Marketing managers often commission formal marketing studies of specific problems and opportunities, like a market survey, a product-preference test, a sales forecast by region, or an advertising evaluation. It’s the job of the marketing researcher to produce insight to help the marketing manager’s decision making. Formally, the American Marketing Association says:2
Marketing research is the function that links the consumer, customer, and public to the marketer through information—information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing research specifies the information required to address these issues, designs the method for collecting information, manages and implements the data collection process, analyzes the results, and communicates the findings and their implications.
1. IMPORTANCE OF MARKETING INSIGHTS
Marketing research is all about generating insights. Marketing insights provide diagnostic information about how and why we observe certain effects in the marketplace and what that means to marketers.3
Good marketing insights often form the basis of successful marketing programs.
- When an extensive consumer research study of U.S. retail shoppers by Walmart revealed that the store’s key competitive advantages were the functional benefit of “offers low prices” and the emotional benefit of “makes me feel like a smart shopper,” its marketers used those insights to develop their “Save Money, Live Better” campaign.4
- When marketing research showed that consumers viewed Walgreens largely as a convenience store with a pharmacy in the back, the company took steps to reposition itself as a premium health care brand, putting more emphasis on its wellness offerings such as its walk-in clinics.5
Gaining marketing insights is crucial for marketing success. To improve the marketing of its $3 billion Pantene hair care brand, Procter & Gamble conducted a deep dive into women’s feelings about hair, using surveys with mood scales from psychology, high-resolution EEG research to measure brainwaves, and other methods. As a result, the company reformulated Pantene products, redesigned packages, pared the line down from 14 “collections” to eight, and fine-tuned the ad campaign.6
If marketers lack consumer insights, they often get in trouble. When Tropicana redesigned its orange juice packaging, dropping the iconic image of an orange skewered by a straw, it failed to adequately test for consumer reactions—with disastrous results. Sales dropped by 20 percent, and Tropicana reinstated the old package design after only a few months.7
2. WHO DOES MARKETING RESEARCH?
Spending on marketing research topped $40.2 billion globally in 2013, according to ESOMAR, the world association of opinion and market research professionals.8 Most large companies have their own marketing research departments, which often play crucial roles within the organization. Here is how Procter & Gamble describes its marketing research department.9
Consumer & Market Knowledge (CMK) Department is P&G’s key internal compass guiding and championing decisions related to brand and customer business development strategy based on in-depth analysis of consumers, shoppers and the retail trade. CMK leads analysis of market trends and consumer habits/motivations, shopper behavior, customer and competitive dynamics; designs and analyzes qualitative and quantitative consumer and shopper research studies as well as syndicated market data. CMK is an integral partner, involved in all the stages of the brand life cycle starting with design of a concept to final product development and through to the in-market launch driving business growth. CMK brings to life P&G stated global strategy “Consumer is Boss.”
Marketing research, however, is not limited to large companies with big budgets and marketing research departments. Often at much smaller companies, everyone carries out marketing research—including the customers. Small companies can also hire the services of a marketing research firm or conduct research in creative and affordable ways, such as:
- Engaging students or professors to design and carry out projects—AT&T, GE, Samsung, Shell Oil, and others have engaged in a “crowdcasting” exercise by sponsoring the Innovation Challenge, where top MBA students compete in teams to address company problems. The students gain experience and visibility; the companies get fresh sets of eyes to solve problems at a fraction of what consultants would charge.10 The nonprofit United Way uses graduate students and interns as critical marketing research resources to collect and consolidate marketplace data and set up larger research projects.11
- Using the Internet—A company can collect considerable information at little cost by examining competitors’ Web sites, monitoring chat rooms and blogs, and accessing published data. Social media monitoring tools from companies like Radian6, Attensity, and Lithium keep firms on top of online buzz. Home water filtration company Aquasana uses tools from NetBase to collect what people are saying about Brita and other competitors on Twitter, Facebook, news sites, blogs, message boards, and any other place there are relevant online conversations.12
- Checking out rivals—Many small businesses, such as restaurants, hotels, or specialty retailers, routinely visit competitors to learn about changes they have made. Tom Stemberg, who founded the office supply superstore Staples, made weekly unannounced visits to his own stores, competitors’ stores, and other stores outside his category, always focused on “what the store was doing right” to get ideas for improving Staples.13
- Tapping into marketing partner expertise—Marketing research firms, ad agencies, distributors, and other marketing partners may be able to share relevant market knowledge they have accumulated. Partners targeting small or medium-sized businesses may be especially helpful. For example, to promote more shipping to China, UPS conducted several in-depth surveys of the Chinese market to portray its complexities but also its opportunities for even small and medium-sized businesses.14
- Tapping into employee creativity and wisdom—No one may come into more contact with customers and understand a company’s products, services, and brands better than its employees. Software maker Intuit puts employees into four- to six-person “two pizza” teams—called that because it takes only two pizzas to feed them. They observe customers in all walks of life and try to identify problems Intuit might be able to solve. Intuit takes all the employees’ proposed solutions and experiments with them, building products behind the ideas that seem to work best.15
Most companies use a combination of resources to study their industries, competitors, audiences, and channel strategies. They normally budget marketing research at 1 percent to 2 percent of company sales and spend a large percentage of that on the services of outside firms. Marketing research firms fall into three categories:
- Syndicated-service research firms—These firms gather consumer and trade information, which they sell for a fee. Examples include the Nielsen Company, Kantar Group, Westat, and IRI.
- Custom marketing research firms—These firms are hired to carry out specific projects. They design the study and report the findings.
- Specialty-line marketing research firms—These firms provide specialized research services. The best example is the field-service firm, which sells field interviewing services to other firms.
3. OVERCOMING BARRIERS TO THE USE OF MARKETING RESEARCH
In spite of the rapid growth of marketing research, many companies still fail to use it sufficiently or correctly. They may not understand what it is capable of or provide the researcher the right problem definition and information from which to work. They may also have unrealistic expectations about what researchers can offer. Failure to use marketing research properly has led to numerous gaffes, including the following historic one.16
STAR WARS In the 1970s, a successful marketing research executive left General Foods to try a daring gambit: bringing market research to Hollywood, to give film studios access to the same research that had spurred General Foods’s success. A major film studio handed him a science fiction film proposal and asked him to research and predict its success or failure. His views would inform the studio’s decision about whether to back the film. The research executive concluded the film would fail. For one, he argued, Watergate had made the United States less trusting of institutions and, as a result, its citizens in the 1970s prized realism and authenticity over science fiction. This particular film also had the word “ waf in its title; the executive reasoned that viewers, suffering post-Vietnam hangover, would stay away in droves. The film was Star Wars, which eventually grossed more than $4.3 billion in box office receipts alone. What this researcher delivered was information, not insight. He failed to study the script itself, to see that it was a fundamentally human story—of love, conflict, loss, and redemption—that happened to play out against the backdrop of space.
Source: Kotler Philip T., Keller Kevin Lane (2015), Marketing Management, Pearson; 15th Edition.