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The Marketing Research Industry: Evolution of the Industry Charles Coolidge Parlin is known as the “father of marketing research.” Parlin conducted the first continuous marketing research in the early 1900s for the Curtis Publishing Company. The purpose of Parlin’s research was to increase advertising for The Saturday Evening Post magazine. Copyright © 2010 Pearson Education, Inc.3-2

Growth of the Need for Marketing Research The Industrial Revolution led to manufacturers producing goods for distant markets. Manufacturers needed to know about faraway consumers. This led to the growing need for marketing research. Copyright © 2010 Pearson Education, Inc.3-3

The Marketing Research Industry Today World Revenues – The marketing research industry today accounts for about $21.5 billion spent annually. – The top 25 firms can be found in the report Honomichl Global Top 25 (See page 44.) – The top 50 U.S. firms can be found in the Honomichl Top 50. (See page 46.) Copyright © 2010 Pearson Education, Inc.3-4

Classifying Firms in the Marketing Research Industry Research Suppliers – Internal Suppliers – External Suppliers Limited Service Suppliers Full Service Suppliers Copyright © 2010 Pearson Education, Inc.3-5

The Marketing Research Industry Classification of Marketing Research Suppliers May or may not be a formal department Outside firm hired to perform some sort of marketing research Can perform all marketing research functions for the client Can perform only limited marketing research functions for the client Syndicated data service firms collect information that is made available to multiple subscribers. Standardized service firms provide syndicated marketing research services, as opposed to syndicated data, to clients. Customized service firms offer a variety of research services that are tailored to meet the client’s specific needs. Online research services firms specialize in providing services online. Copyright © 2010 Pearson Education, Inc.3-6

Industry Structure: Internal Suppliers Internal suppliers: an entity within the firm supplies marketing research Methods of Organization – Own formal departments: organized around: Marketing function: ad research, product research, pricing research, channel… Research process: data analysis, data collection… Area of application: brands, customers... Copyright © 2010 Pearson Education, Inc.3-7

Industry Structure: Internal Suppliers Methods of Organization – Single individual or committee – No responsibility assigned Copyright © 2010 Pearson Education, Inc.3-8

Industry Structure: External Suppliers External suppliers: outside firms hired to fulfill a firm’s marketing research needs Methods of Organization – Function: data analysis & collection… – Type of research application: ad research… – Geography: domestic, international… – Types of customers, finance, health – Combination of the above Copyright © 2010 Pearson Education, Inc.3-9

Industry Structure: External Suppliers Classification – Full service – Limited service Copyright © 2010 Pearson Education, Inc.3-10

Where to Find External Research Suppliers Copyright © 2010 Pearson Education, Inc.3-11

Challenges to the Marketing Research Industry Marketing researchers should focus on diagnosing problems in the market…need for portability led to Walkman, Watchman. Marketing researchers should speed up marketing research by using IT. Marketing researchers should take an integrative approach…avoid being “silos” of isolated information. Copyright © 2010 Pearson Education, Inc.3-12

Challenges to the Marketing Research Industry Marketing researchers should expand their strategic impact...get away from standard reports & get involved in strategic issues. Other criticisms – lack of creativity, too survey oriented, lack of understanding of real problems, lack of concern for respondents. Copyright © 2010 Pearson Education, Inc.3-13

Suggested Improvement: Certification For several years, certification has been debated. The MRA started a certification program in February Professional Researcher Certification – go to and see menu item “Certification.” Copyright © 2010 Pearson Education, Inc.3-14

Other Suggestions for Industry Improvements Education…MR industry has made much progress here. Examples include Southern Illinois University – Edwardsville’s Master of Marketing Research, AMA’s Notre Dame School of Marketing Research, Burke Institute, Advertising Research Foundation seminars, etc. Copyright © 2010 Pearson Education, Inc.3-15

Some Ethical Marketing Research Situations: Class Exercises Copyright © 2010 Pearson Education, Inc.3-16

Is this Ethical? 1.A research company decides to leave a message on prospective respondents’ answering machines telling them that if they call back in the next 24 hours, they will receive a valuable prize if they take part in a survey. Ethical as long as true Copyright © 2010 Pearson Education, Inc.3-17

Is this Ethical? 2.Upon completion of an interview, the respondent is asked to provide the names and telephone numbers of others he or she thinks should take part in the survey. Ethical - snowball sampling, referral sampling Copyright © 2010 Pearson Education, Inc.3-18

Is this Ethical? 3.A door-to-door salesman finds that by telling people that he is conducting a survey, they are more likely to listen to his sales pitch. Unethical – sugging What is frugging? Copyright © 2010 Pearson Education, Inc.3-19

Is this Ethical? 4.The cover letter of a mail questionnaire says that it will "only take a few minutes to fill out." But pretests have shown that at least fifteen minutes are needed to fill it out. Unethical as “few” is vague Copyright © 2010 Pearson Education, Inc.3-20

Is this Ethical? 5.Telephone interviewers are instructed to assure the respondent of confidentiality only if the respondent asks about it. Ethical as long as confidentiality is true Copyright © 2010 Pearson Education, Inc.3-21

Is this Ethical? 6.A client insists on inspecting the completed questionnaires to assess their validity, but the researcher suspects that the client is really interested in finding out what specific respondents said about the client. Unethical if the survey is confidential or anonymous Copyright © 2010 Pearson Education, Inc.3-22

Is this Ethical? 7.In the appendix of the final report, the researcher lists the names of all respondents who took part in the survey, and places an asterisk beside the names of those who indicated agreement to be contacted by the client's sales personnel. Ethical…They agreed to this. Copyright © 2010 Pearson Education, Inc.3-23

Ethical Issues with Online Surveys Spam surveys… Opt-In vs. Opt-Out Illegal! Copyright © 2010 Pearson Education, Inc.3-24

Why are Ethical Issues Problematic? Two competing ethical philosophies: – Deontology holds that if an (any) individual's rights are violated, then the behavior is not ethical. Copyright © 2010 Pearson Education, Inc.3-25

Why are Ethical Issues Problematic? Two competing ethical philosophies: – Teleology says to judge a given behavior in terms of its benefits and costs to society: if there are individual costs but group benefits, then there are net gains (versus net losses) and the behavior is judged to be ethical. Copyright © 2010 Pearson Education, Inc.3-26

Why are Ethical Issues Problematic? Marketing Research Situation or Practice Deontologist says… Teleologist says… Mystery shopper Frugging Disguised survey UnethicalNo problem Wrong! Okay if it helps folks Unethical Okay if it gets to the truth Copyright © 2010 Pearson Education, Inc.3-27

Marketing Research Code of Ethics CASRO: MRA: ESOMAR: PMRS: Copyright © 2010 Pearson Education, Inc.3-28

Ethical Issues – Research Integrity Sugging – selling under the guise of conducting research Frugging – fund-raising under the guise of conducting research Copyright © 2010 Pearson Education, Inc.3-29

Ethical Issues – Research Integrity Misrepresentation and omission of pertinent research data Copyright © 2010 Pearson Education, Inc.3-30

Ethical Issues – Research Integrity Treating clients, suppliers, and the public unfairly Copyright © 2010 Pearson Education, Inc.3-31

Ethical Issues with Respondents Respondent cooperation has been going down Marketing researchers should: – Eliminate or keep deception to a minimum – If promised, guarantee anonymity or confidentiality – Fight invasions of privacy such as telemarketing and SPAM Copyright © 2010 Pearson Education, Inc.3-32

Panels Marketing research companies are making greater use of panels Recruiting respondents who agree to participate in future studies Panel Equity, the value of having access to a large number of consumers willing to cooperate in studies, will increase in the future Copyright © 2010 Pearson Education, Inc.3-33

Some Internet Sites About Careers in Marketing Research Quirk’s Occupational Outlook Handbook Copyright © 2010 Pearson Education, Inc.3-34

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2010 Pearson Education, Inc Copyright © 2010 Pearson Education, Inc.