Market research is the development, interpretation, and communication of decision-oriented information for business managers. It is used to solve problems, identify opportunities, support promotional efforts, and improve CUSTOMER RELATIONS / SATISFACTION. Market research is distinguished from MARKETING INFORMATION SYSTEMS in that it is undertaken to accomplish a specific objective, while marketing information systems provide an ongoing source of information used to make marketing decisions. Market research can be valuable to nonprofit groups as well as businesses. Market research is often conducted to understand why sales have decreased and how consumers perceive a company’s products as well as to identify new market segments, test consumers’ responses to new PRODUCTs and new promotional messages, and evaluate customer satisfaction with existing products and SERVICES. Companies often use syndicated market research (research data collected by a specialist detailing industry trends) to address many issues and concerns syndicated services. Marketers of retail products subscribe to services providing monthly sales data for their own and their competitors’ products by region and type of retail outlet. Other syndicated services like Nielsen and Arbitron provide television-viewer and radio-listener data, respectively. Some market-research firms also maintain a database of U.S. consumers, allowing marketers to send samples or surveys to particular groups of consumers whose opinions and responses they are interested in. When existing information, either within the organization or from syndicated sources, will not sufficiently answer the problem, and the problem or objective is of significant importance, market research is undertaken. The market research process involves a seven-step procedure.
• Define the objective.
• Conduct a situation analysis.
• Conduct an informal investigation.
• Plan and conduct a formal analysis.
• Plan the sample.
• Collect the data.
• Analyze and report the data.
Market research usually is conducted for one of three objectives: learning about a market or situation, describing market segments or customer behavior, or estimating the effectiveness of a MARKETING STRATEGY or the impact of a change in the marketing environment. Situation analysis addresses the question of what is known. Often the research objective can be accomplished by conducting an informal investigation. Review of existing published studies, discussions with personnel and customers, and analysis of existing data can (and should be) utilized before launching a formal market-research analysis. Formal market research studies can be expensive. If the problem or opportunity can be sufficiently evaluated using informal investigation, it is usually less costly and less time-consuming than conducting a full market study. After determining what information is needed, market researchers usually choose among six methods of gathering data: OBSERVATION, experimental design, personal interview surveys, TELEPHONE SURVEYS, MAIL SURVEYS, or INTERNET SURVEYS. Each method has its advantages and disadvantages. Observation does not interfere with CONSUMER BEHAVIOR, but it sometimes requires training of observers and can be expensive and time-consuming. Consumer-behavior studies using one-way mirrors, parking lot license plate-number collection, and people-flow patterns in buildings are all common observation methods. In experimental designs, researchers change one or more variables and measure consumers’ response. Price, ADVERTISING message, lighting, and product location within a store are examples of experimental designs used by market researchers. Personal interview surveys offer the advantage of indepth discussion, use of open-ended questions, and observation of respondents’ nonverbal responses. However, they are expensive and time-consuming, and they have the potential of interviewer bias. Telephone surveys are faster and less costly than personal interviews but limited in length, and with call screening and message machines, they may not generate a representative sample. Mail surveys are even less costly than telephone surveys, but they are slow and often result in a low response rate. This introduces the problem (called nonresponse bias) of whether those people who did not respond have different opinions from those who did. INTERNET surveys are an increasingly popular form of research but can result in a nonrepresentative sample. If a few respondents log-in and fill out the survey form repeatedly, the results will be of little use to the researcher. An old saying in market research (and in any data-collection effort) is “garbage in, garbage out.” The choice of data-collection method and the decision of what samples to take often influence each other. Ideally market researchers would like to have information from the target audience they are studying, but many times limitations restrict the sampling process. A random sample gives each member of the population an equal chance of being chosen for the survey. Random samples allow researchers to use their data to make judgments about the total population. Convenience samples (samples of readily available people such as colleagues, employees, and friends) or mall-intercept studies (random interviews with people at malls) are nonprobability samples and are not necessarily representative of the group being studied. The classic study using a convenience sample was the 1980s research by Coca-Cola regarding whether to replace the formula for Coke. Using a mall-intercept survey, researchers asked consumers which sample they liked best. Respondents chose the new formula by a small margin, but the researchers did not ask respondents whether they were Coke drinkers, and they did not say the purpose was to evaluate an alternative formula. By not sampling Coke drinkers and by not asking the right questions, Coca-Cola’s research was flawed and when Coca-Cola introduced the new formula consumers were outraged. While retailers chant the mantra “location, location, location,” market researchers repeat “pretest, pretest, pretest.” Researchers should pretest the survey instrument, sampling procedure, data-collection process, and data analysis. In the process, market researchers hope to avoid Murphy’s Law—“if it can go wrong, it will go wrong.” How the data is going to be evaluated should be established in advance, facilitating analysis and reporting of research results.
See also SURVEYS.