SOMETHING ABOUT MARKET RESEARCH

SECTION A: MARKET RESEARCH

HISTORY OF MARKET RESEARCH
TYPES OF MARKET RESEARCH
MARKET RESEARCH TECHNIQUES
MARKETING RESEARCH METHODS
METHODS OF PERSONAL RESEARCH
RESEARCH AGENCIES AND CLASSIFICATION OF RESEARCH AGENCIES
COMMONLY USED MARKETING RESEARCH TERMS
STAGES OR STEPS IN MARKET RESEARCH PROCESS
RESEARCH STANDARDS AND ETHICS
ANALYZING MARKET RESEARCH
REPORTING MARKET RESEARCH
CHOOSING A MARKET RESEARCH FIRM

SECTION B : CRM AND MARKET RESEARCH

THE CONFLUENCE OF DATA MINING AND MARKET RESEARCH FOR

SMARTER CRM
WHAT IS DATA MINING AND MARKET RESEARCH?
WHERE DO DATA MINING AND MARKET RESEARCH FIT IN CUSTOMER
INTELLIGENCE?
WHERE SHOULD DATA MINING AND MARKET RESEARCH CONVERGE?
WHY AREN’T DATA MINING AND MARKET RESEARCH CONVERGED
TODAY?
WHAT ARE THE BENEFITS OF CONVERGING DATA MINING AND MARKET
RESEARCH?
BOOM BOOM: THE WAY AHEAD
WHO TAKES THE LEAD FOR CRM EXTRACTS FROM THE ESOMAR
CONFERENCE, IN THE US, AND IN JAPAN

CONCLUSION
BIBLIOGRAPHY
SECTION A

MARKET RESEARCH

Market research is the process of gathering and interpreting information

about customers and potential customers. Research is needed because
buying behaviors are sometimes difficult to predict or explain. If a marketer
fails to take into account the customers' interests and motivations, which are
learned through market research, the marketer may be trying to sell a
product or service that is ill-suited for its target users. People may buy only
after carefully studying a product's features and benefits. They may buy after
seeing a well-executed advertisement over and over again. Or, they may buy
after hearing about a good product from their friends and colleagues. They
may even purchase on a whim without knowing anything at all about the
product because the packaging caught their eye while walking down the
supermarket aisle.

Research attempts to understand and explain buying patterns so that a

company's marketing strategy can attract the most customers (or more
accurately, the highest profits) per rupee spent on marketing. As John
Wanamaker, the famed New York department store owner who hired the
first advertising copywriter, said in the 1880s, "I know half the money I
spend on advertising is wasted, but I can never find out which half." Market
research tries to solve that dilemma.

Market research consists of testing the market to determine the acceptance of

a particular product or service, especially amongst different demographics. It
is used to establish which portion of the population will or does purchase a
product, based on age, gender, location, income level and many other
variables. Market research allows companies to learn more about past,
current and potential customers, including their specific likes and dislikes.

Based on market research data, businesses can develop a "target audience."

A target audience is a specific group of customers that has a distinct need or
desire for a product or service. Market research is used to determine how
often the target audience will buy a particular item, how much they are
willing to pay for it, and their overall satisfaction with it. By analyzing
market research information, manufacturers and service providers learn
where to focus their resources most effectively.

For example, mature men and women are most likely to buy a hair product
that covers gray. Advertising for such a product would obviously target
adults, perhaps those 30 and older. It makes no sense to waste money and
effort advertising it to teen girls. On the same note, if a product should be
popular amongst different demographics, but seems to be selling to only one
group, a company may hire a market research team to find out why. Through
the market research data collected, the company can learn how to make the
product more attractive to other audiences, or how to advertise it better.

Market research also helps companies develop information regarding new

products or product lines and learn how well new items will be received. It
can also help businesses learn how the public responds to a comparable
product already on the market. In this way, business can stay in the loop,
keeping in touch with the wants and needs of potential consumers. They can
halt production of a product that the public shows little or no interest in, or
change it, improve it, or lower the price as necessary based on market
research information.

Corporations come to understand their markets in many different ways. A

few common methods include:

 using company intelligence to learn competitors' strategies

 analyzing past sales data to glean purchasing trends

 surveying present customers or a target audience

 evaluating demographic data, such as from the country’s census, to

infer market shifts

Market research is critically important but remains imperfect. Although new

products are usually researched before introduction, more than 80 percent
fail. A company once conducted an exhaustive market research study on
sales of their products and on their customers. They discovered that the
company wasted more than 60 percent of its marketing budget targeting
people who never buy from a particular product category or those were loyal
to other brands. They also found that the small segment that was loyal or the
company’s customers delivered three times the profits that occasional buyers
did. This meant that the coupons delivered to regular customers took money
away from the bottom line since those people would have bought the
product anyway.

HISTORY OF MARKET RESEARCH

While there were undoubtedly many marketing (or market...there's a
difference) research projects that are not recorded in history, the first
CONTINUOUS marketing research is said to have been conducted by
Charles Coolidge Parlin (1872-1942). He did marketing research for the
Curtis Publishing Company to gather information about customers and
markets to help Curtis sell more advertising in their magazine, The Saturday
Evening Post. He is recognized today as being the "Father of Marketing
Research."

Advertising was not tested in the United States until the 1920s. Until that
time copywriters would write what they thought an ad should be, publish it,
and hope that readers acted upon the information. During the 1920s, Daniel
Starch began expanding his educational surveys into advertising. From those
surveys he developed a theory that effective advertising must be seen, read,
believed, remembered, and acted upon. By the 1930s he had launched a
company that interviewed people in the streets, asking them if they read
certain magazines. If they did, his researchers would show them the
magazines and ask if they recognized and remembered ads in them. He then
compared the number of people he interviewed with the circulation of the
magazine to extrapolate how effective those magazine ads were in reaching
readers.

Various market research companies started following Starch's example and

improved on his techniques. George Gallup (1901-84) developed a rival
system of "aided recall" that prompted people to recall the ads they had seen
without actually showing the ads. Gallup was able to adapt this system to
measure radio and television advertising.
Throughout the last 70 years, market research has grown much more
sophisticated as well as pervasive. One survey of surveying activity found
that 73 percent of Americans said they had participated in a survey with 42
percent having been also surveyed in the previous year.

TYPES OF MARKET RESEARCH

Consumer marketing research (US English) or market research (British

English) which is a form of applied sociology that concentrates on
understanding the behaviours, whims and preferences, of consumers in a
market-based economy, and aims to understand the effects and comparative
success of marketing campaigns, and apart from this there are other forms of
business research which include:

 Market research (US English; in Britain market research is used for

"marketing research" as well) broader in scope and examines all aspects of a
business environment. It asks questions about competitors, market structure,
government regulations, economic trends, technological advances, and
numerous other factors that make up the business environment (see
environmental scanning). Sometimes the term refers more particularly to the
financial analysis of companies, industries, or sectors. In this case, financial
analysts usually carry out the research and provide the results to investment
advisors and potential investors.

 Advertising research - is a specialized form of marketing research

conducted to improve the efficacy of advertising. Copy testing, also known
as "pre-testing," is a form of customized research that predicts in-market
performance of an ad before it airs, by analyzing audience levels of
attention, brand linkage, motivation, entertainment, and communication, as
well as breaking down the ad’s flow of attention and flow of emotion. Pre-
testing is also used on ads still in rough (ripomatic or animatic) form.

Research is the scholarly or scientific practice of gathering existing or new

information in order to enhance one's knowledge of a specific area. Research
has many categories, from medicine to literature.

Marketing research, or market research, is a form of business research and

is generally divided into two categories: consumer market research and
business-to-business (B2B) market research, which was previously known
as industrial marketing research.

Consumer marketing research studies the buying habits of individual people

while business-to-business marketing research investigates the markets for
products sold by one business to another.

 Audience Research.

Research on who is listening, watching, and reading are all important to

marketers in order to determine which media are best suited for reaching a
target audience. Television and radio ratings determine popularity of shows
and how large of an audience can be reached during show broadcasts.
Publication subscription lists are audited by tabulating companies that cross-
check magazine subscription records to make sure the people receiving the
publications have either subscribed or requested the publication.

In the early days of television, selected viewer families kept diaries or logs
of their viewing habits. Completed logs were mailed to the A.C. Nielsen
Company, which then compiled the results. In 1986 the log gave way to a
people meter that allows viewers to punch buttons on a remote control-like
device that records viewers' choices automatically.

While not yet in place, inventors are experimenting with devices that will no
longer depend on viewers, listeners, or readers to actively tell researchers
about their habits. The researchers may soon be able to get all the
information they need from devices placed in the home. One device under
study would be a television capable of looking back at viewers. It would
store digitized images of its "television family" in its memory banks then
regularly record if they are in the room. The device would even record
whether their faces are turned toward the TV to prove they are looking at the
show and its accompanying commercials.

Another device under development would not only monitor when people are
watching television, but would know when they are reading advertising-
filled magazines. The device would record pulses coming from a television
or radio and from a transmitter cleverly hidden in the publication's bindings.

The devices sound Orwellian, which is what is slowing their development

and implementation. Broadcasters are not sure they want to cooperate with
the transmission of the imperceptible pulses, while advertisers are leery
about appearing too eager to know everything their customers do in the
privacy of their own homes.

 Product Research.
This looks at what products can be produced with available technology, and
what new product innovations near-future technology can develop (see new
product development).

Simple in-person research such as taste tests conducted in malls and in the
aisles of grocery stores is market research. So is elaborate, long-term "beta
testing" of high-tech products, particularly software, by experienced users.
While advertising agencies formerly conducted much of the product
research, that function has also moved into the marketing department of
advertisers.

Product research can be simple: tweaking the taste of an existing product,

then measuring consumers' reactions to see if there is room in the market for
a variation. Or, it could be more extensive: developing prototypes of
proposed new products that may be intended for market introduction months
down the road. Other kinds of product research include:

 researching the appeal of a new product's proposed name

 testing new packaging

 identifying new markets or selling points for an existing product

 testing new pricing

 testing an advertising campaign

As in all research, there is a danger to paying too much attention to the

wrong things. The introduction of New Coke in the 1980s was based on the
outcome of taste tests that showed the public wanted a sweeter product.
Once introduced, an angry public, outraged that Coca-Cola changed the
familiar formula, forced the company to ignore its misdirected market
research and leave the original Coke on the market. The company had
looked closely at taste test studies, but failed to factor in research that
showed consumers were happy with the product as is.

 Brand Research.

Brands, the named products that advertising pushes and for which
manufacturers can charge consumers the most money, are always being
studied. Advertisers want to know if consumers have strong brand loyalty
("I'd never buy another brand, even if they gave me a coupon"); if the brand
has any emotional appeal ("My dear mother used only that brand"); and
what the consumer thinks could be improved about the brand ("If only it
came in a refillable container").

Brand research has its perils. Campbell's Soup once convened a focus group
comprised of its best soup customers. One of the findings was that those
customers saw no need for a low-salt alternative soup Campbell's wanted to
market. Concerned that the general public seemed to want low-sodium
products, Campbell's retested groups other than their best customers. This
research found a market interested in a low-sodium soup. The loyal
Campbell's customers loved the saltier product as is, while a larger group of
potential customers preferred the low-salt alternative.

 Psychological Research.

Perhaps the most controversial type of market research is psychological

research. This research tries to determine why people buy certain products
based on experimentally derived profiles of the way consumers live their
lives. One company has divided all Americans into more than 60
psychological profiles. This company contends that the lifestyles these
people have established by past buying habits and their cultural upbringing
influence their buying decisions. The researchers assert that individual
differences can sometimes be negated.

This research continues to be controversial since it measures attitudes about

buying and not the buying itself. Critics point to conflicting information
uncovered through other market research studies. In one series of research
projects researchers asked people what they were planning to buy before
entering a store. After the people surveyed left the store, the same researcher
examined what was actually in the shopping cart. In one such study only 30
percent of the people bought what they said they were going to buy just a
half hour earlier.

 Scanner Research

There is no fooling the checkout scanner at the supermarket or the

department store. It records what was actually purchased. This is valuable
information advertisers use to help plan ongoing marketing strategies.

Scanners have changed the way advertisers have typically thought about the
sale of consumer products. Before scanners, advertisers received sales
information when retailers reordered stock, generally every two weeks.
Advertisers had no way to quickly measure the effect of national
advertising-supported sales promotions, store sales promotions, or the
couponing of similar products by their competitors.
Now, computer technology can send scanner information to advertisers
within days or even hours. What scanners have so far confirmed is that
consumers are fickle. They may try a product heavily promoted through
national television one week. Then the next week they may switch brands
based on local promotions from the competition.

 Database Research

Virtually every type of consumer shows up on thousands of lists and

databases that are regularly cross-referenced to mine nuggets of marketing
research. Such database research, associated with database marketing, is
growing in popularity among marketers because the purchaser has already
contributed the raw data. All the marketer has to do is develop a computer
program to look for common buying patterns.

Database research can be thought of as the ultimate in market segmentation

research. For example, from zip codes lists, marketers may determine where
the wealthy people live in a city. That list can be merged with a list of
licensed drivers. The resulting list can be merged with another list of owners
of cars of a certain make older than a certain year. The resulting list can be
merged with another list of car enthusiast magazine subscribers. The final
compiled and cross-checked list will deliver a potential market for a new
luxury car soon to be introduced and profiled in the car magazines. The
people on the potential buyers' list would then be mailed an invitation to
come see the new car.

Database research and marketing allow companies to build personal

relationships with people who have proven from past purchases that they are
potential customers. For example, a motorcycle manufacturer such as
Harley-Davidson may discover from database research that a family with a
motorcycle has a teenage son. That son is a potential new customer for
everything from clothes to a new motorcycle of his own. In another
example, movie rental giant Blockbuster Entertainment can suggest titles its
customers might want to rent based on a check of its database for the types
of movies people have rented in the past.

This personal relationship also provides a basis for more detailed and
economical market research than might be possible from conducting random
calling. From that research, marketing sometimes follows. For example,
General Motors Corp., which has collected a database of 12 million GM
MasterCard cardholders in just two years, surveys them to determine what
they are driving now and when they might buy a new car. GM's logic: why
spend millions of dollars trying to sell to total strangers when you have a list
of millions of people you already know?

 Post-sales or customer satisfaction research

Companies no longer believe that the sale ends their relationship with a
customer. Nearly one-third of the research revenues generated by the leading
U.S. research companies concern customer satisfaction. Many companies are
now waiting a few days or weeks, then surveying customers by telephone.
Companies want reassurance that the customer enjoyed the buying
experience and that the product or service lived up to the buyer's
expectations.
One research company uses a one dollar check to encourage customer
satisfaction responses. It prints a customer survey on the back of the check
that is returned when the customer cashes the check. The survey company
thus secures a short, but complete, survey of customer satisfaction. Such
research can be even more personal. Honda once developed a program in
which assembly line workers called new Accord owners to ask them what
improvements could be made in the car.

The reason for this sort of research is to ensure current customers are happy
and will consider themselves future customers. One study found that 70
percent of customers believe it is important that companies stay in contact
with them, but that less than a third of those same customers reported that
they had heard from companies whose products they purchased. Nearly 90
percent of those surveyed said they would choose a company's products if it
stayed in touch with them and sought their satisfaction.

 Social research

This refers to research conducted by social scientists (primarily within

sociology and social psychology), but also within other disciplines such as
social policy, human geography, political science, social anthropology and
education. Sociologists and other social scientists study diverse things: from
census data on hundreds of thousands of human beings, through the in-depth
analysis of the life of a single important person to monitoring what is
happening on a street today - or what was happening a few hundred years
ago.
Social scientists use many different methods in order to describe, explore
and understand social life.

All of these forms of marketing research can be classified as either problem-

identification research or as problem-solving research.

A company collects primary research by gathering original data.

Secondary research is conducted on data published previously and usually
by someone else. Secondary research costs far less than primary research,
but seldom comes in a form that exactly meets the needs of the researcher.

A similar distinction exists between exploratory research and conclusive

research. Exploratory research provides insights into and comprehension of
an issue or situation. It should draw definitive conclusions only with extreme
caution. Conclusive research draws conclusions: the results of the study can
be generalized to the whole population.

 Exploratory research

is conducted to explore a problem to get some basic idea about the solution
at the preliminary stages of research. It may serve as the input to conclusive
research. Exploratory research information is collected by focus group
interviews, reviewing literature or books, discussing with experts, etc. This
is unstructured and qualitative in nature. If a secondary source of data is
unable to serve the purpose, a convenience sample of small size can be
collected. Conclusive research is conducted to draw some conclusion about
the problem. It is essentially, structured and quantitative research, and the
output of this research is the input to management information systems
(MIS).
Exploratory research is also conducted to simplify the findings of the
conclusive or descriptive research, if the findings are very hard to interpret
for the marketing manager.

MARKET RESEARCH TECHNIQUES

Marketing research techniques come in many forms, including:

Ad Tracking – periodic or continuous in-market research to monitor a

brand’s performance using measures such as brand awareness, brand
preference, and product usage. (Young, 2005)

Advertising Research – used to predict copy testing or track the efficacy of

advertisements for any medium, measured by the ad’s ability to get
attention, communicate the message, build the brand’s image, and motivate
the consumer to purchase the product or service. (Young, 2005)

Brand equity research - how favorably do consumers view the brand?

Brand name testing - what do consumers feel about the names of the
products?

Commercial eye tracking research - examine advertisements, package

designs, websites, etc by analyzing visual behavior of the consumer

Concept testing - to test the acceptance of a concept by target consumers

 Coolhunting - to make observations and predictions in changes of new

or existing cultural trends in areas such as fashion, music, films, television,
youth culture and lifestyle
  Buyer decision processes research - to determine what motivates
people to buy and what decision-making process they use

 Copy testing – predicts in-market performance of an ad before it airs

by analyzing audience levels of attention, brand linkage, motivation,
entertainment, and communication, as well as breaking down the ad’s flow
of attention and flow of emotion. (Young, p 213)

 Customer satisfaction studies - exit interviews or surveys that

determine a customer's level of satisfaction with the quality of the
transaction

 Demand estimation - to determine the approximate level of demand

for the product

 Distribution channel audits - to assess distributors’ and retailers’

attitudes toward a product, brand, or company

 Internet strategic intelligence - searching for customer opinions in

the Internet: chats, forums, web pages, blogs... where people express freely
about their experiences with products, becoming strong "opinion formers"

 Marketing effectiveness and analytics - Building models and

measuring results to determine the effectiveness of individual marketing
activities.

 Mystery shopping - An employee or representative of the market

research firm anonymously contacts a salesperson and indicates he or she is
shopping for a product. The shopper then records the entire experience. This
method is often used for quality control or for researching competitors'
products.

 Positioning research - how does the target market see the brand
relative to competitors? - what does the brand stand for?

 Price elasticity testing - to determine how sensitive customers are to

price changes

 Sales forecasting - to determine the expected level of sales given the

level of demand. With respect to other factors like Advertising expenditure,
sales promotion etc.

 Segmentation research - to determine the demographic,

psychographic, and behavioural characteristics of potential buyers

 Online panel - a group of individual who accepted to respond to

marketing research online

 Store audit - to measure the sales of a product or product line at a

statistically selected store sample in order to determine market share, or to
determine whether a retail store provides adequate service

 Test marketing - a small-scale product launch used to determine the

likely acceptance of the product when it is introduced into a wider market

 Viral Marketing Research - refers to marketing research designed to

estimate the probability that specific communications will be transmitted
throughout an individuals Social Network. Estimates of Social Networking
Potential (SNP) are combined with estimates of selling effectiveness to
estimate ROI on specific combinations of messages and media.

MARKETING RESEARCH METHODS

Methodologically, marketing research uses the following types of research

designs:

Based on questioning:

Qualitative marketing research - generally used for exploratory purposes -

small number of respondents - not generalizable to the whole population -
statistical significance and confidence not calculated - examples include
focus groups, in-depth interviews, and projective techniques

Quantitative marketing research - generally used to draw conclusions - tests

a specific hypothesis - uses random sampling techniques so as to infer from
the sample to the population - involves a large number of respondents -
examples include surveys and questionnaires

Based on observations:

Ethnographic studies -, by nature qualitative, the researcher observes social

phenomena in their natural setting - observations can occur cross-sectionally
(observations made at one time) or longitudinally (observations occur over
several time-periods) - examples include product-use analysis and computer
cookie traces. See also Ethnography and Observational techniques.

Experimental techniques -, by nature quantitative, the researcher creates a

quasi-artificial environment to try to control spurious factors, then
manipulates at least one of the variables - examples include purchase
laboratories and test markets

Researchers often use more than one research design. They may start with
secondary research to get background information, then conduct a focus
group (qualitative research design) to explore the issues. Finally they might
do a full nation-wide survey (quantitative research design) in order to devise
specific recommendations for the client.

METHODS OF PERSONAL RESEARCH

Closed-ended questions

The type of research most people experience is filling out a comment card or
questionnaire at a restaurant or hotel asking about the service they received.
Another common research method is a telephone survey in which
interviewers read from a carefully prepared list of questions designed so
answers can be categorized and tabulated by computer.

Both of these are considered closed-ended, meaning that the person being
surveyed cannot expound on their answer. Such surveys usually ask for
"yes" or "no" answers or several measures of multiple choice opinion (e.g.,
"extremely interested," "somewhat interested," or "not interested at all").
This type of market research is generally conducted to elicit opinions and
beliefs of the public. It is commonly used for political polling and to
determine the awareness or popularity of a product or service.

The inherent problem with multiple-choice questionnaires that ask for clear-
cut answers is that many people do not think in a clear-cut fashion. If not
carefully prepared, closed-ended questions may elicit answers that do not
provide a clear view of the person being surveyed. Sometimes, the company
conducting the survey may intentionally or inadvertently write questions that
elicit the answers it wants to get rather than a true picture of what is
happening in the marketplace.

Open-ended questions

Although they are useful for soliciting insights or concerns that the marketer
hasn't anticipated, open-ended questions tend to be frowned upon in market
research. They present two challenges: (1) they can produce answers that are
ambiguous and hard to compare because the respondents aren't relying on a
fixed vocabulary to describe their thoughts and behaviors, and (2) they
require more time and effort to analyze. Some marketers may favor open-
ended questions in hopes of uncovering significant new feedback from their
current or potential customer base, but experienced market researchers have
found that this rarely occurs. Particularly if the research involves an
established product or service, researchers find there is usually a predictable
spectrum of opinions or responses to a given question; few respondents
volunteer profound new ideas. As a result, in most kinds of research experts
prefer to keep open-ended questions to a minimum and use them only when
they serve a specific purpose.

Drawbacks

There is a problem in both closed- and open-ended questionnaire researches,

particularly which conducted over the telephone. The person answering the
questions could grow increasingly bored or, worse; annoyed at the time it
takes to answer the questions. Once they become bored or annoyed, people
stop giving true opinions.

One company that has researched the problem of bored interviewees found
that falloff in attention can begin as soon as one minute after the person
starts answering questions. This also held even when people filled out
questionnaires on their own time. The company believes that the longer the
person is annoyed, the higher the likelihood that the value of the
questionnaire is reduced.

Another study showed that 31 percent of Americans say they refuse to

answer marketing research surveys. The survey conductors speculate that the
high resistance is a result of consumers lumping telemarketing and survey
calls together. Both frequently come at the dinner hour, when many people
do not want to participate.

Focus groups

In-person, sit-down sessions around a table with groups of consumers,

would-be consumers, never-buyers, or any other demographic group a
company wishes to bring together are called focus groups. This can be the
most inexpensive type of research when handled on a local basis by a small
business wanting to get a handle on its customers. Or, it can be one of the
most expensive if a major corporation wants to test its plans in all sections of
the country.

Small businesses may invite a focus group to a neighborhood home to sit

around the dinner table to discuss how the company can develop new
markets. Major corporations conduct their focus groups in a controlled
environment, sometimes with a one-way mirror at one end. This allows
executives to unobtrusively watch the proceedings and/or to videotape the
session for further study.

The key to gathering good information from a focus group is for the
moderator to keep the conversation flowing freely without taking a side. If a
company is interested in launching a new product, the moderator usually
does not even mention the company that is hosting the focus group, not
wanting opinions already formed about the company's other products to
influence the discussion. The moderator's job is to involve everyone in the
session and prevent any individuals from dominating the conversation. The
latter danger is called "The Twelve Angry Men," named after a Henry Fonda
movie in which a talkative, persuasive Fonda slowly influences 11 other jury
members to acquit a man being tried for murder.

Researchers agree that focus group research should be accompanied by other

types of research and not be the sole basis for launching new products. The
reason is that opinions expressed among strangers may not always reflect the
way people would react when alone. For example, a focus group discussing
low-fat foods may garner an enthusiastic response from people who want to
be publicly perceived as being concerned about their health. The same
people, however, might say they never buy low-fat products if questioned
during an anonymous phone interview.

Business to business market research

Business to business (B2B) research is inevitably more complicated than

consumer research. The researchers need to know what type of multi-faceted
approach will answer the objectives, since seldom is it possible to find the
answers using just one method. Finding the right respondents is crucial in
B2B research since they are often busy, and may not want to participate.
Encouraging them to “open up” is yet another skill required of the B2B
researcher. Last, but not least, most business research leads to strategic
decisions and this means that the business researcher must have expertise in
developing strategies that are strongly rooted in the research findings and
acceptable to the client.

There are four key factors that make B2B market research special and
different to consumer markets:

The decision making unit is far more complex in B2B markets than in
consumer markets

B2B products and their applications are more complex than consumer
products

B2B marketers address a much smaller number of customers who are very
much larger in their consumption of products than is the case in consumer
markets

Personal relationships are of critical importance in B2B markets.

Most of B2B market research today is done online, using online panels.

Marketing Research in Small Business and Nonprofit Organizations

Marketing research does not only occur in huge corporations with many
employees and a large budget. Marketing information can be derived by
observing the environment of their location and the competitions location.
Small scale surveys and focus groups are low cost ways to gather
information from potential and existing customers. Most secondary data
(statistics, demographics, etc.) is available to the public in libraries or on the
internet and can be easily accessed by a small business owner.

International Marketing Research

International Marketing Research follows the same path as domestic

research, but there are a few more problems that may arise. Customers in
international markets may have very different customs, cultures, and
expectations from the same company. In this case, secondary information
must be collected from each separate country and then combined, or
compared. This is time consuming and can be confusing. International
Marketing Research relies more on primary data rather than secondary
information. Gathering the primary data can be hindered by language,
literacy and access to technology.

RESEARCH AGENCIES AND CLASSIFICATION OF THESE

RESEAECH AGENCIES

Marketers often outsource their research to outside agencies when they lack
the staffing or the expertise to conduct extensive research on their own.
Numerous market research firms exist, many of which are quite specialized
to a particular trade. These outside suppliers of research range from small
one-person consultancies to large multibillion-dollar corporations. Working
with a research supplier is often a highly interactive process. The marketer
needs to determine if the research agency has sufficient knowledge and skills
to produce reliable results; the supplier needs a great deal of information
about the product being marketed, its strengths and weaknesses, the
marketer's goals, and so forth in order to construct an effective research
project.

Usually market research agencies are classified on the type of researches

they usually conduct or the industry they normally cater too. For example a
MR firm that does research for advertising agencies or for companies to
check the effectiveness of their ads then they are an Advertising research
company.

Thus an agency can be a specialist in one or all the following type of

research.

Syndicated Studies like

Social Research Product Research

Database Research Audience Research

Scanner Research Post-Sales or Customer

Psychological Research Satisfaction Research

Brand Research Advertising research

Or all of them.
 Classification based on the services provided by the MR agency.

A market research agency can provide any or all of the specified outputs.

Price Analysis
Identify Trends.

Market research/ Analysis and reports

Domestic / International competitors

Market
Target Market Analysis Research Marketing Plans

SWOT analysis Report

Competitive Analysis

Location Analysis Report

MR agencies are also classified based on the facilities they provide and
hence the type of the sevice they provide. For example whenever an
organization wants a research to be done by an agency for them they
evaluate the agency by the facilities provided by them.

The following is an excerpt from a website guiding to search for an MR

agency.

All Facilities Central Call Center

Mall Facilities Focus Group Facilities
Test Kitchens Product Testing Clinics

An agency can have any of the above Facilities or all of them.

The next way of classifying the MR agencies would be based on the type of
research services they provide. It can be any one or all of the following.

All Specialties Data Collection

Data Processing
Field Management Services
Moderator Services
Research Analysis
Sampling
Web-Based Research
Collection & Processing
Focus Groups
Research/Project Design
Research Service Provider
Transcription Services
Web Surveys

COMMONLY USED MARKETING RESEARCH TERMS

Market research techniques resemble those used in political polling and

social science research. Meta-analysis (also called the Schmidt-Hunter
technique) refers to a statistical method of combining data from multiple
studies or from several types of studies. Conceptualization means the
process of converting vague mental images into definable concepts.
Operationalization is the process of converting concepts into specific
observable behaviors that a researcher can measure. Precision refers to the
exactness of any given measure. Reliability refers to the likelihood that a
given operationalized construct will yield the same results if re-measured.
Validity refers to the extent to which a measure provides data that captures
the meaning of the operationalized construct as defined in the study. It asks,
“Are we measuring what we intended to measure?”

Applied research sets out to prove a specific hypothesis of value to the

clients paying for the research. For example, a cigarette company might
commission research that attempts to show that cigarettes are good for one's
health. Many researchers have ethical misgivings about doing applied
research.

Sugging (or selling under the guise of l.market research) forms a sales
technique in which sales people pretend to conduct marketing research, but
with the real purpose of obtaining buyer motivation and buyer decision-
making information to be used in a subsequent sales call.

Frugging comprises the practice of soliciting funds under the pretense of

being a research organization.

STAGES OR STEPS IN MARKET RESEARCH PROCESS

Identification and definition of the objectives

This is the first step in the process of marketing research. It is of crucial

importance as it shows the direction of the research work. The research
process begins by making a clear and concise statement of a problem or
issues to be investigated. A clear definition of the problem helps the
researcher in all subsequent research efforts including the setting up of
proper research objectives,the determination of the techniques to be used,and
the extent of information to be collected.

Statement of research objectives

In the next step,the researcher makes a formal statement of the research

objectives and states the reasons and aims for which the research is being
undertaken. Such objectives may be stated in qualitative or quantitative
terms and are expressed in the form of research questions,statement or
hypothesis.

Planning the research design

The next step is developing research design which is a master plan

specifying the procedures for collecting and analysing the needed
information. It represents a framework for the research plan of action.The
objective of the study are included in the research design to ensure that data
collected are relevant to the objectives. The researcher also determines the
sources of information needed; the data collection method such as
survey,interview,etc; the methodology, timing and possible costs of
research.

Planning the sample

Sampling involves procedures whereby a small number of items or parts of

the 'targeted population' is taken to represent the whole population. It
involves several important decisions relating to :- (i) defining the target
population; (ii) selection of a sample which truly represents the population;
(iii) the sample-size to be used for the purpose; and (iv) selection of various
units to make up the sample.

Data collection

It involves gathering of facts to be used in solving the problem. Data is

primary, if it is collected from the original base through empirical research
by means of various tools such as observation, experiment and survey
methods. It may be collected from salesmen, customers and dealers. Data is
secondary, if it is collected from concerned reports, magazines and other
periodicals, especially written articles, government publications, books, etc.
The data sources may be internal or external. Internal sources exist within
the firm itself like accounting data, salesmen's reports, etc while; sources
outside the firm are external sources.

Data processing and analysis

The data collected is processed and analyzed. It is thus converted into a

meaningful format so as to suggest answers to the initially identified and
defined problems. Data processing begins with the editing or inspection of
data for checking consistency in its classification and coding. The analysis
of data represents the application of logic to the understanding of the data
collected. It may involve determination of consistent patterns and
summarizing of appropriate details by using various analytical techniques.
The aim of this step is to check whether empirical findings support or refute
the statements or hypothesis made earlier.

Formulating conclusions and preparing the report

The final stage is that of interpretation the information and drawing
conclusion for use in making business decisions. The research report should
clearly and effectively communicate the research findings. If needed, the
researcher may bring out his appropriate recommendations or suggestions in
the matter. The presentation of the report so prepared must be technically
accurate and understandable.

RESEARCH STANDARDS AND ETHICS

Most professional market research organizations abide by some formal or

informal code of ethics. Many of the marketing trade groups like the
American Marketing Association and the Marketing Research Association
have published standards of ethical practices and require their members to
adhere to them. Managers should be aware of ethical standards as they
supervise in-house research and contract out to other firms. Some examples
of unethical research methods:

leading a respondent toward a specific answer in a survey, either directly or

indirectly

disclosing a respondent's name or other personal information if they have

been told it was an anonymous survey

interviewing young children without parental consent

disguising a sales or fundraising pitch as market research, or using research

participants subsequently as sales leads based on information obtained from
the research

ANALYZING MARKET RESEARCH

Once market data have been collected by reliable means, the goal of market
research is to extract as much meaning from the information as possible.
Usually this starts by tabulating results, e.g., 34 percent of respondents have
heard of the brand and 60 percent represent middle-income households, but
only 13 percent buy it regularly. Depending on the type of questions asked
and the marketer's objectives for the research, the analysis may involve a
host of more sophisticated statistical analyses. Statistical methods may be
used to answer the following questions, among many others:

Are the apparent relationships between variables in the study statistically

significant or could they easily occur at random?

What is the margin of error for the findings?

What kind of patterns could be projected into the future based on past
indications?

What demographic factors best predict a loyal customer and which ones
appear irrelevant?

What are the meaningful segments in the market?

Which aspects of the product or service are most valued by consumers?

Knowledgeable answers to such questions require an understanding of both

the data and appropriate statistical methods. Consequently, introductory
textbooks on market research often include a heavy dose of statistical theory.

REPORTING MARKET RESEARCH

The final step in most formal research projects is to present the findings to
the decision makers. Though it may include many pages of supplementary
tables and charts, the essential research report for management is usually one
or two pages. The report explains the nature of the research—what it was
trying to learn and by what methods—and conclusions from it—what was
learned and how it affects the company. A good report not only summarizes
the statistics compiled from the research, but goes further too cautiously
interpret their significance for the business and what they suggest for the
future.

CHOOSING A MARKET RESEARCH FIRM

Before launching a new product line, it’s essential to know the marketplace
- and hiring a market research firm is an excellent way of assessing the level
of demand. However, once you’ve made the decision to outsource, it’s
important to pick the right company. Cultivating a relationship with a
capable market research company can give you the edge over the
competition … but operating on bad market research is even riskier than
operating on none.

First of all, you should write up a list of several research firms, and then
weigh each company against the others. As you evaluate them, here are a
few things to ask yourself:

 Does the firm have a good reputation? Even if you’re dealing with a
company that has been recommended by a colleague (and this is
always a good idea, by the way) ask for and check references. This is
one of the easiest ways of narrowing down your list of candidates.
  Is the firm experienced in your area? If you’re not sure, ask the
company for examples of completed projects that are similar to your
own. The company’s reputation and references are important, but so is
its level of experience.
 How is your rapport? Invite the marketing firm to meet with you for
an initial assessment. See if the company’s representatives listen to
what you have to say, and if they are responsive to your needs. The
people you talk to at this meeting are probably the ones who you will
deal with throughout the process. Do you have good chemistry with
them?
 Is the price competitive? If you’ve met with several companies, then
you should have a number of proposals to compare. Of course, quality
is very important, and cheaper certainly isn’t always better - but which
proposal offers you the most for your dollar?

Once you’ve made your decision, find out who will be your point of contact.
Because it is the market research company’s job to cater to your needs, you
should appoint one individual within your company to act as the resource
person for the research contractor. This will ensure that there is smooth
communication between both companies, and that there will be greater
accountability on both ends. Now is also the time to establish a firm
timetable of deadlines, and schedule periodic status reports. What you ask
for before you sign is what you will get - so make sure you put all your
needs and demands on the table.

Market research is an invaluable aid to any publicity campaign, and can

literally save you millions of dollars. After all, in the business world, there
are very few mistakes that can compare in severity to launching a new
product line - and discovering only after the fact that there is no demand for
what you are selling. But although market research is obviously important,
it’s sometimes less clear whether that research should be conducted in-
house, or outsourced.

One of the most palpable advantages of outsourcing is that market research

firms specialize in assessing marketability. While your employees are
trained to produce and sell your product, market researchers know how to
gather, analyze and report on information. Not only does this translate into
experience, but it also means that market research companies have access to
software (e.g. Microtab, StatPac, etc.) and facilities that you probably don’t -
like two-way mirrors and industry-standard taping equipment. A large
market research company will probably also employ statisticians,
psychologists, and other relevant professionals who it just wouldn’t make
sense for you to employ on a permanent basis.

And believe it or not, sometimes the fact that the company is an outsider can
be a real advantage. When reputable market research companies conduct
focus groups and surveys, they never reveal their employer’s identity, and
that kind of anonymity can be extremely valuable. Particularly if your new
product is highly innovative or otherwise sensitive in nature, you may not
want anyone knowing about it until you’re ready to put it on the shelves.

Finally, because the market researchers are not affiliated with your
company, you can be assured of their objectivity … something you may not
be able to guarantee if marketing issues have become politicized within your
own business.
All this being said, there are some drawbacks to hiring an outside company,
and they are the same risks that apply to any sort of outsourcing. Clearly, no
outside company is ever going to be as familiar with your business’ needs as
its own employees are. You may have to spend some time explaining the
background behind your company and product, and even then, there’s no
guarantee that the market researchers will end up with an accurate portrait.
You will also have to resign yourself to surrendering much of your control
over the process, because the other company may have its own set of
procedures in place. You may find that the market researchers don’t agree
with you on how things should be done, or that your project has to compete
with several others for the researchers’ time.

So is outsourcing worthwhile? Probably. Even if you disagree with how the

market researchers conduct the campaign, there’s a pretty good chance that
they’re right - and that you’re wrong. Just to be sure though, one of the
smartest things you can do is to find out about the research firm before you
commit. Some research companies may be slow, inefficient, or sloppy …
but if you hire a capable one, it might be just what you need to get your
product launch off to a jump-start.
SECTION D: CRM AND MARKET RESEARCH

THE CONFLUENCE OF DATA MINING AND MARKET

RESEARCH FOR SMARTER CRM

In most companies, the realms of customer- behavior analysis and customer-

attitudes analysis are worlds apart. They are like two swift flowing rivers
that never meet. Behavioral analysis is typically the domain of business
intelligence: tightly managed by IT and heavily focused on operational
systems, data management, report servers, On-line Analytical Processing
(OLAP) cube administration and Data Mining.

While attitudinal analysis is the world of Market Research: owned by

Marketing, often outsourced to a Market Research agency, resulting in
tabular reports and executive briefing documents. However, true holistic
customer analysis demands that these worlds come together. Customers both
think and act. An understanding of how customers think can help explain
and predict customer behavior. Conversely, customer behaviors can help
explain and predict customer attitudes. Ideally, behaviors and attitudes
would be analyzed simultaneously for deeper customer understanding.

For companies with large numbers of customers, Data Mining and Market
Research are often employed to gain intelligence into customer behavior and
attitudes respectively. Therefore, truly holistic customer analysis requires
that these two disciplines be integrated. The rivers must converge.

• Are Data Mining and Market Research integrated within a particular

company?

• Is the company optimizing their investment in behavioral and attitudinal

data for a complete picture of their customers’ intentions and actions?

• Are they aware of the potential costs associated with redundant use of two
disciplines to examine the same research question?

• Is it possible for the company to create a more efficient and accurate

research operation by coordinating these disciplines for deeper customer
understanding?

• What potential barriers will the company face by trying to create a

coordinated research operation?

WHAT IS DATA MINING AND MARKET RESEARCH?

Let’s begin our examination of the convergence of Data Mining and Market
Research by exploring the
basic principles and common uses of each discipline for customer2
understanding today.

Data Mining

There are several definitions of Data Mining in use today. Broad definitions
suggest that Data Mining is the exploration and analysis of large data sets.
Under such definitions reporting, graphing, traditional statistics and
sophisticated machine learning are all considered Data Mining. In this
document we use a more narrow definition of Data Mining that stresses the
discovery aspect of the discipline. Specifically, we see Data Mining as the
iterative process of using pattern discovery algorithms to find useful and
previously unknown trends and relationships in large volumes of data. These
patterns help explain past events as well as predict future events.

Data Mining is used in many industries where there is a need to find patterns
in vast amounts of data. For example, Data Mining is being used to find
sequences in DNA; predict manufacturing defects; identify drivers of student
performance; optimize transportation logistics; forecast energy consumption;
and, most recently, to identify threats to national security.

Perhaps the most widely recognized use of Data Mining is in the commercial
market. Today’s businesses are using Data Mining to identify patterns in
customers’ buying behavior; identify profitable customer segments; increase
marketing return rates; prevent loss of valuable customers; estimate credit
risk; identify fraudulent activity and much more.

The strength of Data Mining is in its ability to quickly sift through vast
amounts of data to find patterns that are hidden and would otherwise be
impossible to find. Data Mining often uncovers unexpected patterns, which
fosters new learning and insight.

According to a 2002 report from IDC, the Data Mining market is expected to
grow at a CAGR of 13% to reach $823 million in 2006. This growth can be
attributed to at least four key factors.

1. There are more information sources available today than ever and the
amount of information is growing exponentially.

2. The explosive growth in the capacity of databases along with the

shrinking cost of data storage has made it possible to acquire, store and
manage more data than ever.

3. Using Data Mining techniques used to require complex programming

skills. Today, there are extremely powerful Data Mining tools on the market
that are easy to use making Data Mining more accessible to a broader
audience. Many operational suite vendors are beginning to embed data
mining into their applications.

4. The highly competitive market environment and growing customer

options makes customer intelligence more critical for business performance.
This has created an increased appetite for rapidly finding knowledge from
vast amounts of data.

Market Research

The American Marketing Association defines marketing research as the

"systematic and objective approach to gathering marketing information
which -- when processed, analyzed and interpreted -- will help identify
problems and opportunities that allow for better-informed, lower-risk
decisions."

In business, Market Research is typically focused on learning more about

consumers, customers, competitors and market trends at large.

Depending on the source of information, Market Research is classified as

either primary or secondary. Primary research uses information from
original sources; that is, a Market Researcher collects data that have not been
previously collected or published. Secondary research refers to collecting
data from published sources such as information released by government
agencies, and reports and publications available in a public library.

Primary research is classified as either qualitative or quantitative. Examples

of qualitative research are focus groups and in-depth personal interviews.
The most common form of quantitative research is a survey that uses a
questionnaire to collect data.

The name qualitative research implies that its findings are not quantifiable.
The research process is quite often a discussion in which the researcher
poses open-ended questions to participants. Findings are participants'
opinions, comments and impressions that cannot be tabulated to obtain
averages or percentages.

Qualitative research defines issues, substantiates perception and identifies

behavior. For instance, results of focus groups involving the users of a
consumer product can clarify issues surrounding brand loyalty, and reveal
users' likes and dislikes. Findings of personal interviews with corporate
purchasing agents can aid the understanding of the criteria business firms
use to select suppliers.

While qualitative research provides valuable information, it does not lend

itself to rigorous data analysis that can reveal relationships among marketing
variables. Quantitative research relies on survey questionnaires that are often
responses to multiple-choice items or ratings on a scale. These surveys are
typically conducted as either personal interviews, telephone interviews, mail
surveys, or web-based surveys. Results from these surveys are then analyzed
to generate averages, ranges and percentages.

When analyzing customer or consumer information, Market Research has

many uses. Market segmentation studies provide information about the
characteristics shared by customers. Purchasing power and buying habits
studies uncover the financial strength and economic attributes shared by the
target market. Psychological market studies reveal information regarding the
perceived opinions and values held and shared by consumers in the market.
Marketplace studies can provide insight into competitor strengths and
directions. Environmental studies can provide insight into economical and
political circumstances that can influence internal productivity and
operations.

WHERE DO DATA MINING AND MARKET RESEARCH FIT IN

CUSTOMER INTELLIGENCE?

A corporate Customer Intelligence environment includes a wide range of

technology-enabled processes for data collection, data storage, analysis and
deployment. Typically, the customer intelligence environment is enabled by
a large number of technology vendors, services providers and internal
efforts. All of these efforts are brought together for the singular purpose of
gaining a deeper understanding of the customer. Figure 1 clearly illustrates
this environment.

CUSTOMER INTELLIGENCE ENVIRONMENT

Customer Data

Starting at the top of Figure 1, Customers and Consumers alike provide

information in the form of behaviors and attitudes. Consumer behaviors may
be captured internally by sales patterns, channel usage, and campaign
responses. Consumer behavior may also be collected externally through
syndicated research, behavior assessment such as Nielsen, or
attitudinal/lifestyle profiles such as Acxiom or Experian. In addition,
consumer attitudes may be captured through either qualitative or quantitative
Market Research. Our model for customer intelligence suggests that these
sources of information are captured and either loaded into or made
accessible by the Analytic Data Repository.

Data Collection

Customer behaviors are directly collected through the major touch-points of

the organization. These touch-points include call centers, point-of-sale
systems, Web sites and other operational systems managed by the
organization. Customer attitudes are being collected through commissioned
Market Research studies as well as corporate web surveys, customer panels
and emerging technologies for text analysis and customer voice analysis.

Data Storage

Whether from customers, consumers or both, there are a growing number of

data sources available that provide organizations with a myriad of behavioral
and attitudinal information. In order to derive insights from the data, the data
must be combined, managed and centrally accessible.

Monitor

Monitoring is the process of identifying key indicators of business

performance at various levels across the organization. These key
performance indicators (KPIs) are typically accessed through executive
dashboards. Critical KPIs may also be monitored by alerting agents that can
send emails or calls when a defined threshold is crossed. Whether by human
or machine, KPIs often identify areas of threat or opportunity.

Report

Upon identifying a potential threat or opportunity, enterprise reports are

typically available to quickly determine the impact of the trend on business
performance. Reports are useful for rapidly accessing business information.
However, they are not well suited for exploration due to their static nature.

Explore

Given that the threat or opportunity has been shown to be relevant and
substantial, exploration can begin in order to identify possible drivers of the
trend. On-line Analytical Processing (OLAP) technology is a valuable tool
for examining issues from several dimensions. With OLAP one can narrow
the problem or focus the opportunity down to a manageable space. For
example, if treadmill sales are on the decline, OLAP can help identify which
regions and customer segments are most accountable for the trend. This
exploration of the data can be classified as 'data mining' using the broadest
definition of the term. However, manually finding important patterns in
OLAP ‘universes’ may be like finding a needle in a haystack as the number
of business dimensions grows. In such situations, automated Data Mining
techniques may be employed to find hidden patterns.

Exploration often leads to the formation of new hypotheses. For example,

one might observe that when women buy treadmills they also buy “ab
crunchers.” Yet, when men buy treadmills they also buy heart monitors.
These observations may lead one to conclude that women buy treadmills to
“tone up” while men buy treadmills for better health.

Here is where customer intelligence typically breaks down. The observations

in the previous example merely suggest a cause. Many CRM efforts fail
because decisions are made based upon one discipline without consideration
for the other as described below.

Research

The origin of customer intelligence is Consumer research. Many hypotheses

are generated daily within an active customer intelligence environment.
These must be properly tested, especially those with strategic implications or
costly tactical programs.

Back to our treadmill example, while exploration may have suggested that
women were focusing on body image and men were focusing on health, the
reverse may actually the case. Research might reveal that women are
including this equipment as part of a low-impact program designed to fight
osteoporosis and promote healthy aging. While the men intend to use the
treadmill to their physical limit to burn off the excess carbohydrates they are
consuming as part of their muscle building program.

Consumer research is commonly executed with either of two disciplines -

Data Mining or Market Research. Both disciplines provide scientific rigor
and allow one to draw conclusions within acceptable bands of confidence.

Deploy
These conclusions are the new findings that expand one’s customer
intelligence. They provide the confidence to plan and execute new programs
to avoid the threats or capitalize on the opportunities at hand. Done properly,
these programs are tested and evaluated prior to being deployed broadly into
the operations of the organization.

What Customer Intelligence Questions do Data Mining and Market

Research address?

Within the context of Customer Intelligence, Data Mining and Market

Research are often used to support decision making in the areas of Customer
Acquisition, Customer Segmentation, Customer Retention, and Cross-
Selling. These applications are part of the field called Analytical Customer
Relationship Management (A-CRM). As described below, the insights
gained from these initiatives help organizations better manage their customer
interactions, improve the level of customer service, and create richer longer-
lasting customer relationships.

Customer Segmentation

Understanding customer segments is critical to any customer-focused

organization. Market Research derives customer segments through surveys
and demographic research. Data Mining uses clustering techniques to find
naturally occurring groups within the customer database. While each
approach individually provides insight into basic customer groups,
combining these approaches yields deeper insight still. A simple illustration
of this can be seen in the table below. The table shows variances between
purchased Demographic Segments and Clusters that are derived by
behavioral, transactional, and individual characteristics. Segment 1 seems to
include two distinct behavioral clusters. An understanding of Clusters 1 and
2 may suggest varied marketing strategies within Segment 1. Segment 2 and
Cluster 2 seem to validate each other. Clusters 1 and 3 contain two different
demographics. While these two groups seem to behave the same,
demographics may provide insight into differing intentions. Combining Data
Mining and Market Research techniques for customer segmentation can lead
refinement of segmentation strategies and to more accurate customer
understanding.

Customer Acquisition

Data Mining is used to help improve customer-acquisition efforts by

identifying the profile of potential buyers for a particular product or
responders to a campaign. While these derived profiles can lead to
improvements in marketing efforts, one can only infer the reasons these
groups respond where others do not. With Market Research one can survey
customers to understand why they buy a particular product or respond to a
specific campaign. Used together, Data Mining and Market Research can
provide more actionable results in a more efficient manner. Specifically,
Data Mining can identify customer segments to survey and provide
hypotheses as to purchase intent and Market Research can narrow field work
to a tighter segment and more focused research objective.

Customer Retention

Market Research is well equipped to identify drivers of satisfaction and

loyalty. By matching primary Market Research data to a customer data-
warehouse, Data Mining can be used to identify behavioral links between
reported satisfaction and loyalty. Additionally, Data Mining can be used to
validate a relationship between reported loyalty and actual churn behavior.
Used together, Data Mining and Market Research can more accurately
identify key drivers of customer loyalty and enable an active management of
customer churn.

Cross Selling

Data Mining is often used to identify naturally occurring associations

between products. Marketing managers use these associations to develop
joint-marketing and cross-selling campaigns. However, many times product
associations are not obvious or only occur within specific customer
segments. Data Mining is often ill-equipped to provide further insight into
these patterns. In such circumstances, Market Research can be utilized to
focus on what factors lead to these associations. This research can result in
more effective cross-selling campaigns and product promotions.

WHERE SHOULD DATA MINING AND MARKET RESEARCH

CONVERGE?
The convergence of Data Mining and Market Research can best be
illustrated by examining the underlying research stages common to both
disciplines. To this end, we define the underlying research processes as
consisting of six distinct stages. These stages include:

• Define where the customer is articulated

• Capture where information is collected

• Store where information is managed and maintained

• Analyze where information is examined

• Understand where insights and conclusions are drawn

• Deploy where insights are operationalized throughout the organization

Data Mining Process

Data Mining most commonly defines the customer as a set of trackable

behaviors. This is due in large part to the fact that Data Mining requires
large data sets. These are more often produced by operational systems than
surveys. This means that the customer is defined as an acting entity with less
input from intentions, attitudes or outside behaviors. Therefore, Data Mining
focuses on capturing what is accessible via operational systems that interact
with the customer.

These systems produce massive amounts of transactional data including

purchases, customer service inquiries, web visits, phone logs and more. The
data is stored in large data warehouses. The analysis of this data requires
highly scalable algorithms that churn through the data looking for common
aggregate patterns. Customer understanding is derived from interpreting
behavioral patterns. Intentions are then inferred from actions. Finally, the
insights gained through Data Mining are represented in the form of 'models'
that can be used to score databases and real-time applications.

Market Research Process

Market Research defines the customer as a thinking affective entity where

intentions and attitudes are more important than actions. Market Research
often defines the ‘customer’ as a group within the general population. Being
freed from the internal corporate database, Market Research is able to
explore questions such as competitive-product assessments, intentions to
defect and general satisfaction. The data outputs are subjective comments
and ratings. The data is often captured in the form of spreadsheets or text
files and delivered in the form of written reports. The analysis of this data is
a subjective summary of the results and interpretation of meaning across the
responses. Customer understanding is gained by linking the attitudes of
general population segments to the assumed makeup of a client’s existing
customer base. Deployment of market research results occurs through
presentations to decision makers.

Combining Processes

Combining Data Mining and Market Research will require synergy at each
stage of the research process. While the customer deserves to be seen as a
thinking and acting entity, combining these disciplines provides the unique
ability to analyze the gaps that are known to exist between espoused plans
and practice. Thus data capture must expand to include all information,
subjective and objective, intentions and actions. The storage of data must
come together so that the analysis stage can leverage both. In addition, the
analysis stage must leverage new processes that take advantage of the best of
both disciplines, including empirical behavioral modeling and qualitative
research methods. Finally, the deployment of insight, whether to human or
machine, should take advantage of the knowledge gained from both Data
Mining and Market Research. Only when a full perspective of the customer
is available can holistic conclusions be drawn and the most accurate insight
can be deployed.

For a more detailed examination of the convergence of Data Mining and

Market Research practice, see Convergent Research Patterns (Kenning
Research Inc., 2003).

WHY AREN’T DATA MINING AND MARKET RESEARCH

CONVERGED TODAY?

Despite their shared fit within customer intelligence, their commonality of

application, and their similarity of research stages, Data Mining and Market
Research are still not converged into a unified research environment today.
While there are examples of leading companies who have converged
disciplines for ad hoc research, systematic convergence has been hindered
by several factors. Among the most challenging barriers to convergence are
separations between Data Mining and Market Research with respect to
organizational structure, culture, and infrastructure.

Organizational Separation
In most organizations today, Data Mining and Market Research operations
are housed within different parts of the business. This physical separation
hinders interaction and cooperation. Organizational separation also implies
that two decision-makers, both tasked with customer intelligence, are
operating under different strategies and objectives.

Cultural Separation

The cultural separation between Data Mining and Market Research can be
seen from the executive and field level. At the executive level, there tends to
be a decision-making culture that is based more heavily on either internal
analytics or Market Research. The comfort of decision-makers toward one
approach over the other perpetuates the separation of disciplines.

At the field level, there may exist an adversarial relationship between Data
Miners and Market Researchers. This atmosphere of non-cooperation
hinders the advancement of research.

"Anything where a person's identity is used isn't Market Research, it's

spying…We [Market Researchers] are always at risk of getting a bad name
from people who mistake Market Research and Data Mining, which is about
finding out enough about people to sell them something.” President of a
Market Research Society

“What we need is not market research, it’s more transactional data. It is well
known that past behavior is the best predictor of future behavior. Attitudinal
research is weak at best.” Data Mining Expert

Infrastructure
Today, Market Research and Data Mining rely on separate internal
infrastructures. Bringing these two disciplines together will require the
integration of technologies that are not widely integrated today. Such
technologies include data collection, data management, data storage, data
analysis/reporting, and deployment. As well as general applications such as
project management and knowledge management.

WHAT ARE THE BENEFITS OF CONVERGING DATA MINING

AND MARKET RESEARCH?

Maintaining two separate disciplines for consumer research, Data Mining

and Market Research leads to:

• Non-optimized use of available data

• Non-optimized use of new learning

• Redundant treatment of similar research questions

• Sub optimal conclusions drawn when one discipline is used where the
other would have been more effective

• Ultimately, the potential for non-optimized intelligence at a higher cost

Organizations that commission Data Mining and Market Research are often
rich with data. In many cases, Data Mining and Market Research can be
improved with the inclusion of data generated for use by the other discipline.
Bringing these two research areas together can lead to the identification of
available data, which can be leveraged to derive deeper, more accurate
insight.
By not converging these disciplines there is the risk that knowledge gained
from one research initiative isn't shared with the other. This can lead to the
formation of conclusions that could have been improved by previous
learning.

Certainly, an organization would want to avoid a situation where both

disciplines are being used in an uncoordinated manner to address the same
research question. For example, it is not uncommon for organizations to
commission market research agencies to study the issue of customer loyalty,
while in another initiative they have commissioned data analysts to develop
models of customer retention.

This is a good example of each discipline providing a unique and valuable

contribution to the research question. Yet, the results will be sub-optimized
and more expensive if they are not coordinated.

Recommendations

The convergence of Data Mining and Market Research may not be the best
strategic initiative for your company at this time. Only those companies who
today are making a significant investment in customer intelligence and
market research can expect significant gains from convergent research. If
your company collects behavioral and attitudinal data on your customers,
has numerous customers with whom you engage frequently, and is under
competitive pressure to grow and maintain your customer base, consider the
following recommendations.

Determine the Need

The first step toward the development of a convergent research environment
at your organization is an internal assessment. Review the following
questions with relevant individuals within your organization. Do you
commission Market Research and Data Mining today? Are they being
conducted separately? Are they being conducted to address similar business
questions? Is Customer Intelligence critical for business operations? Can
incremental improvements in Customer Intelligence result in significant
advancements in business performance?

Test the Readiness

Examine your internal Data Mining and Market Research operations.

Distribute this paper and get their reaction. Assess the cultural readiness of
your team to adopt a convergent research discipline. Examine the
organization structure that houses Data Mining and Market Research.
Develop a chart that documents the relationships among those who are
pivotal to the research process for each discipline. Identify the cultural and
organizational barriers that separate these disciplines. Be sure to document
the strengths and supporting relationships as well. Review the technologies
each group utilizes to perform its research. Identify the overlap and
differences in the required infrastructure. Determine if these information
environments can be coordinated.

Then, identify all internal consumers of market research and data mining
results. Interview these decision makers to understand how they use these
streams of information. Ask them how they synthesize this information in
their own minds, and what they desire from the research, and assess the
potential business benefits from convergent knowledge. Also, identify all
non-human deployment of research results, whether these are in the form of
scores back into the database or recommendations to real-time operational
systems. Assess the potential benefit of improving the accuracy of these
scores, even by the smallest amount.

Start Small

While it is important to have a vision of what is possible and how to get

there, a company must take one successful step at a time. They can pick a
small pilot study to measure their internal readiness for the convergent
research paradigm. This pilot should test the organizational, cultural, and
technological environments. It should also be designed to demonstrate the
"lift" generated as a result of convergent knowledge compared with
traditional research approaches alone.

Start Strategic

Due to the initial investment in the pilot, an application that has high
strategic value has to be chosen. Or they must pick a tactical application that
has the promise of high financial returns. Chances are, a successful pilot
project will lead to the identification of a larger implementation of the
approach. Proving the concept on a highly visible and strategic application
will insure greater excitement and buy-in for further progress towards
convergent research.

Find Support

All change, no matter how beneficial, is difficult. It will be easy to slide

back into the 'old ways' of doing things. The company can choose a
consultant, under a limited and focused engagement, to help through their
internal assessment and to help design a pilot program,after making sure the
consultant has experience in both Data Mining and Market Research toward
improving customer intelligence.

Share your Success

Finaly the oraganisation can find a forum to share the results of their
successful initiatives. Not only will this establish the organization as
innovative and adaptive, it will foster the development of a supportive
community of like-minded contemporaries who will challenge each other to
grow and refine the discipline of convergent research. Then companies can
develop and maintain a convergent research practice as their competitive
advantage.

Boom Boom: The way ahead

Future

Client organizations are more receptive to applying DW & BI and Data

Mining. These services will soon be embraced by the research organizations,
leveraging on the availability of a good education pool. Just as product
companies go through the evolution lifecycle, the research service industry
also needs to upgrade and come up with newer client servicing options - like
branded market research agencies setting up in-house research divisions for
larger corporations (this will ensure data security, real time data available at
every stage).
The future of Indian research from a market opportunity point of view is
very bright simply given the growth in economy and the increasing need for
consumer insights for sound decision-making. This includes Multinational
corporations and the new Indian ventures on the retail, realty and hospitality
front. What will determine success or failure is how the agencies can
transition themselves and put in structures and technology in place to tap the
opportunity.

Globalization will continue to drive the research standardization wave and

the time to get involved with Indian research is… NOW.

CONCLUSION

The need of the hour are MR professionals who are true managers -
managers who have to facilitate a radical change in the way market research
is looked upon today; very often as an activity done by a separate cell and an
end in itself. I see myself, as an MR professional, using research as an
actionable tool, incorporating cutting edge methodologies, and getting the
needed results while saving time and money. I want to turn it into a dynamic
instrument, use it to feel the pulse of the market, make probabilistic
predictions abut the market through sophisticated tools and ultimately get
involved in product innovation and strategic planning.

Bibliography

Further details about conducting market research in Asian markets such as

India can be found at the website of our Asian office, at
www.b2binternational.com.cn
http://www.expresscomputeronline.com/20070101/mediaentertainment0
1.shtml

http://www.quirks.com/articles/a1997/19971103.aspx?
searchID=7502398&sort=9:Editor’s note: Ravi Iyer is president of
Paradigm Technologies International, a Westwood, N.J. research firm.

The Hindu Business Line MR looks for a makeover.htm, INDIA a

global hub for Outsourcing

Check…..http://www.bus.wisc.edu/update/winter06/marketing_researc
h.asp

http://www.internationalbusinessstrategies.com/market-research-
reports/india.html?referrer=gad1&gclid=CMXZqYiiy5ICFQ-
vQwodh129cg

http://groups.google.co.in/group/aiii/browse_thread/thread/cdf9603bdf3
392d5