Varied Observations on MR

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SOMETHING ABOUT MARKET RESEARCH

SECTION A: MARKET RESEARCH

HISTORY OF MARKET RESEARCHTYPES 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 RESEARCHCHOOSING 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 ARENT 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


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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 moreaccurately, 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 aparticular 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.


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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.


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

common methods include:

y using company intelligence to learn competitors' strategiesy analyzing past sales data to glean purchasing trendsy surveying present customers or a target audiencey evaluating demographic data, such as from the countrys census, to infermarket 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 companys

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."


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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 surveyshe 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


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success of marketing campaigns, and apart from this there are other forms of

business research which include:

y 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.

y Advertising research - is a specialized form of marketing researchconducted 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 ads 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.


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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.

y 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-checkmagazine 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-likedevice 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.


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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.

y 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:


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y researching the appeal of a new product's proposed namey testing new packagingy identifying new markets or selling points for an existing producty testing new pricingy 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.

y Brand Research.

Brands, the named products that advertising pushes and for whichmanufacturers 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


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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.

y 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 psychologicalprofiles. 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 informationuncovered 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.


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y Scanner ResearchThere 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 ofsimilar 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.

y Database ResearchVirtually 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


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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 andcross-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 spendmillions of dollars trying to sell to total strangers when you have a list of

millions of people you already know?


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y Post-sales or customer satisfaction researchCompanies 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 thatis 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 happyand 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.

y Social researchThis refers to research conducted by social scientists (primarily within sociology

and social psychology), but also within other disciplines such as social policy,


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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 astreet 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 eitherproblem-

identification researchor asproblem-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 researchand 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.

y Exploratory researchis 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


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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 brands

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 ads ability to get attention,communicate the message, build the brands 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


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y Coolhunting - to make observations and predictions in changes of newor existing cultural trends in areas such as fashion, music, films, television,

youth culture and lifestyle

y Buyer decision processes research - to determine what motivatespeople to buy and what decision-making process they use

y Copy testing predicts in-market performance of an ad before it airsby analyzing audience levels of attention, brand linkage, motivation,

entertainment, and communication, as well as breaking down the ads flow of

attention and flow of emotion. (Young, p 213)

y Customer satisfaction studies - exit interviews or surveys thatdetermine a customer's level of satisfaction with the quality of the transaction

y Demand estimation - to determine the approximate level of demandfor the product

y Distribution channel audits - to assess distributors and retailersattitudes toward a product, brand, or company

y Internet strategic intelligence - searching for customer opinions in theInternet: chats, forums, web pages, blogs... where people express freely about

their experiences with products, becoming strong "opinion formers"

y Marketing effectiveness and analytics - Building models andmeasuring results to determine the effectiveness of individual marketing

activities.

y Mystery shopping - An employee or representative of the marketresearch firm anonymously contacts a salesperson and indicates he or she is


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shopping for a product. The shopper then records the entire experience. This

method is often used for quality control or for researching competitors'

products.

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

y Price elasticity testing - to determine how sensitive customers are toprice changes

y Sales forecasting - to determine the expected level of sales given thelevel of demand. With respect to other factors like Advertising expenditure,

sales promotion etc.

y Segmentation research - to determine the demographic,psychographic, and behavioural characteristics of potential buyers

y Online panel - a group of individual who accepted to respond tomarketing research online

y Store audit - to measure the sales of a product or product line at astatistically selected store sample in order to determine market share, or to

determine whether a retail store provides adequate service

y Test marketing - a small-scale product launch used to determine thelikely acceptance of the product when it is introduced into a wider market

y Viral Marketing Research - refers to marketing research designed toestimate the probability that specific communications will be transmitted

throughout an individuals Social Network. Estimates ofSocial Networking


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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 - statisticalsignificance 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


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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


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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 thequestions 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.


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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 isannoyed, 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 mostinexpensive 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.


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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 wantingopinions 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


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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.


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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-personconsultancies 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.


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

Syndicated Studies like

Social Research

Database Research

Scanner Research

Psychological Research

Brand Research

Product Research

Audience Research

Post-Sales or Customer

Satisfaction Research

Advertising research

Or all of them.


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Classification based on the services provided by the MR agency.

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

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

MarketResearch

Marketresearch/Analysis and

reports

MarketingPlans

CompetitiveAnalysis

PriceAnalysis Identify

Trends.

Domestic /Internationalcompetitors

TargetMarketAnalysis

LocationAnalysisReport

SWOTanalysisReport


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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 Collection & Processing

Field Management Services Focus Groups

Moderator Services Research/Project Design

Research Analysis Research Service Provider

Sampling Transcription Services

Web-Based Research 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


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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 theextent 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 sellingunder 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


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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


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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 itis 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 conclusionfor 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


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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


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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 thedecision 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 researchwhat it was trying to

learn and by what methodsand conclusions from itwhat was learned and


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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, its essential to know the marketplace -

and hiring a market research firm is an excellent way of assessing the level of

demand. However, once youve made the decision to outsource, its 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:

y Does the firm have a good reputation? Even if youre dealing with acompany 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.

y Is the firm experienced in your area? If youre not sure, ask the companyfor examples of completed projects that are similar to your own. The

companys reputation and references are important, but so is its level of

experience.y How is your rapport? Invite the marketing firm to meet with you for an

initial assessment. See if the companys representatives listen to what you

have to say, and if they are responsive to your needs. The people you


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talk to at this meeting are probably the ones who you will deal with

throughout the process. Do you have good chemistry with them?

y Is the price competitive? If youve met with several companies, then youshould have a number of proposals to compare. Of course, quality is

very important, and cheaper certainly isnt always better - but which

proposal offers you the most for your dollar?

Once youve made your decision, find out who will be your point of contact.

Because it is the market research companys 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, its 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


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also means that market research companies have access to software (e.g.

Microtab, StatPac, etc.) and facilities that you probably dont - like two-way

mirrors and industry-standard taping equipment. A large market research

company will probably also employ statisticians, psychologists, and otherrelevant professionals who it just wouldnt 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 employers 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 youre 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, theres 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 dont agree with you on how things should be


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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, theres a pretty good chance that

theyre right - and that youre 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.


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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 predictcustomer 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?


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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?

Lets 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


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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. Todays 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, whichfosters 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.


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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 theirapplications.

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


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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 oftenresponses 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 thecharacteristics 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.


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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.


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CUSTOMERINTELLIGENCE 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


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information are captured and either loaded into or made accessible by the

Analytic Data Repository.

DataCollection

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.

DataStorage

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


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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


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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 ones 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.


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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.

CustomerSegmentation

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 approachindividually 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


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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


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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.

CrossSelling

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


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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.


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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 aggregatepatterns. 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 clients 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


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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 mustleverage 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 ARENT 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.


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OrganizationalSeparation

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.

CulturalSeparation

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

spyingWe [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, its 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


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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 oftenrich 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.


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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


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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 inCustomer 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

Documents

Varied Observations on MR