Download To understand how the marketing research industry evolved

CHAPTER 2
UNDERSTANDING THE MARKETING RESEARCH INDUSTRY
LEARNING OBJECTIVES

To understand how the marketing research industry evolved

To know about the marketing research industry today, including the major firms and
professional organizations

To learn how to classify firms in the marketing research industry

To know examples of the different types of external suppliers

To appreciate some of the challenges to the industry and suggestions for improvement

To understand how a researcher's philosophy might dictate behavior

To appreciate the ethical issues involved in marketing research

To learn the ethical standards for conducting online survey research
CHAPTER OUTLINE
CHAPTER 2 UNDERSTANDING THE MARKETING RESEARCH INDUSTRY
The Marketing Research Industry
Evolution of the Industry
The Marketing Research Industry Today
“The Honomichl Top 50”
Classifying Firms in the Marketing Research Industry
Internal Suppliers
Do Internal Suppliers Organize the Research Function?
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External Suppliers
How do External Suppliers Organize?
Classifying External Suppliers
Challenges to the Marketing Research Industry
Marketing Researchers Should Focus on Diagnosing Problems
Marketing Researchers Should Speed Up Marketing Research by Using IT
Marketing Researchers Should Take an Interactive Approach
Marketing Researchers Should Expand their Strategic Impact
Other Criticisms
Improvements: Certification, Auditing and Education
Ethics and Marketing Research
Your Ethical Views Are Shaped by Your Philosophy
Ethical Behavior in Marketing Research
KEY TERMS
Charles Coolidge Parlin
Honomichl Global 25
Honomichl Top 50
Strategic alliances
Research suppliers
Internal supplier
External suppliers
Full-service supplier firms
Syndicated data service firms
Standardized service firms
Customized service firms
Online research services firms
Limited-service supplier firms
Field service firms
Market segment specialists
Sample design and distribution
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Data analysis services
Specialized research technique firms
Certification
Auditing
Professional Certified Marketer (PCM) Ethics
Deontology
Teleology
Code of ethical behavior
Sugging
Frugging
Research integrity
RFP’s
Deception
Confidentiality
Anonymity
Spam
Panel equity
Can Spam Act
Opt-out standard
Opt-in standard
TEACHING SUGGESTIONS
1. Ask students if they can detect the three main causes for the changes in marketing research
over its history. One is evolution of markets where we moved from local markets where
buyer and seller were neighbors to global ones where buyers and sellers are from completely
different cultures. This drives the need for information about the marketing environment.
Another is changes in technology ranging from questionnaire design to computerization
which have been adopted by marketing research. The third cause is the combination of
computer technology (namely the Internet) and globalization effected by online research.
Class discussion and examples of one or all three of these forces can be fruitful. Select a
company that has global marketing aspirations and have students identify what research
questions are relevant as it moves into different countries and cultures. One the other hand, it
might be enlightening to illustrate how marketing research companies are now on the Internet
by using companies identified in Chapter 2.
2. Some topics that you might want to describe to students to open their eyes up to the impact of
technology on marketing research are the following: (1) single source data where purchases
of a family’s (say) grocery products are captured across several weeks, (2) focus groups that
take place over the Internet using video cameras and chat software, or (3) handheld
computers that administer customer satisfaction questionnaires to exiting customers at (for
example) automobile dealership service centers.
3. To delve into “The Honomichl 50”look at the Marketing News Marketing Research Report.
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Unless there is a change in policy, the Marketing Research Report appears annually in a June
issue, and it can be used to update the figures. The Report also profiles each of the 50 top
companies, and as an introduction to the industry, have students select companies and
summarize the profiles in class presentations or discussion.
4. “The Honomichl 50” and some reference to marketing research companies in Chapter 2
include the website addresses of the top marketing research companies. If you have
multimedia capability with Internet connection in your classroom, use one or a number of
them to show students the number and variety of products and services that these companies
offer. Alternatively, have student volunteer to visit top company website and “show and tell”
some interesting products and/or services that they find.
5. Students may not understand the distinctions between the three internal research suppliers:
(a) formal department, (b) single individual, and (c) no one responsible. If possible, have a
representative from each organizational type come to the class and discuss how marketing
research takes place in his/her company. Alternatively, describe the situations based on your
knowledge of representative companies.
6. Most students will think that all marketing research companies are full-service. One way to
help them understand about the limited service companies is to say that they are practicing
niche marketing. They have found niches in the research industry, and they specialize in
performing their functions very well.
7. Save copies of the Marketing News or Quirk’s Marketing Research Review and bring them to
class. After reviewing full-service and limited-service marketing research firms, hand out the
newspapers and have students look at the marketing research company ads. Let selected
students summarize the services of companies they have singled out. Alternatively, select the
ads yourself, make overhead transparencies or PowerPoint slides, and use them for class
when you cover this topic in your class presentation. Another approach, if you have
multimedia classroom capability, is to find the Internet sites for various types of marketing
research firms and to illustrate the products and services of these different firms during class.
8. The chapter indicates that formal marketing research departments are typically only found in
large companies, and often they are very small. Ask students what this implies about a career
in marketing research. You might tie this discussion in with the careers in marketing
research appendix. Points to be made are: (1) it will probably take a masters degree to break
into the management level, (2) you will probably have to locate in a major metropolitan area,
but (3) there will be opportunities for sharp managers who know something about marketing
research in medium- and small-sized companies since they don't have marketing research
personnel.
9. It is important that students come to realize the ethical issues in marketing research early on,
and this is why this topic is introduced in Chapter 2. Also, they need to be made aware that
philosophical differences exist. Going over the various ethical issue areas is worthwhile, but
sugging and frugging invariably generate the most class interest and story-telling.
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10. The right to privacy issue is a major worry in the research industry. Ask students what they
believe are their personal privacy rights and how they enforce them when they are violated.
Then turn the tables by telling them that they have taken on a job as a telephone interviewer
where they will be compensated $5 for each completed interview. What would they do to
make money? Sometimes students do an about face on privacy when they are worried about
making enough money to pay their rent.
11. It is always fun to ask students if they have been “sugged” or “frugged” recently. Those who
have not read the chapter will be immediately obvious, as sugging and frugging invariably
stick in students’ minds. Those who have no clue obviously did not read the chapter before
class.
ANSWERS TO REVIEW QUESTIONS
1. Name three professional organizations serving the marketing research industry.
The ones mentioned in the chapter are; Marketing Research Association, American
Marketing Association, CASRO, Advertising Research Foundation, Qualitative Research
Consultants Association, Professional Market Research Association, European Society of
Marketing Research, and Market Research Society of Australia.
2. Who is given credit for conducting the first continuous and organized marketing research?
(He is also known as the “Father of Marketing Research.”)
This person is Charles Coolidge Parlin who pioneered marketing research for the Curtis
Publishing Company and Saturday Evening Post.
3. Explain why marketing research was not widespread prior to the Industrial Revolution.
Prior to the revolution, businesses and their customers were in close proximity, meaning that
businesses had much direct contact with their customers and did not need to research them.
4. The marketing research industry, worldwide, is about a $_ _ billion industry. Marketing
research, in the U.S. is about a $_ billion industry.
Worldwide, it is a $15 billion industry. The chapter states that the United States research
firms account for about $7.5 billion.
5. We categorized firms as internal and external suppliers of marketing research information.
Explain what is meant by each and give an example of each type of firm.
An internal supplier is an entity inside a firm that supplies marketing research. An example
would be a marketing research department such as those noted in GM, General Mills, Ford,
Kodak, or DaimlerChrysler. An external supplier is an outside or independent firm hired by
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another firm to fulfill its marketing research needs. All of the marketing research companies
on the Honomichl list are external suppliers.
6. Distinguish among full-service, limited-service, syndicated data services, standardized
services, customized service firms and online research services firms.
Full-service supplier firms have the ability to conduct the entire marketing research project
for the buyer firms.
Limited-service supplier firms specialize in one or, at most, a few marketing research
activities.
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.
7. How would you categorize the following firms?
a. a firm specializing in marketing to kids ages (6-12)
Limited-service firm.
b. a firm that specializes in a computerized scent generator for testing reactions to smells
Standardized service firm
c. a firm that offers a package for running test markets
Standardized service firm
d. a firm that offers clients samples drawn according to the client’s sample plan
Standardized service firm
e. a firm that collects data over the Internet
Online research services firm
8. Explain why certification is beneficial to the marketing research industry.
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Marketing Research Application 2.1, describes the Professional Marketing Researcher
Certification program launched by the Marketing Research Association in 2005. This
program benefits the marketing research industry by developing a pool of well-trained,
competent marketing researchers, thereby improving standards in this industry.
9. What is the advantage in a firm having its own formal marketing research department?
Explain three different ways such a department may be internally organized.
The advantage is that marketing research department staff is fully aware of the company’s
operations and the industry, so they will have greater insight into opportunities and problems.
The three internal organization alternatives are: (1) area of application such as industrial
consumers and ultimate consumers, (2) marketing function such as pricing, advertising, etc,
or (3) the marketing research process such as data analysis, data collection, and so forth.
10. On evaluating the marketing research industry, what was suggested in the text as indicating
there is room for improvement?
There is a cite of a study by Dawson, Bush, and Stern who found that a key issue in the
marketing research industry is the lack of uniform quality: there are good suppliers, but there
are poor suppliers. Hence, there programs by the AMA, MRA, and other organizations
aimed at improving the quality of the marketing research industry’s services.
11. What were given as recommendations for improving marketing research by Professors
Mahajan and Wind?
Mahajan and Wind, highly regarded in academics and business consulting, recommend that
researchers (1) focus on diagnosing problems, (2) use information technology to increase
speed and efficiency, (3) take an integrative approach, and (4) expand the strategic impact of
marketing research.
12. What have been some suggested remedies for improving the marketing research industry?
The suggested improvements are: certification, auditing, and education.
13. Do you agree or disagree with the question “Should marketing researchers be certified?”
Why or why not?
Students may have formed their own opinions, but the chapter makes clear that certification
is a highly desirable quality as it assures that the certification holder has certain capabilities
and skills in marketing research.
14. What are the two fundamental philosophies that can be used as a basis for making ethical
decisions?
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Deontology is concerned with the rights of the individual. If an individual's rights are
violated, then the behavior is not ethical.
Teleology analyzes 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 and the behavior is judged to be
ethical.
15. Name four ethical issues facing the marketing research industry.
Noted are: codes of ethics, sugging and frugging, research integrity, treating others fairly
(buyers, suppliers and the public), respondents, and respondent fairness (deception,
confidentiality and anonymity, privacy, unsolicited telephone calls, and spam ).
ANSWERS TO APPLICATION QUESTIONS
16. Go to the Web site for any three companies listed in the Honomichl 50. Study the website
and compare and contrast the services the three firms offer.
This is an exercise to have students learn about the services and products of leading
marketing research companies. There is no “set” answer as it is dependent on what
companies are selected. One approach is to have 2 or 3 students showcase different
companies to the class via multimedia presentation, especially if the classroom has a high
speed Internet connection.
17. Look up "marketing research" in your Yellow Pages directory. Given the information
provided in the Yellow Pages, can you classify the research firms in your area according to
the classification system of research firms we used in this chapter?
There is no set answer to this exercise. Instructors who are located in small cities or places
where there is little industry or commerce should refrain from assigning this exercise as
students will find few or no marketing research companies in their directories. An alternative
is to have students use an online business directory services such as SmartPages.com or
MSNYellow Pages (yellowpages.msn.com) and to specify a major city such as Chicago,
Atlanta, Los Angeles, or New York.
18. Comment on each practice in the following list. Is it ethical? Indicate your reasoning in each
case.
a. A research company conducts a telephone survey and gathers information that it uses later
to send a salesperson to the home of potential buyers for the purpose of selling a product.
It makes no attempt to sell the product over the telephone.
This is ethical as long as the respondents were informed that information was being
gathered to qualify them for the sales call; it is unethical if there were promises of
confidentiality or anonymity, or if the respondent was otherwise lead to believe that this
was purely a research effort in which case the approach would be sugging.
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b. Would your answer to (a) change if you found out that the information gathered during
the telephone survey was used as part of a "legitimate" marketing research report?
If the company is doing research, and it is confidential and/or anonymous, the use of the
information to send a salesperson is unethical. However, if the survey did not assure
these conditions, and respondents agreed to a sales call, it would be an ethical practice.
c. A door-to-door salesperson finds that, by telling people that he is conducting a survey,
they are more likely to listen to his sales pitch.
This is sugging, an unethical practice.
d. Greenpeace sends out a direct-mail piece described as a survey and asks for donations as
the last question.
If it is not a bona fide survey, this is frugging, an unethical practice.
e. 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 a
willingness to be contacted by the client's sales personnel.
This is ethical as those identified agreed to the contact.
f. A "list" of randomly generated telephone numbers is drawn in order to conduct a telephone
survey.
These will result in unsolicited telephone calls, but it is not an unethical practice.
g. A "list" of randomly generated e-mail addresses is generated using a "Spambot" (an
electronic "robot" that searches the Internet looking for and retaining e-mail addresses)
in order to conduct a random online research project.
According to the CASRO code of ethics, this is an unethical practice.
h. Students conducting a marketing research project randomly select e-mail addresses of
other students from the student directory in order to conduct their term project.
Although all of the CASRO conditions may not be in place, this is an ethical practice as
long as the contacted students have an “opt out” option to not respond.
CASE SOLUTIONS
Case 2.1 Conducting an E-mail Survey
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Note: This case solution was written by Dr. Jeff Totten who wrote the case.
Case Objective: To provide students with the opportunity to identify and discuss the issue of
"opt-in" versus "opt-out" and other ethical issues in e-mail and web-based research projects.
Answers to Case Questions
1. Evaluate each of the five options that Dr. Andrews has developed, using the CASRO
guidelines.
Option 1
Several marketing research principles are violated if this option is actually implemented. No
personalization is used in the e-mail message. The firm is not told where the professor got
their e-mail address from. Other companies' e-mail addresses are revealed in the message
received by each individual firm, without getting the permission of all the firms. The purpose
of the study is not clearly revealed to the firm. The professor has not addressed
confidentiality and anonymity issues. The professor has not provided complete contact
information about himself. No prenotification at all is sought in this option. No permission
is sought as well. The survey would arrive unannounced. At best, the firm would opt out
after the fact by refusing to complete the survey.
Option 2
This is somewhat better, in that the professor recognizes the need to get permission from each
firm; i.e., he is seeking "opt-in" permission, where the firm gives its "active consent" to
participate in the study. However, the same problems noted for Option 1 above also plague
Option 2: No personalization is used in the e-mail message. The firm is not told where the
professor got their e-mail address from. Other companies' e-mail addresses are revealed in
the message received by each individual firm, without getting the permission of all the firms.
The purpose of the study is not clearly revealed to the firm. The professor has not addressed
confidentiality and anonymity issues. The professor has not provided complete contact
information about himself.
Option 3
The professor is slowly seeing the light, so to speak. He acknowledges the need to comply
with Human Subjects guidelines, which can vary from university to university. We don't
know if he has submitted his proposed study and survey to his campus Human Subjects
Committee (or Institutional Review Board). He has personalized the e-mail message. He
indicates the source he used to get the firm's e-mail address. He addresses the confidentiality
issue, offers the firm the option of participating or not, and offers a copy of the findings.
However, there are still problems: Other companies' e-mail addresses are revealed in the
message received by each individual firm, without getting the permission of all the firms.
The purpose of the study is not clearly revealed to the firm. The professor has not clearly
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addressed anonymity. The professor has not provided complete contact information about
himself.
Option 4
According to CASRO guidelines, since the professor doesn't have a pre-existing relationship
with these marketing research firms, so he should not send unsolicited e-mail messages, even
as prenotification. The purpose of the research is clearly stated. Personalization is used, and
the firm is told where the professor got its name and address from. He seeks "opt-in"
permission from the firm to send them the survey. He recognizes that e-mail attachments
don't always work, so he wants to make sure they can receive the survey in the format he has
selected. He identifies how long the survey will take to complete. He addresses the
confidentiality issue, as well as anonymity. He provides contact information. He should add
his phone number and mailing address, to make the information truly complete.
Option 5
The problem with this option is the use of e-mail prenotification when the professor does not
clearly have a pre-existing relationship with these companies. The gray area comes from the
timing of the study. The CASRO guidelines, and other guidelines from AAPOR, IMRO, and
similar research organizations, were just being developed. At the time of the study, it would
be okay to use this option, given the ignorance of the professor and the uncertainty of the
research industry in terms of how this should be handled. Certainly, this option stands on
fairly solid research principles, as noted above in Option 4. Today, Option 4 would not
comply with CASRO guidelines, but in 1999-2000??
2. Are any of the options illegal? Unethical? Why?
Options 1, 2 and 3 would be illegal under CASRO's guidelines. According to its Code of
Ethics, "survey research organizations will not use unsolicited e-mails to recruit respondents
for surveys."1 Even though he is a professor, and not a research organization, Andrews is
likely have his unsolicited e-mails considered to be spam, especially Option 1, which doesn't
include a prenotification attempt. These three options would also be considered unethical.
Andrews could get into trouble, depending whether or not the State of Minnesota has a state
law that prohibits sending unsolicited e-mails.
Option 5, as noted in the discussion of question 1, falls in a gray area. The professor actually
chose this option, and did have some firms respond that his messages would be considered
spam. He quickly responded by apologizing. Some requested that he remove their e-mail
addresses, which he did. Clearly, if he was doing the study today, option 5 would be illegal
according to CASRO guidelines. Back in the year 2000, when he did the study, he might be
forgiven due to his ignorance and the industry's struggle to deal with these issues at the time.
For example, IMRO, the association of firms using interactive methods (e-mail, Internet), did
1 Quoted in Burns & Bush, Marketing Research, 4e, Prentice-Hall, 2003, p.69.
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not even exist until January 2001.
3. Which option would you recommend that Andrews use?
Option 4 is the best option to use, since Andrews does not have a pre-existing relationship
with any of the marketing research firms. He should have taken the time and the extra cost
needed to use this option.
Case 2.2 College Life E-zine
Case Objective. This is the second of the integrated case end-of-chapter cases. It opens
students’ minds up to the concerns that marketers have concerning confidentiality and
protection of their marketing plans when dealing with a third party such as a marketing
research company. Students will encounter the CASRO code of ethics and search it for its
provisions about client-research firm confidentiality. Also, students will visit the Greenbook
website and thus be exposed to the wide array of research industry companies.
Answers to Case Questions
1. Go to the CASRO website. Can you find anything in their Code of Ethics that addresses the
four friends’ concern about the confidentiality of their business plans?
Students will need to access www.casro.org and find their way to CASRO Code of
Standards and Ethics for Survey Research. There, they will find a Table of Contents that
includes the topic “Responsibilities to Clients.” Below is the specific provision (#5) that
addresses the concern of confidentiality.
“5. Research Organizations will hold confidential all information that they obtain about a
Client's general business operations, and about matters connected with research projects that
they conduct for a Client.”
1. Go to the Greenbook website. Take a look at the different types of marketing research firms
and services offered by firms in the research industry. Develop some criteria the four friends
should use in selecting a research firm.
This website will be daunting to students until they find the link “To Find the Company You
Need, Click Here.” When this window opens, it will relate to the “Develop some criteria…”
part of the question. Specifically, there is a search engine with categories that could serve as
criteria.
 Types of research (select concept tests and/or development or new product ideas testing)
 Research services (select consumer research, marketing research, consultation)
 Audience Industries/Market Specialties (select restaurants, food services)
 Online Research Tools and Services (select surveys & panels and full service providers)
 Computer Programs (possibly select demographic analysis or market segmentation)
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