Market Research

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The American Marketing Association defines market research as the function that links the consumer, customer and public to the marketer through information used to identify and define marketing opportunities and problems; generate, refine and evaluate marketing actions; monitor marketing performance; and improve the understanding of marketing as a process.

Market research is a multistep process: specifying the information to address the issues; designing the method for collecting information and managing and implementing the data-collection process; analyzing the results; and communicating the findings and their implications.

When the data under consideration belong to an individual client company, the research is deemed proprietary. When several clients sponsor the research and the data are owned by the research company, the research is syndicated.

Common types of market research

Many advertisers also use advertising budget research to examine the relationship of ad expenditures to sales, traffic or some other specified goal and use statistical analysis to determine the budget levels they need to meet their goals.

Advertising effectiveness research tries to assess the effectiveness of the advertising message. Copy or message research deals with consumer retention, perception and response to an advertising message. Ad tracking research monitors the growth or decline over time in consumer response to the total advertising-communications campaign. Media model research attempts to predict the effects of advertising by media.

Product market research includes brand equity research, consumer research and market geography research. Using "clustering," a common tool in product market research that postulates consumers like to live among others like themselves or in clusters, marketers profile target markets and measure how individual ZIP codes receive their products or services. After identifying neighborhoods where existing customers live, marketers predict the types of neighborhoods where prospective customers should be found.

In the U.S., PRIZM (potential rating index by ZIP markets) is the most commonly used clustering system. PRIZM describes every U.S. neighborhood in terms of any of 62 clusters with distinct lifestyle types.

Industry pioneers

In the 1920s, Daniel Starch was a psychology professor at Harvard University when he became interested in advertising. Mr. Starch and other market researchers founded the Market Research Council in 1927. Mr. Starch's "readership report" greatly influenced the measurement of print ad readership throughout the industry.

George Horace Gallup, known for polling, measured newspaper and magazine editorial and advertising content by having consumers read a real ad in real publications and respond to it. Mr. Gallup pioneered the "telephone coincidental" and "diary" methods of research on radio audience size, the first based on random telephone calls to homes, the second on written records kept by listeners.

Mr. Gallup went to work as research director in 1932 at Young & Rubicam, where he established the first independent ad agency copy-testing department in 1938. By 1958, Mr. Gallup had established the Gallup Organization, which conducts marketing and survey research.

Arthur C. Nielsen founded A.C. Nielsen Co. in 1923; Nielsen Media Research, the TV ratings company serving the U.S. and Canada, shares a common heritage with ACNielsen Corp. (The companies split in 1996 as part of a general restructuring, although they are now owned by the same company, Dutch conglomerate VNU.)

In the mid-1960s, psychologist Ernest Dichter, considered the founder of motivational research, advocated that a product's image is an inherent feature of that product. Since advertising plays an important role in creating a brand image, Mr. Dichter's theory led to a proliferation of image measurement in advertising research.

Trade associations

Trade associations also have been an influence in the expansion of research applications to advertising. In 1961, the Association of National Advertisers proposed a model that required a defined target audience, used intended communication effects in setting advertising goals and evaluated advertising effectiveness with measurable communication task goals.

The DAGMAR model was closely related to the AIDA (Awareness-Interest-Desire-Action) "hierarchical" effects model, which breaks the effects of advertising into several stages (e.g., awareness of the product after ad exposure, interest in the product, desire to buy the product and, finally, purchase of the product). The AIDA model is still reflected in the types of advertising "impact" measures regularly employed by many advertisers. DAGMAR emphasized benchmark measures and measurable communication goals, which increased use of research in both advertising planning and advertising evaluation.

The American Association of Advertising Agencies emphasizes research in advertising in its Services Standards for members, which work with client marketing staffs to enhance advertising effects through research. In addition, ANA and Four A's co-sponsor research on advertising industry issues, such as the impact of advertising "clutter."

The Advertising Research Foundation, founded in 1936 by ANA and the Four A's, has as its mission the improvement of the practice of advertising, marketing and media research in pursuit of more effective marketing and advertising communications. The ARF regularly issues research-based guidelines to advertisers, agencies and research suppliers. It also publishes the "Journal of Advertising Research", the leading journal of advertising research in the industry.

The American Marketing Association, created in 1937, emphasizes the study, research, planning, dissemination and use of marketing knowledge to improve marketing methods and management. It publishes several research journals including "Marketing Research" and the "Journal of Marketing Research."

Account planning

The introduction of account planning in the 1970s in the U.K. revolutionized the research departments of many advertising agencies. Under an account planning system, an agency's research department acts as the voice of the consumer and takes an active part in the development of advertising.

The concept of account planning was introduced in 1965 by Stanley Pollitt, a media director at Boase Massimi Pollitt, London. Only in the 1980s, however, did account planning gain a foothold in the U.S., when Chiat/Day adopted the approach. Despite the emphasis on intermediate communication effects (e.g., awareness and attitude change) by many in market research, there are many managers who assess advertising performance primarily through increased sales.

The use of scanners at supermarket cash registers has made possible research that combines data on exposure to cable TV advertising with data on store purchases. This is called "single-source" data research, in which a group of consumers participate in a panel where both their TV viewing behavior and purchases are monitored.

Media audience research

There are two commonly used methods to tap readership of magazines. Mediamark Research Inc. and Simmons Market Research Bureau measure readership by the "most recent reading method." Readers are given a list of more than 200 magazines and interviewed face to face. They also fill out an extensive product purchase or use questionnaire.

A second method, called "through the book," is used by Starch and previously was used by Simmons. Readers are shown the pages of magazines and asked if they have read the content or advertisements of that magazine.

Scarborough Research measures 75 local markets via combined telephone and mail surveys among adults ages 18 and up using detailed demographics, lifestyle, leisure and reported media use, as well as an array of retail, products and services usage.

In 1996, the Gallup Organization began offering competing syndicated local newspaper and radio/TV research in the top 15 markets and in other selected U.S. markets. Arbitron specializes in local radio audience research and has provided rating services since 1949.

Nielsen Media Research is the leading provider of TV audience measurement in the U.S. and Canada. Nielsen provides audience estimates for all national TV programs using a national People Meter panel and also estimates local audiences for each of the U.S. TV markets using diary methods, in addition to the electronic metering of TV viewership in 47 markets. Since 1988 Nielsen has been providing Internet usage and ad information through Nielsen//NetRatings.

The Nielsen People Meter, which at the end of the 20th century was in approximately 5,000 U.S. households, provides daily household and persons-viewing estimates based on a single sample of households. Each household member pushes an assigned button to indicate they are in the viewing audience.

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