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
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.
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).
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).
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).
(The entire section is 3750 words.)