracking, collecting and interpreting information. This led to the development of various tools like online focus groups and pop-up or website intercept surveys. These types of services allowed companies to dig deeper into the motivations of consumers, augmenting their insights and utilizing this data to drive market share.
As information around the world became more accessible, increased competition led companies to demand more of market researchers. It was no longer sufficient to follow trends in web behavior or track sales data; companies now needed access to consumer behavior throughout the entire purchase process. This meant the Marketing Research Industry, again, needed to adapt to the rapidly changing needs of the marketplace, and to the demands of companies looking for a competitive edge.
Today, marketing research has adapted to innovations in technology and the corresponding ease with which information is available. B2B and B2C companies are working hard to stay competitive and they now demand both quantitative (“What”) and qualitative (“Why?”) marketing research in order to better understand their target