International Encyclopedia of the Social Sciences Encyclopedia of Business and Finance, 2nd ed.Encyclopedia of ManagementEncyclopedia of Small Business Further reading


Market Research

Market Research

I. Market AnalysisJohn E. Jeuck


II. Consumer ResearchDik Twedt



Market analysis is concerned with predicting the size and location of markets as measured by sales. The term is sometimes used as a synonym for “market research,” which is more accurately defined to include the entire range of methods and techniques employed not only for the delineation of the sizes and shapes of markets but also for the evaluation of tactics and strategies useful for developing and exploiting markets.

While market analysis and advanced methods of sales forecasting derive from the relatively young fields of statistics, survey methodology, and econometrics, the practice of prediction—commercial prediction no less than any other kind—has a very long history. Before the Delphic liturgy was defined, the auguries were divined from the livers of bulls and the entrails of doves; and the ambiguities of the oracle may not have been less than some of the forecasts that today trumpet tomorrow’s fortunes.

The process and the outcome of sales forecasting command general interest among business managers, since sales volume constitutes the most important source of income for all but a narrow class of (financial) enterprises; and it is basic for corporate planning with respect to plant, personnel, and investment. Marketing plans and the allocation of promotional budgets are, of course, importantly influenced by expectations of the level and distribution of market opportunities.

The methods of market measurement In measuring markets, one is concerned with both industry and enterprise concepts—total generic product sales in an area, loosely referred to as “market potential,” and enterprise or brand sales, which are some proportion of industry sales. This is the “market share” of the firm or brand. The sales forecasts of particular companies normally depend on estimates of market potential (itself sometimes an inference from a general economic forecast), which are then adjusted for the firm’s expected market share.

Methodological discussions of market analysis usually focus on sales or market potential. In practice, of course, it is not always obvious what the most appropriate definition of “market” or “product” is. One speaks of markets in various contexts: the “gasoline market,” for example, of which the “high octane market” is a segment. The “petroleum market” and the “liquid fuels market” are broader concepts—but narrower than the “energy sources market.” Similarly, one often hears of the “high price” and “low price” markets, the “New York,” the “west coast,” and the “export” market. In estimating market potentials it is important to choose the relevant definition, but this choice is often influenced by the data available. [SeeMarkets AND Industries.]

While successful forecasting depends on gauging the effects of changes in the firm’s marketing policy, on competitive behavior, and on the consequences of future events that may transform the environment, business planning often starts from estimates of present (recent) sales. It is common practice to estimate potential market size by taking recent industry volume as the first approximation to the measure of expected market size. Even this is not always easy. Not only are there difficulties in establishing a relevant definition of “industry,” but data on recent industry sales are not as readily available as one might expect. Census data of various sorts offer authoritative figures on production and sales volume of fairly broadly defined product classes in the United States, but these tabulations do not appear at frequent intervals. More frequent compilations of industry statistics are by-products of excise taxes (e.g., gasoline and tobacco in the United States) and/or import duties. Other sources of industry sales-volume data are sometimes found in the publications and the archives of trade associations and of advertising media. Many firms find it useful to subscribe to one or more of the commercial subscription services that collect panel data from households and/or dealers for certain kinds of products. These panels provide much more detailed information on product movement—by brand, price level, and type of outlet, for example —than is available by other means. Finally, of course, it is possible to undertake special surveys of product volume and use.

In the absence of industry sales figures, and in order to avoid the expense of direct data collection, corollary or proxy data may be used to estimate market potentials. Data on complementary goods, for example, can serve this purpose—the market potential of automobile batteries for replacement can be estimated from data on the distribution of cars, sales of electrical appliances will be related to and limited by the number and location of wired homes.

Whatever the data sources of the market potential estimates, they are often available only on a national basis. One of the tasks of market analysis is to make the conversion to local and regional estimates. The conversion is characteristically made by distributing national figures in proportion to such measures as population, income, number of employees, and value added by manufacture, which are available for smaller geographic units.

The technology of sales forecasting It is customary in the literature of forecasting to distinguish between short-term and long-term forecasting, although there is only rough agreement on definitions. “Short term— clearly refers to the monthly or quarterly outlook and many practitioners would include the annual forecast. “Long term” can safely be attached to 10-year forecasts, but many technicians would so classify any predictions whose horizon is greater than one year. Forecasts for three years and five years are sometimes categorized as “intermediate range.” Much (most) of the technology of forecasting is common to predictions of the various planning horizons, although truly long-range forecasts (e.g., for 10 and 15 years) depend heavily on trend analysis of such fundamental variables as population, productivity, income distribution, political developments, and leisure—all of which change slowly and are assumed to be stable in forecasts for any period up to a few years.

While few analysts would enthusiastically endorse Alphonse de Lamartine’s observation that “History teaches everything, even the future,” the fact is that the experience of yesterday and today constitutes all we know about tomorrow. The technology of forecasting includes methods for identifying relevant historical data and for manipulating them in ways which may make the record more meaningful and illuminating. The art of forecasting largely consists in interpreting historical data and in specifying those future events that will condition tomorrow’s performance.

There are numerous ways of categorizing sales forecasting methods. It is convenient here to distinguish among the following: “judgment forecasts,” including sales-force estimates; market surveys; market tests; time series analysis, including curve fitting; and regression analysis. While these various techniques are sometimes presented as mutually exclusive and alternative analytical tools, in practice full reliance is seldom placed on any single method; two or more approaches often supplement each other. Certainly, the forecast ultimately accepted as the basis for company planning almost always will reflect the intuitive estimates of senior management.

Judgmental approaches. Hardly anyone will quarrel with the assertion that intuition and judgment dominate the practice of sales forecasting. Ease, cheapness, and flexibility all combine to support the use of predictions of sales volume which rest unabashedly on the judgment of one or more persons in the firm. Judgment forecasts, whether made by individuals or committees, are dominated by the experience, perception, and intuition of the forecasters. The process cannot be separated from the performer(s) and replication is impossible. However inelegant the method may appear, impressionistic evidence suggests that the more rigorous statistical forecasting methods continue to play a subsidiary role in business planning.

Judgment forecasts are sometimes based on sales-force estimates of future sales. It is hoped that sales personnel (and their managers) are familiar with the needs and circumstances of customers and the relative strength of competitive offerings. In some companies sales representatives systematically interview customers concerning their spending plans. Rarely, however, are sales-force estimates the sole basis of a company’s forecast. Substantial editing is generally contributed by corporate staff and senior management.

While it is often claimed that salesmen (and their supervisors) are unduly optimistic and therefore generate faulty forecasts, evidence is hard to come by. It is not obvious that such a bias should consistently attach to their estimates, since the estimators’ interest will be a function both of the character of the compensation plan and the particular use to be made of the forecast.

Market surveys. Whereas sales-force estimates rely on a survey of the forecasts of sales personnel, a more recent development has been that of the survey of buyer intentions. The market survey rests on a sample of potential buyers whose attitudes and/or intentions to purchase are solicited in person or by mail or telephone.

The survey has enormous appeal as a forecasting aid. It seems plausible that buyers should know (and be able and willing to say) what and whether they plan to buy in the future—especially if the future is not too distant. But this view assumes that consumers can predict what the future will be like as well as what they will choose to do if the future is as they expect it to be. Evidence on the validity of these assumptions is uncertain.

The Survey of Consumer Finances was initiated in 1946 by the Board of Governors of the Federal Reserve System (Juster 1964). These surveys, covering intentions to purchase durable goods (e.g., houses, automobiles, and major household appliances), are among the best-known and most thoroughly analyzed materials in the literature of forecasting. They are in many respects models of methodological nicety and generally far surpass ordinary commercial standards—and costs—of market investigation. Despite the relatively long history of these surveys and the superior methods and skills of the investigators, one must still characterize the method as more promising than certain. What does seem clear is that the survey method is best adapted to products involving relatively large expenditures and a fairly high degree of planning for purchase. In the case of family expenditures, homes and automobiles most clearly meet these conditions. In the case of industrial markets, expenditures for capital goods (e.g., expensive machinery and new plant construction) obviously qualify. Indeed, surveys of spending plans for industrial capital goods have tended to yield more accurate forecasts than those for consumer goods.

Market testing. Another method used to estimate market potential is the market test. Employed primarily for new products and invading brands, the market test is essentially an “experiment” which eschews direct questioning of respondents in favor of measuring their behavior. Market experiments are not feasible for all product categories, and they are expensive even when confined, as they usually are, to one or a few markets. The test is most commonly employed for packaged consumer goods items—the frequently purchased branded food, drug, and household supply products of relatively low price and high turnover. Market tests by and large amount to “tryouts” in one or a few markets—typically cities or metropolitan areas—which are selected as test locations because they are considered to be representative and relatively self-contained and have trade outlets and advertising media which are amenable to experimentation.

Virtually nothing is publicly available on the predictive value of the test market as a forecasting method. Test marketing is above all else a private affair. One infers that it provides useful, if not precise, information from the fact that successful and sophisticated enterprises continue to employ the method. At the same time, some conspicuous commercial failures suggest that test marketing is far from infallible as a basis for estimating market potential. In an article on the predictive power of test marketing, the author concluded:

Despite its shortcomings, test marketing has provided a certain degree of service to marketing management. It has, without question, considerably narrowed the range of new product sales prediction error over forecasts arrived at by judgment, even experienced judgment. From a management point of view, however, for a technique as expensive as test marketing, and one that exposes the company’s future hand to competitors, it would seem that we have a right to expect a much greater measure of reliability and accuracy. (Gold 1964, p. 16)

Time series analysis. Among the most frequently employed statistical forecasting techniques is that of time series analysis, which probes the record of past sales behavior in search of patterns that may be extrapolated. Historical sales, economic, and social data constitute time series which can be analyzed by statistical techniques of various kinds. But when measured against the task, the statistical tools are rudimentary and, some statisticians believe, of dubious value. One persistent approach seeks indicating or “leading” series which signal the direction and, hopefully, the extent of movement in the “following” or “lagging” series. While experience has dampened the hope that many companies can find consistently reliable lead-lag relationships, the search has not abated and empiricism rules.

Past sales patterns are sometimes mechanically projected by methods of curve fitting and trend analysis. The results are extremely sensitive to the particular formulas chosen and are perhaps most often used in combination with the forecasters’ best guesses about the state of key variables in the future and often with a substantial dash of reasoning by analogy.

Forecasting for the month or the quarter ahead is frequently characterized by relatively mechanical projections of recent sales, usually “smoothed” by one statistical device or another. The availability of computers and developments such as exponentially weighted projections of past sales, the weights declining as one incorporates earlier and earlier data, promise better short-term forecasts and improved inventory control in situations of highly complex inventory assortments and relatively strong seasonal demand.

In all forecasting it is well to have some criterion of success and, particularly, a measure of the extent to which forecasts do little but exploit the tendency for sales figures to show inertia, each period tending to be close to the experience of the immediately preceding period. This interest in a criterion underlies the so-called “naive models.” The simplest of such models is the “no-change” model, that is, the forecasted sales for the period ahead will equal the sales of the current period. A somewhat more complex formulation would be that the direction and rate of change, rather than the absolute value, will persist. (These are, of course, simple methods of extrapolation.) Naive models have been used mainly as standards for evaluating alternative forecasting methods. Nonetheless, the notion underlying naive models can be expressed in various autoregressive statistical methods that have some promise of improving judgmental forecasts, even for periods as long as a year.

Regression analysis. Regression analysis, in its many forms, attracts increasing interest and use. The underlying idea is to exploit the statistical relationship evidenced in the past between the variable to be forecast and the so-called independent variables (e.g., income, population, prices) that may be related to it. There are numerous regression analyses “explaining” the sales of various products, in the sense of showing a statistical relationship between sales and the independent variables. The prediction problem is then shifted from the dependent variables (sales) to the independent variable(s). Occasionally, of course, a lagged relationship can be shown to exist. Predicting from a regression analysis assumes stability of the past statistical relationships. As in all other statistical forecasting techniques, intuition and judgment are required to allow for changes in basic conditions that are neither reflected in historical data nor embraced by the statistical model.

The advent of the computer has made it possible to undertake more sophisticated (complex) manipulations of data than ever before. Computer programs make feasible the exponential smoothing of time series, stepwise multiple regression, the solution of systems of multiple regression equations, and simulation. But while the contributions of the computer promise wider use of complex forecasting techniques and offer improved opportunities for experimenting and testing alternative methods, the millennium is not yet.

Status and prospect. Despite the enthusiasm for sales forecasting and the exhortations that it constitutes the basis if not, indeed, the essence of business planning, the record is neither clear nor impressive. Accurate forecasting is still a wish rather than a fact. Distressingly little published information is available on the degree to which actual sales conform to forecast sales. One survey in the United States reported that there was an average deviation of 8 per cent between forecasts and actuals in 1955, but the average performance masks a wide range of deviations within and between industry groups (American Management Association 1956, p. 148).

In an English study Carter and Williams suggest some of the difficulty of making accurate sales predictions in the case of new ventures. In 57 per cent of the cases examined where expected and actual yields were at variance, the explanation was associated with “unforeseen changes of demand, or changes in the price of competing product.” They properly observed:

The importance of changes in demand can be seen. Many of these were changes in the demand for an intermediate product, deriving from a change in the nature of, or the demand for, some final products of other industries. Given the long period which must often elapse between the final decision to go ahead with a new plant and the sale of its first product, it is clearly unreasonable to expect many of these complex changes in demand to be foreseen; market research is not an answer to everything. (1958, pp. 90-91)

Limited information on European experience indicates mixed results, although the record of the “Munich Business Test” on quarterly forecasts of turning points is encouraging (see Theil 1958, chapters 4, 5).

There is an extensive literature on market analysis and sales forecasting, but most of it is preoccupied with technique and much of it is hortatory. And as Lorie observed a few years ago:

Progress comes most rapidly in any pragmatic discipline when adequate testing devices are available for measuring the success of current theories and procedures. Only by such testing is it possible to discard what has not succeeded and to cling to what has succeeded, for the purposes of further elaboration and refinement. These facts are considered self-evident in the field of meteorology, where most of the practitioners make their living by forecasting. As a consequence, a very extensive literature devoted to problems of evaluation has developed during the last seventy-five years. (1957, p. 177)

Unfortunately, the evaluation of sales forecasts is not general in the literature, and it is not common in industrial practice. Much too little is known about the predictive value of alternative techniques. The most sanguine would agree that there is much to be learned and that the task of prediction is to be approached with humility. Performance offers ample opportunity for improvement. The recording of methods and specific quantified forecasts with subsequent comparison with experience is certainly to be encouraged, not only as a means of educating technicians, but also as an opportunity for evaluating them.

John E. Jeuck


American Management Association, Marketing Division 1956 Sales Forecasting: Uses, Techniques, and Trends. Special Report No. 16. New York: The Association.

Carter, Charles F.; and Williams, Bruce R. 1958 Investment in Innovation. Oxford Univ. Press.

Ferber, Robert 1960 The Railroad Shippers’ Forecasts and the Illinois Employers’ Labor Force Anticipations: A Study in Comparative Experience. Pages 181–199 in Universities-National Bureau Committee for Economic Research, The Quality and Economic Significance of Anticipations Data. National Bureau of Economic Research, Special Conference Series, No. 10. Princeton Univ. Press.

Gold, Jack A. 1964 Testing Test Market Predictions. Journal of Marketing Research 1, no. 3:8-16.

Hummel, Francis E. 1961 Market and Sales Potentials. New York: Ronald Press.

Juster, Francis T. 1964 Anticipations and Purchases:An Analysis of Consumer Behavior. Princeton Univ. Press.

Lorie, James H. 1957 Two Important Problems in Sales Forecasting. Journal of Business 30:172–179.

Mclaughlin, Robert L. 1962 Time Series Forecasting: A New Computer Technique for Company Sales Forecasting. Chicago: American Marketing Association.

National Industrial Conference Board 1964 Forecasting Sales. Studies in Business Policy, No. 106. New York: The Board.

Spencer, Milton H.; Clark, Colin G.; and Hoguet, Peter W. 1961 Business and Economic Forecasting: An Econometric Approach. Homewood, 111.: Irwin.

Theil, Henri (1958) 1961 Economic Forecasts and Policy. 2d ed., rev. Amsterdam: North-Holland Publishing.


Consumer research, or marketing research, is the systematic gathering, recording, and analyzing of data and problems related to the marketing of goods and services. The “first law” of marketing has been expressed as “Make what people want to buy; don’t merely try to sell what you happen to make.” This dictum reflects the existence of a society in which consumers can and do exercise considerable freedom of choice in purchasing.

Present interest in the consumer can be viewed against a historical background of concern with two other factors: production and sales. Concern with production grew in importance during the industrial revolution and reached a peak in the most advanced countries in the early part of the twentieth century with the introduction of assembly lines and mass production methods. Then, as manufacturing efficiency increased and unit costs decreased, the need to dispose of the fruits of mass production gradually shifted management’s attention to sales. Later, with the increase in competition for the buyer’s dollar within the market, sellers found that they had to take an interest in the consumer and, thus, turned to marketing research to find out what it is that people want to buy. By telling the seller what people want to buy, the researcher helps him plan more efficiently, avoid failures (thus lowering costs to consumers), and provide consumers with a much wider choice of products.

Definition The first and most important step in any marketing research undertaking is to define the problem. A clear statement of the problem is sometimes more than half the answer. Sometimes, too, after the problem is clearly outlined, it becomes obvious that the answer is already known or may cost too much to obtain. However, the cost of not having the answer must also be considered. If it is high, research may pay off. But if the price of being without the answer is minimal, marketing research may be uneconomical.

Once the problem has been defined and agreement has been reached as to what kinds of measurement will yield acceptable answers, the researcher designs his experiment. There are two basic ways of obtaining information about consumers: one is to ask them directly about their awareness, attitudes, and opinions; the other is to observe their actual behavior (other than verbal behavior). Depending upon the problem and the need for a precise answer, the opinion test (sometimes called “consumer jury”) may be entirely adequate. This approach is often used because it is quick, relatively inexpensive, and often provides useful guidance for marketing decisions. Its major drawback is that consumers do not always do what they say they will, for a variety of reasons.

Motivation research In an attempt to obtain better answers about why consumers act as they do, marketing researchers sometimes engage in motivation research (MR). The basic assumptions of MR are that people often have unconscious motivations and that indirect questioning and various projective devices may be more effective than direct questions.

In a study by Haire, for example, women were asked to describe a hypothetical individual solely on the basis of reading a grocery list prepared by that individual. There were two such lists, differing only in one item. One list included a reference to “regular grind coffee,” and the other list referred to “instant coffee.” Reactions to the second list showed that a significant number of women believed that the use of instant coffee characterized its user as “lazy.” Once the reason for the product’s lack of acceptance had been identified, the next step was to conduct an educational campaign, pointing out to housewives that by reducing food-preparation time, they could be with their families more—a use of the saved time that the experimenter assumed was consistent with the house-wives’values (Haire 1950).

Other examples of such techniques include:

(a) Word association. (“Tell me the first word that comes into your mind when I say ’margarine.’”)

(b) Incomplete sentences. (The respondent is asked to complete a sentence such as “The main reason my family doesn’t have soup more often is———”)

(c) Balloon Cartoons. (An example would be a comic strip drawing of two men in conversation. The balloon above one of the men might read: “John, I’ve been thinking about buying a station wagon.” The balloon above John’s head is blank, and the respondent is asked to suggest John’s response.)

(d) Narrative projection. (Character descriptions are followed by questions about the kinds of attitudes or purchasing behavior that might be expected from the individuals described.)

(e) Involuntary attention tests. (The respondent is asked to look at one of two stimuli, and the one he picks up and examines first is assumed to be more interesting.)

There is little doubt that for certain kinds of problems, and particularly for certain kinds of products and services about which people are sensitive (such as personal-care items or small loans), the techniques of motivation research are appropriate and even necessary. But to claim, as some proponents did during the 1950s, that these techniques are the only way to measure attitudes properly is to go to extremes. The violent arguments of that era between the quality-oriented, small-sample MR specialists and the more traditional, quantity-oriented, big-sample researchers (dubbed “mere nose counters” by the MR group) have largely ceased. It became clear that MR, although it contributed many lasting insights and methods that eventually influenced even the most traditional researchers, was not the ultimate key to a complete understanding of human behavior.

Sampling In most marketing research projects, once the problem has been defined, the next step is to decide how the sample of respondents is to be selected and how large the sample should be. It is important that the sample be free from systematic bias that could influence the conclusions. For example, a pre-election political survey of voter preference in upper-income suburbs would very probably be biased in favor of one political party; hence the sample findings could be quite different from the outcome of the actual election [seeSample Surveys].

In marketing research it is not always desirable to sample from the total population. For example, if we wish to study reactions to a brand of hair tonic, we would be wise to qualify respondents as tonic users before proceeding to interview them about their reactions. Going still further, we might want to talk only to heavy users. For a wide variety of frequently purchased products it has been shown that the 50 per cent of buyers who are heavy buyers account for 80 to 90 per cent of total sales volume (Twedt 1964).

Since about half the population uses hair tonic, a fourth of the total population (the top half of users) accounts for nearly 90 per cent of all hair tonic consumption. There is increasing evidence that this relationship is not limited to packaged goods; the same basic pattern of purchase concentration is shown in sales of gasoline to credit card customers, in tolls for residential long-distance telephone calls, and even in sales of fractional horse-power motors to industrial buyers.

Since consumption varies by individual and by household, it seems appropriate to let each respondent “vote with his pocketbook” by weighting his response according to the amount of the given product he consumes. Suppose, for example, that research has been conducted to determine whether a package for cake mix should have a red or a blue background for package illustration. From hypothetical data in Table 1, one sees that although the total sample gives a majority vote to the package with the red background, the correct marketing decision would be to choose the blue background, since it is clearly more appealing to the heavy users, who account for about 85 per cent of total cake mix purchased.

Table 1 – Package-background preferences of cake-mix users*
 Red backgroundBlue background
*Based on a sample of 1,000 cake-mix users (500 heavy users and 500 light users).
Light users45050
Heavy users150350

Questionnaires After the necessary decisions have been made as to the purpose of the survey and who the respondents will be, it is necessary to make up a questionnaire. Questionnaires are often designed with a few general, bland questions at the beginning in order to establish rapport between interviewer and respondent. It is essential to ask the questions in such a way that the answer to a given question does not bias succeeding questions. For this reason many researchers build questionnaires by writing each question on a separate card, moving the cards around until a smooth sequence is achieved, and then transferring the questions to a regular questionnaire format. In major surveys the questions are “pretested” on a small group of 25 to 50 respondents, whose answers are not included in the final tabulations but are analyzed to see if the questions are clear and unambiguous. Revisions are made, and the questionnaire is again pretested. It is not unusual for a survey to go through as many as a dozen revisions before the questionnaire is finally approved (Payne 1951).

Preceding and tabulation The next step is to precode the questionnaires by assigning to, and printing next to, each question the appropriate code for machine tabulation of responses. Questionnaires can now be designed for optical scanning by machine, with the answers converted directly to either punched cards or magnetic tape; the cards or tape can be programmed to produce a page of “print-out” that is used as photographic copy for the final research report. The enormous economies in human time and the accompanying error reduction through elimination of tedious copying and hand tabulation and computing make it obvious that these developments will continue. The great potential economies of the computer in marketing research are not its only value; a beneficial side effect is that in order to use the computer to its maximum efficiency, the entire research project, including the final tabulations, must be thought through in advance, and this usually results in uncovering mistakes in planning at a time when they can be more easily corrected.

Quality control in field interviewing Questionnaire surveys are usually made by interviewing organizations that specialize in this type of work. A list of such firms, and of others that offer a broader variety of services, including consulting, experimental design, and preparation of the final report with recommendations for action, is contained in Bradford’s Directory of Marketing Research Agencies, which lists 350 firms in the United States and abroad (Bradford 1965–1966).

After the interviewing organization has been selected, it is customary to hold a briefing session with the project leader, the interviewing supervisors, and the interviewers in order to give detailed instructions on how the interview is to be conducted. Any questions the interviewers have should be answered at this time. Often they will be told not to proceed after the first day of interviewing until the field supervisor has had an opportunity to review the quality of work done during that day.

As the field work is progressing, or immediately after it is completed, 10 to 20 per cent of the interviews are validated in one of several ways: reinterview, a telephone call, or by mail. During these follow-up procedures, the supervisor verifies that the interview actually took place, and a few key questions may be repeated to check for report consistency. When the work of a given interviewer seems irregular, all the interviews turned in by that person are rechecked. If, as occasionally happens, it develops that the interview was not made and that the questionnaire has been faked, the interviewer is not employed again by the same organization. One of the weakest links in the entire data-gathering and data-processing chain is the failure to validate questionnaires properly [seeQuality Control, Statistical].

Recommendations for action If the objectives of a research survey have been clearly denned, the right questions asked of the right people in order to answer these objectives, and the field work properly supervised, the two remaining tasks—tabulation and analysis, and report preparation—should be fairly routine. There are, however, two major conflicting viewpoints about the extent to which the researcher should make firm recommendations for marketing action.

One group of marketing executives tends to regard the researcher primarily as a technician from whom only “the facts” are wanted, with no interpretation or conclusions about appropriate courses of action. The other viewpoint is reflected by Theodore Levitt of Harvard University, who says,

Expertness [in marketing research] encompasses much more than the elaboration and use of formal techniques in research and analysis. More than anything else it should be viewed as involving imaginative audacity in the interpretation of data and events and in formulating positive action-oriented proposals for management’s consideration. … Too often nothing is permissible in the way of making policy or entertaining ideas unless the data are so unambiguously in favor of proposed policies or ideas that even the elevator operator can see their merit. (1962, pp. 187-190)

Observing behavior Most of the discussion up to this point relates to the gathering of opinions through survey research. There are many other ways in which marketing research can be conducted. Observing and recording consumer behavior takes many forms. Legibility tests of an advertisement, for example, can be made by determining the amount of illumination or length of exposure required to allow reading of the sales message. It is even possible to measure behavior which the respondent is not consciously aware of, such as pupillary dilation while viewing a product or an advertising stimulus. Or suppose that we wish to determine the proportion of consumers that will read the statement of ingredients on the package label of a new food product. It is a simple matter to observe shoppers at the moment of buying and record the number of seconds they examine each package before selecting it.

Another major method of behavioral research in marketing is to conduct controlled advertising and sales tests in selected areas. Two cities may be matched, for example, on the basis of their previous sales of a given product. An advertising campaign may then be undertaken in one city, and a different campaign (or perhaps no advertising) employed in the other city. After a predetermined time period sales results are compared for the two cities. Variations of this method may include much more complex statistical procedures and may involve factorial and Latin-square experimental designs, with many cities or retail outlets included in the test. The measures may be actual sales, the proportion of consumers who are aware of a given brand name, or the proportion who can recall specific sales points about the product.[SeeExperi-Mental Design.]

Subjects for marketing research The most common research activities of 1,660 companies are shown in Table 2.

Table 2 — Market research activities*
ActivityCompanies involved (per cent)
* Based on activities of 1,660 companies.
Source: American Marketing Association 1963.
Sales and market research: 
Development of market potentials68
Market share analysis67
Determination of market characteristics67
Sales analyses66
Establishment of sales quotas57
Distribution and costs studies52
Test markets, store audits37
Consumer panel operations27
Sales compensation studies44
Studies of premiums, coupons, sampling, deals29
Product research: 
New product acceptance63
Competitive product studies65
Product testing57
Packaging research45
Business economics and corporate research: 
Short-range forecasting (to 1 year)62
Long-range forecasting (over 1 year)59
Studies of business trends58
Profit and/or value analysis53
Plant and warehouse locational studies44
Diversification studies49
Purchase of companies, sales of divisions44
Export and international studies39
Linear programming35
Operations research29
Program evaluation review technique studies18
Employee morale studies32
Advertising research:  
Motivation research30
Copy research37
Media research47
Evaluation of advertising effectiveness48

Advertising research Advertising research is a special application of marketing research but employs many of the same techniques and methods. The task of advertising research usually is to find answers to one or more of the following questions:

(1) What shall we say? (2) How shall we say it?

(3) Where, when, and how often shall we say it?

(4) How well did we communicate the intended message? These questions are investigated, respectively, in motivation research, copy research, media research, and evaluation research [seeAdvertising, article on Advertising Research].

Growth of marketing research departments Of 1,660 companies surveyed more than half reported having a marketing research department (American Marketing Association 1963). Research departments are most common among companies that manufacture consumer goods (62 per cent have them), industrial companies (60 per cent), and publishers and broadcasters (57 per cent). The bigger the company, the more likely it is to have a research department. The research department is a fairly recent addition to corporate staffs; more than half of the departments in the survey had been formed since 1955. Even the companies that do not have formal marketing research departments carry on such research, either through their own personnel or through outside consulting firms. Between 1960 and 1965 marketing research budgets as a percentage of sales increased for both consumer and industrial companies.

It is clear that marketing research has matured greatly since 1955 and that it has gained increased acceptance from business management. It is also true that marketing research has not yet reached its full potential.

Dik Twedt

[Directly related are the entries Advertisingand Consumers. Other relevant material may be found in Interviewing, article on Social Research.]


Readers interested in more detailed consideration of the various aspects of marketing research are referred to Wales & Ferber 1956, an annotated bibliography of more than 1,600 references covering 28 major areas. For current developments in the United States and abroad, see the three leading professional journals: Journal of Marketing, Journal of Marketing Research, and Journal of Advertising Research.

American Marketing Association 1963 A Survey of Marketing Research: Organization, Functions, Budget, Compensation. Edited by Dik W. Twedt. Chicago: The Association.

Bradford, Ernest S. (editor) 1965–1966 Bradford’s Directory of Marketing Research Agencies and Management Consultants in the United States and the World, llth ed. Middleburg, Va.: Bradford.

Haire, Mason 1950 Projective Techniques in Marketing Research. Journal of Marketing 14:649–656.

Journal of Advertising Research. → Published since 1960.

Journal of Marketing. → Published since 1936.

Journal of Marketing Research. → Published since 1964.

Levitt, Theodore 1962 Innovation in Marketing: New Perspectives for Profit and Growth. New York: McGraw-Hill.

Payne, Stanley L. 1951 The Art of Asking Questions. Studies in Public Opinion, No. 3. Princeton Univ. Press.

Twedt, Dik W. 1964 How Important to Marketing Strategy Is the “Heavy User”? Journal of Marketing 28, no. 1:71-72.

Wales, Hugh G.; and Ferber, Robert (1956) 1963 A Basic Bibliography on Marketing Research. Chicago: American Marketing Association.

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Market Research." International Encyclopedia of the Social Sciences. 1968. Encyclopedia.com. 29 May. 2016 <http://www.encyclopedia.com>.

"Market Research." International Encyclopedia of the Social Sciences. 1968. Encyclopedia.com. (May 29, 2016). http://www.encyclopedia.com/doc/1G2-3045000766.html

"Market Research." International Encyclopedia of the Social Sciences. 1968. Retrieved May 29, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3045000766.html

Marketing Research


Accelerating product cycles, easy access to information on products and services, highly discerning consumers, and fierce competition among companies are all a reality in the world of business. Too many companies are chasing too few consumers. Therefore, knowing, understanding, and responding to one's target market is more important than ever. And this requires informationgood information. Good information can lead to successful products and services. Good information is the result of market research. Marketing gurus Kevin Clancy and Peter Krieg in their book, Counterintuitive Marketing, wrote, "Marketing research, we believe, poses many dangers and many opportunities. Bad research can, and often does, lead companies in the wrong direction. Good research, on the other hand, is the sine qua non of the counterintuitive approach to great marketing" (quoted in DeVries, 2005).


According to the Marketing Research Association, "Marketing research is a process used by businesses to collect, analyze and interpret information used to make sound business decisions and successfully manage the business" (2005). Marketing research is a $6-billion-a-year industry. Marketing research provides, analyzes, and interprets information for manufacturers on how consumers view their products and services and on how they can better meet consumer needs. The ultimate goal is to please the consumer in order to get, or keep, the consumer's business.


Marketing research as an organized business activity began between 1910 and 1920. The appointment of Charles Collidge Parlin as manager of the Commercial Research Division of the Advertising Department of the Curtis Publishing Company in 1911 is generally noted to be the beginning of marketing research. Parlin's success led several industrial firms and advertising media to establish research divisions. In 1915 the U.S. Rubber Company hired Dr. Paul H. Nystrom to manage a newly established Department of Commercial Research. In 1917 Swift and Company hired Dr. Louis D. H. Weld from Yale University to become manager of their Commercial Research Department.

In 1919 Professor C. S. Duncan of the University of Chicago published Commercial Research: An Outline of Working Principles, considered to be the first major book on commercial research. In 1921 Percival White's Market Analysis was published; the first research book to gain a large readership, it went through several editions. Market

Research and Analysis by Lyndon O. Brown, published in 1937, became one of the most popular college textbooks of the period, reflecting the growing interest in marketing research on the college campus. After 1940, numerous research textbooks were published and the number of business schools offering research courses grew rapidly.

Following World War II (19391945), the growth of marketing research increased dramatically. By 1948 more than 200 marketing research organizations had been created in the United States. An estimated $50 million was spent on marketing research activities in 1947. Over the next three decades this expenditure level increased more than tenfold.

Methodological Development

Major advances in marketing research methodology were made from 1910 to 1920. Questionnaires, or surveys, became a popular method of data collection. With the growth of survey research came improvements in questionnaire design and question construction. During the 1930s sampling became a serious methodological issue. Modern approaches to probability sampling slowly gained acceptance in this period.

From 1950 through the early 1960s, methodological innovations occurred at a fairly steady pace. At this time, a major development occurred: the commercial availability of large-scale digital computers. The computer was responsible for rapidly increasing the pace of methodological innovation, especially in the area of quantitative marketing research. As the field of marketing research attracted increasing interest, two new journals began publication in the 1960s: the Journal of Marketing Research and the Journal of Advertising Research. Technological advances have had a major impact on many aspects of the marketing research profession. These innovations have included checkout scanners in supermarkets, computer-assisted telephone interviewing, database marketing, data analysis by computers, data collection on the Internet, and Web-based surveys.

The second decade of the Internet age has confirmed the Internet as a consumer and business communications medium. In 2005 companies were projected to spend more than $1.1 billion on online market research, a 16 percent increase over 2004. The advantages of online research are self-evident: There is no need for data entry or interviews, and responses are collected automatically, saving time and money while eliminating coding errors and interviewer bias. Also, respondents may feel more comfortable in answering sensitive questions with their anonymity ensured. Ultimately, the Internet, if used properly, can provide the quickest path to valuable insight into a customer's mind.


Marketing research can be classified as exploratory research, conclusive research, and performance-monitoring research. The stage in the decision-making process for which the information is needed determines the type of research required.

Exploratory Research

Exploratory research is appropriate for the early stages of the decision-making process. This research is usually designed to provide a preliminary investigation of the situation with a minimum expenditure of cost and time. A variety of approaches to this research are used, including use of secondary data sources, observation, interviews with experts, and case histories.

Conclusive Research

Conclusive research provides information that helps the manager evaluate and select a course of action. This involves clearly defined research objectives and information needs. Some approaches to this research include surveys, experiments, observations, and simulation. Conclusive research can be subclassified into descriptive research and causal research.

Descriptive research, as its name suggests, is designed to describe somethingfor example, the characteristics of consumers of a certain product; the degree to which the use of a product varies with age, income, or sex; or the number of people who saw a specific television commercial.

Causal research is designed to gather evidence regarding the cause-and-effect relationships that exist in the marketing system. For example, if a company reduces the price of a product and then unit sales of the product increase, causal research would show whether this effect was due to the price reduction or some other reason. Causal research must be designed in such a way that the evidence regarding causality is clear. The main sources of data for causal research are interrogating respondents through surveys and conducting experiments.

Performance-Monitoring Research

Performance-monitoring research provides information regarding the status of the marketing system; it signals the presence of potential problems or opportunities. This is an essential element in the control of a business's marketing programs. The data sources for performance-monitoring research include interrogation of respondents, secondary data, and observation.


The marketing research process is comprised of a series of steps called the research process. To conduct a research project effectively, it is important to anticipate all the steps and recognize their interdependence.

Need for Information

The first step in the research process is establishing the need for marketing research information. The researcher must thoroughly understand why the information is needed. The manager is responsible for explaining the situation surrounding the request for information and establishing that the research information will assist in the decision-making process. Establishing the need for research information is a critical and difficult phase of the research process. Too often the importance of this initial step is overlooked, which results in research findings that are not decision-oriented.

Research Objectives

Once the need for research information has been clearly defined, the researcher must specify the objectives of the proposed research and develop a specific list of information needs. Research objectives answer the question "Why is this project being conducted?" The answer could be as broad as the determination of the amount of effort needed to increase the company's market share by 5 percent or as specific as the determination of the most preferred of five moisturizers by women in southern California. Only when the researcher knows the problem that management wants to solve can the research project be designed to provide the pertinent information.

The difficult part of establishing research objectives is the conflict that often exists between the value of information and the research budget. Because each piece of information has some cost associated with it, whether it is the cost of the account manager's travel expenses or the cost of having an outside agency perform a telephone survey, each piece must be evaluated in terms of its value with respect to the needed decision.

Research Design and Data Sources

The next step in the research process is to design the formal research project and identify the appropriate sources of data for the study. A research design is the framework that specifies the type of information to be collected, the sources of the data, and

the data-collection procedures. Although there are many different ways to classify designs, one that gives a clear overview of the various procedures is based on three methods of generating primary data: experimentation, observation, and survey.

Experimentation involves establishing a controlled experiment or model that simulates the real-world marketing situation being investigated. In the observation method, the primary data result from observing the respondents doing something. The survey method involves collecting the primary data by questioning a certain number of people. Survey questioning may be done in-person, over the phone, through the mail, or online.

To determine the data sources for the research project, an assessment must first be made of the amount and type of data currently available. These data are called secondary datadata already gathered and available, having been accumulated previously for a different purpose. Although these data are assembled quickly and often at a low cost, sometimes they do not satisfy the research objectives.

There are two types of secondary data: internal (data originating within the firm) and external (published data originating outside the firm). Internal secondary data are all the data originating within the firm that were collected for some purpose other than the objective currently being addressed. Two of the most important types of internal data are sales and cost data.

After the internal secondary data have been examined, additional information can be obtained from published external secondary data. The main sources of external data are the Internet; the government; trade, business, and professional associations; the media; trade journals; universities and foundations; corporate annual reports; and commercial data services. Information obtained from any of these sources must be examined carefully to make sure that it fits the particular needs of the researcher.

  • Internet The Internet can provide links to many sources of information, quickly and easily. Searching the Web or visiting a business library's Web site are ways to become familiar with the types of resources available. Two Web sites that are useful in evaluating potential research resources are the New York Public Library's Science, Industry, and Business Library (http://www.nypl.org/research/sibl/index.html) and the University of Michigan's Documents Center (http://www.lib.umich.edu/govdocs).
  • Government The federal government is by far the largest source of marketing data. Although the data are available at a very low price, if any, once they are located there is often a cost and time commitment in obtaining the data. Some government publications are highly specialized, referring to specific studies of products. Other data are more general in nature. State and local governments also provide information. Data such as birth and death records and information on real estate sales and assessed values are public information and can be obtained from the specific state or local agency.
  • Associations Trade, business, and professional associations also have general data on the various activities and sales of their constituency. For example, the National Kitchen & Bath Association has general information on kitchen and bath design professionals, research design strategies, and remodeling. Although such data will not be company-specific, they are useful in gaining an overall perspective on the industry. Address and membership information for all associations can be found in the Encyclopedia of Associations, updated annually.
  • Media Most magazines, newspapers, and radio and television stations have marketing data available on their audience. Also, media perform periodic market surveys of buying patterns and demographic information in their market area. For example, the Boston Globe does a demographic study of its readers in order to give advertisers a better understanding of the marketing potential of their area.
  • Trade journals Trade journals also provide a wide variety of marketing and sales data on the areas they cover. For example, if market research were needed in the area of computers, then trade journals such as Computerworld, InfoWorld, and ZDNet should be checked for any pertinent information.
  • Universities and foundations Universities and foundations perform a variety of research projects. In addition to special studies supported by grants from the government, universities publish general research findings of interest to the business community through their research bureaus and institutes.
  • Corporate annual reports Corporate annual and 10-K reports are also useful sources of information on specific companies or general industry trends. These reports may not provide great detail; nevertheless, a general picture of the nature and scope of the firms in an industry as well as their general direction can be constructed.
  • Commercial data services Many firms offer marketing research and commercial data services. Some provide custom research; they design the research project specifically to meet the client's needs. This can be expensive. Others, such as Nielsen Media Research, offer standardized information, compiled regularly and made available to clients on a subscription basis.

After all the secondary data sources have been checked and the needed data have not been found, the third aspect of a research projected beginsthe collection of data through primary research. Primary research can be best looked at in terms of three areas: data collection, sample design, and data processing and analysis.

Data Collection

If it has been determined that the required data are not currently available, then the next step is to collect new data. To develop the data-collection procedure, the researcher must establish an effective link between the information needs and the questions to be asked or the observations to be recorded. The process of collecting data is critical because it typically involves a large proportion of the research budget. The most widely used methods of data collection are focus groups, surveys, or interviews.

Focus groups are often used to collect primary data. A focus group consists of a discussion, usually lasting one and a half to two hours, with eight to twelve individuals and a moderator who is intent on encouraging in-depth discussion of a topic or product. The discussion allows for flexibility and provides broad, in-depth knowledge that cannot be obtained through any other research method.

Surveys, also known as questionnaires, are the most common instrument for data collection. A survey consists of a set of questions presented to respondents for their answers. Surveys need to be carefully developed, tested, and debugged before they are used; they can be administered over the phone, through the mail, via e-mail, or online. Web-based surveys and other forms of online research are popular choices because of their many advantagestimely, reliable data collection providing real-time, instant access to target audiences' opinions at reduced costs. Web surveys do not replace the traditional techniques, but they can be an effective choice for companies big and small.

Primary research data are often obtained by interviews, either in person or over the telephone. For example, one might personally interview consumers to determine their opinions of a new line of low-fat foods or personally interview a few executives to determine their opinions of a nationally known advertising agency. An advantage of personal interviews is that the interviewer can adapt the question to the specific situation at hand. A limitation to this method is that the interviewer can introduce bias into the process by asking leading questions or by giving some indication of the preferred answer. A lot of time, supervision, and interviewer training are needed to implement personal interviews successfully.

Sample Design

When research is being conducted, it is important to determine the appropriate target population of the researchthe group of people possessing characteristics relevant to the research problem from whom information will be obtained. Although this may appear to be easy, it is often one of the most difficult tasks in a marketing research project because of the wide variety of factors entering into the determination. For example, it might be important that only recent users of the product be surveyed. Or perhaps the purchasers of the product, not the users, should be the focus of the research.

Once the target population is determined, a decision is needed on how best to represent this population within the time and cost constraints of the research budget. Because there are many different methods used to draw this samplethe group of units composed of nonoverlapping elements that are representative of the population from which it is drawnthe best one needs to be chosen for the specific research project.

Data Processing and Analysis

After the data are collected, the processing begins, which includes the functions of editing and coding. Editing involves reviewing the data forms to ensure legibility, consistency, and completeness. Coding involves establishing categories for responses or groups of responses so that numerals can be used to represent the categories.

It is important that the data analysis be consistent with the requirements of the information needs identified when the research objectives were defined. Data analysis is usually performed with an appropriate software application. This data analysis, whether done by simple numeric counting or by complex computer-assisted analytical techniques, should provide meaningful information appropriate for managerial decisions.

Presentation of Results

After the data have been collected and analyzed, the final aspect of the research project can be generatedthe development of the appropriate conclusions and recommendations. This is the most important part of the project, but it does not always receive the proper attention. The research results are typically communicated to the manager through a written report and oral presentation. The research findings should be presented in a clear, simple format and be accompanied by appropriate support material. The best research methodology in the world will be useless to managers if they cannot understand the research report. Some preparation guidelines for the written and oral reports are:

  • Consider the audience
  • Be concise, yet complete
  • Be objective, yet effective

The findings should address the information needs of the decision situation. The final measure of the value of the research project is whether the findings are successfully implemented in the company.


Marketing research has, in a way, pioneered the move toward the broader view of marketing. Marketing research serves as a coordinating factor between marketing and the other functions of a business, such as engineering, manufacturing, accounting, and finance. This integration has the effect of enhancing the importance of marketing research to the corporation as a whole.

Marketing research continues to play a key role in organizations in the twenty-first century. Technology does and will continue to enable marketing research to take the lead in providing useful information for effective business decisions. The Internet's role in marketing research will continue to grow because it provides a quick, cost-effective way of collecting and disseminating data. Market researchers will continue their evolution from supplying "market and opinion research" to a more strategic position of supplying information, consulting, and exchanging information with consumers. Companies that take advantage of marketing research and view it as a valuable business component will be the companies that survive and thrive.

see also Marketing ; Research in Business


Burns, Alvin C. & Bush, Ronald F. (2006). Marketing research (5th ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.

Chadwick, Simon (1998). The research industry grows upand out. Marketing News, 32 (12), 917.

DeVries, K. (2005). Make your choice. Marketing Health Services, 25 (3), 2024.

Hirt-Marchand, Jennifer (2005). Online research captures audience insight, competitive data. Managed Healthcare Executive, 15 (7), 3032.

Honomichl, J. (2005). Strong progress. Marketing News, 39, pp. H3H57.

Kinnear, Thomas C., and Taylor, James R. (1996). Marketing research: An applied approach (5th ed.). New York: McGraw-Hill.

Kottler, R. (2005). Eight tips offer best practices for online MR. Marketing News, 39 (6), 2425.

Marketing Research Association. (2005). Glossary of terms. Retrieved January 24, 2006, from http://www.mranet.org/resources/glossary_terms.cfm?ID=K

Christine F. Latino

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

Latino, Christine. "Marketing Research." Encyclopedia of Business and Finance, 2nd ed.. 2007. Encyclopedia.com. 29 May. 2016 <http://www.encyclopedia.com>.

Latino, Christine. "Marketing Research." Encyclopedia of Business and Finance, 2nd ed.. 2007. Encyclopedia.com. (May 29, 2016). http://www.encyclopedia.com/doc/1G2-1552100213.html

Latino, Christine. "Marketing Research." Encyclopedia of Business and Finance, 2nd ed.. 2007. Retrieved May 29, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-1552100213.html

Marketing Research

Marketing Research

Marketing research is the function that links the consumer, customer, and public to the marketer through information. This information is used to identify and define marketing opportunities and problems; to generate, refine, and evaluate marketing actions; to monitor marketing performance; and to improve understanding of the marketing process. Marketing research specifies the information, manages and implements the data-collection process, analyzes the results, and communicates the findings and their implications. Marketing research is concerned with the application of theories, problem-solving methods, and techniques to identify and solve problems in marketing. In order to offset unpredictable consumer behavior, companies invest in market research.

Increased customer focus, demands for resource productivity, and increased domestic and international competition have prompted an increased emphasis on marketing research. Managers cannot always wait for information to arrive in bits and pieces from marketing departments. They often require formal studies of specific situations. For example, Dell Computer might want to know a demographic breakdown of how many and what kinds of people or companies will purchase a new model in its personal computer line. In such situations, the marketing department may not be able to provide the detailed information needed from existing knowledge, and managers normally do not have the skill or time to obtain the information on their own. This formal study, whether performed internally or externally, is called marketing research.

The marketing research process consists of four steps: defining the problem and research objectives, developing the research plan, implementing the research plan, and interpreting and reporting the findings.


The marketing manager and the researcher must work closely together to define the problem carefully and agree on the research objectives. The manager best understands the decision for which information is needed; the researcher best understands marketing research and how to obtain the information.

Managers must know enough about marketing research to help in the planning and to interpret research results. Managers who know little about the importance of research may obtain irrelevant information or accept inaccurate conclusions. Experienced marketing researchers who understand the manager's problem should also be involved at this stage. The researcher must be able to help the manager define the problem and suggest ways that research can help the manager make better decisions.

Defining the problem and research objectives is often the hardest step in the research process. The manager may know that something is wrong without knowing the specific causes. For example, managers of a retail clothing store chain decided that falling sales were caused by poor floor set-up and incorrect product positioning. However, research concluded that neither problem was the cause. It turned out that the store had hired sales persons who were not properly trained in providing good customer service. Careful problem definition would have avoided the cost and delay of research and would have suggested research on the real problem.

When the problem has been defined, the manager and researcher must set the research objectives. A marketing research project might have one of three types of objectives. Sometimes the objective is exploratoryto gather preliminary information that will help define the problem and suggest hypotheses. Sometimes the objective is descriptiveto describe things such as the market potential for a product or the demographics and attitudes of consumers who buy the product. Sometimes the objective is causalto test hypotheses about cause-and-effect relationships.


The second step of the marketing research process calls for determining the information needed, developing a plan for gathering it efficiently, and presenting the plan to marketing management. The plan outlines sources of secondary data and spells out the specific research approaches, contact methods, sampling plans, and instruments that researchers will use to gather primary data.

A marketing researcher can gather secondary data, primary data, or both. Primary data consists of information collected for the specific purpose at hand. Secondary data consists of information that already exists somewhere, having been collected for another purpose. Sources of secondary data include internal sources such as profit and loss statements, balance sheets, sales figures, and inventory records; and external sources such as government publications, periodicals, books, and commercial data. Primary data collection requires more extensive research, more time, and more money. Secondary sources can sometimes provide information that is not directly available or would be too expensive to collect.

Secondary data also present problems. The needed information may not exist. Researchers can rarely obtain all the data they need from secondary sources. The researcher must evaluate secondary information carefully to make certain of its relevance (fits research project needs), accuracy (reliably collected and reported), currency (up to date enough for current decisions), and impartiality (objectively collected and reported). Researchers must also understand how secondary sources define basic terms and concepts, as different sources often use the same terms but mean slightly different things, or they attempt to measure the same thing but go about it in different ways. Either way, the result can be that statistics found in secondary sources may not be as accurate or as relevant as they appear on the surface.


Observational research is the gathering of primary data by observing relevant people, actions, and situations. Observational research can be used to obtain information that people are unwilling or unable to provide. In some cases, observation may be the only way to obtain the needed information.

Survey research is the approach best suited for gathering descriptive information. A company that wants to know about people's knowledge, attitudes, preferences, or buying behavior can often find out by asking them directly. Survey research is the most widely used method for primary data collection, and it is often the only method used in a research study. The major advantage of survey research is its flexibility. It can be used to obtain many different kinds of information in many different marketing situations. A classic example of survey research comes from the 1980s, when cola companies began to run taste tests against their competitors. Participants were allowed to taste different cola brands without knowing which was which. The participant then decided which brand was preferred, providing the tester with impartial information about consumer tastes. (It should be noted that these tests were also used for advertising purposes, which differed from the research purposes.) Today, online surveys are a common feature on a wide variety of Web sites, providing marketing researchers with an important source of survey data.

Whereas observation is best suited for exploratory research and surveys for descriptive research, experimental research is best suited for gathering causal information. Experiments involve selecting matched groups of subjects, giving them different treatments, controlling unrelated factors, and checking for differences in group responses. Thus, experimental research tries to explain cause-and-effect relationships.


Research may be collected by mail, telephone, e-mail, fax, or personal contact. Mail questionnaires can be used to collect large amounts of information at a low cost per respondent rate. Respondents may give more honest answers to more personal questions on a mail questionnaire than to an unknown interviewer in person or over the phone. However, mail questionnaires lack flexibility in that they require simply worded questions. They can also take a long time to complete, and the response ratethe number of people returning completed questionnairesis often very low.

Telephone interviewing is the best method for gathering information quickly, and it provides greater flexibility than mail questionnaires. Interviewers can explain questions that are not understood. Telephone interviewing also allows greater sample control. Response rates tend to be higher than with mail questionnaires. But telephone interviewing also has its drawbacks. The cost per respondent is higher than with mail questionnaires, people may regard a phone call as more of an inconvenience or an intrusion, and they may not want to discuss personal questions with an interviewer.

Recent laws have created further difficulty with telephone interviewing. In 2003, the National Do-Not-Call Registry was created in the United States, blocking commercial telemarketers from calling numbers on the no-call list. By early 2008, over 157 million phone numbers in the United States were on the list. A similar list was created in Great Britain in 1999 and in Canada in 2004. The creation of these lists and their widespread use by telephone customers has significantly limited the use of telephone interviewing for marketing research purposes.

Personal interviewing consists of inviting several people to talk with a trained interviewer about a company's products or services. The interviewer needs objectivity, knowledge of the subject and industry, and some understanding of group and consumer behavior. Personal interviewing is quite flexible and can be used to collect large amounts of information. Trained interviewers can hold a respondent's

attention for a long time and can explain difficult questions. They can guide interviews, explore issues, and probe as the situation requires. The main drawbacks of personal interviewing are costs and sampling problems. Personal interviews may cost three to four times as much as telephone interviews.


Marketing researchers usually draw conclusions about large groups of consumers by studying a relatively small sample of the total consumer population. A sample is a segment of the population selected to represent the population as a whole. Ideally, the sample should be representative so that the researcher can make accurate estimates of the thoughts and behaviors of the larger population. If the sample is not representative, it may lead the company to draw the wrong conclusions and misuse its resources.

The marketing researcher must design a sampling plan, which calls for three decisions:

  1. Sampling unitdetermining who is to be surveyed. The marketing researcher must define the target population that will be sampled. If a company wants feedback on a new basketball shoe, it would be wise to target active players and even professional players.
  2. Sample sizedetermining the number of people to be surveyed. Large samples give more reliable results than small samples. Samples of less than 1 percent of a population can often provide good reliability, given a credible sampling procedure. Most commercial samples consist of between several hundred and several thousand respondents.
  3. Sampling proceduredetermining how the respondents should be chosen. To obtain a representative sample, a probability (random) sampling of the population should be drawn. This is a means of determining who is reached by the survey to ensure they are indeed a valid cross-section of the sampling unit. Choosing passersby on a street corner, for example, would not produce a random sample, whereas allowing a computer to pick names randomly from a relevant calling list probably would (depending on how the list was compiled). Probability sampling allows the calculation of confidence limits for sampling error.


In collecting primary data, marketing researchers have a choice of two main research instrumentsthe questionnaire and mechanical devices. The questionnaire is by far the most common instrument. A questionnaire consists of a set of questions presented to a respondent for his or her answers. In preparing a questionnaire, the marketing researcher must decide what questions to ask, the form of the questions, the wording of the questions, and the ordering of the questions. Each question should be checked to see that it contributes to the research objectives.

Although questionnaires are the most common research instrument, mechanical instruments are also used. Two examples of mechanical instruments are people meters and barcode scanners. People meters are not widely used because they tend to be expensive, require unrealistic advertising exposure conditions, and are hard to interpret. The use of data automatically collected by barcode scanners has become more common with the advent of powerful computers and sophisticated database and data-mining software. Data collected by scanners provide marketing researchers with valuable information drawn from a large data pool.


The researcher must now collect the data. This phase is generally the most expensive and the most prone to error. In the case of surveys, four major problems arise. Some respondents will not be at home and will have to be replaced. Other respondents will refuse to cooperate. Still others will give biased or dishonest answers. Finally, some interviewers will occasionally be biased or dishonest.


Following are the characteristics of good marketing research:

  1. Scientific method. Effective marketing research uses the principles of the scientific method: careful observation, formulation of hypotheses, prediction, and testing.
  2. Research creativity. At its best, marketing research develops innovative ways to solve a problem.
  3. Multiple methods. Competent marketing researchers shy away from over-reliance on any one method, preferring to adapt the method to the problem rather than the other way around. They also recognize the desirability of gathering information from multiple sources to give greater confidence.
  4. Interdependence of models and data. Competent marketing researchers recognize that the facts derive their meaning from models of the problem. These models guide the type of information sought and therefore should be made as explicit as possible.
  5. Value and cost of information. Competent marketing researchers show concern for estimating the value of information against its cost. Value/cost evaluation helps the marketing research department determine which research projects to conduct, which research designs to use, and whether to gather more information after the initial results are in. Research costs are typically easy to quantify, while the value is harder to anticipate. The value depends on the reliability and validity of the research findings and management's willingness to accept and act on its findings. In general, the most valuable information tends to cost the most because it requires more intensive methods, although it is easy to spend a great deal of money on poorly conceived research.
  6. Healthy skepticism. Competent marketing researchers will show a healthy skepticism toward assumptions made by managers about how the market works.
  7. Ethical marketing. Most marketing research benefits both the sponsoring company and its consumers. Through marketing research, companies learn more about consumers' needs, and are able to supply more satisfying products and services. However, the misuse of marketing research can also harm or annoy consumers. There are professional ethical standards guiding the proper conduct of research.


The last step in market research is the presentation of a formal plan. At this stage, the marketing researcher should summarize the plan in a written proposal to management. A written proposal is especially important when the research project will be large and complex or when an outside firm carries it out. The proposal should cover the management problems addressed and the research objectives, the information to be obtained, the sources of secondary information or methods for collecting primary data, and the way the results will help management decision making. A written research plan or proposal makes sure that the marketing manager and researchers have considered all the important aspect of the research and that they agree on why and how the research will be done.


In spite of the rapid growth of marketing research, many companies still fail to use it sufficiently or correctly. Several factors can stand in the way of its greater utilization.

  1. A narrow conception of marketing research. Many managers see marketing research as only a fact-finding operation. The marketing researcher is supposed to design a questionnaire, choose a sample, conduct interviews, and report results, often without being given a careful definition of the problem or of the decision alternatives facing management. As a result, some fact-finding fails to be useful. This reinforces management's idea of the limited usefulness of some marketing research.
  2. Uneven caliber of marketing researchers. Some managers view marketing research as little better than a clerical activity and reward it as such. Poorly qualified marketing researchers are hired, and their weak training and deficient creativity lead to unimpressive results. The disappointing results reinforce management's prejudice against expecting too much from marketing research. Management continues to pay low salaries, perpetuating the basic difficulty.
  3. Late and occasional erroneous findings by marketing research. Managers want quick results that are accurate and conclusive. However, good marketing research takes time and money. If they cannot perceive the difference between quality and shoddy research, managers become disappointed, and they lower their opinion of the value of marketing research. This is especially a problem in conducting marketing research in foreign countries.
  4. Intellectual differences. Intellectual divergences between the mental styles of line managers and marketing researchers often get in the way of productive relationships. The marketing researcher's report may seem abstract, complicated, and tentative, while the line manager wants concreteness, simplicity, and certainty. Yet in the more progressive companies, marketing researchers are increasingly being included as members of the product management team, and their influence on marketing strategy in growing.

SEE ALSO Marketing Concept and Philosophy; Research Methods and Processes


Higgins, Lexis F. Applying Principles of Creativity Management to Marketing Research Efforts in High-Technology Markets. Industrial Marketing Management, May 1999, 305317.

Malhorta, Naresh K. Review of Marketing Research. Armonk, NY:M.E. Sharpe, 2008.

.Market Focus: Research-Instant Intelligence. PR Week,7 February 2005, 17.

.Online Market Research Poised for Even Bigger Growth. B&T Weekly, 21 January 2005.

.Simply Wrong Assumptions. Nilewide Marketing Review, 13 February 2005.

Woodside, Arch G. Essential Knowledge for Research in Marketing. Thousand Oaks, CA: Sage Publications, 2008.

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Marketing Research." Encyclopedia of Management. 2009. Encyclopedia.com. 29 May. 2016 <http://www.encyclopedia.com>.

"Marketing Research." Encyclopedia of Management. 2009. Encyclopedia.com. (May 29, 2016). http://www.encyclopedia.com/doc/1G2-3273100182.html

"Marketing Research." Encyclopedia of Management. 2009. Retrieved May 29, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3273100182.html

Market Research

Market Research

If the "market" is viewed as the totality of all environmental factors that bear down on a business, market research may be defined as a disciplined investigation aimed at discovering what is going on and, most importantly, on what is changing in the environment. The object is to discover opportunities and threatsand to assess how some intended action might play itself out. The research may be designed broadly or narrowly, but even limited studies must have sufficient scope to give the investigation context.


Market research answers questions along the following lines: How big is the market and how does it divide?into product lines or services or geographically? Who are the buyers and why do they buy? Who is the competition and what methods are they using? What's on the horizon that will change this market? How will we benefit or suffer if these changes take place?

Managements undertake such research for some motive; thus market research always has a context. The context may be negative (declining profitability or sales) or positive (new technology, rapid growth); it may be brought about by forces outside the company's control such as legislative events, the economy as a whole, a new entrant to the market. Most start-ups that need front-end funding begin their careers by doing a comprehensive market study in order to put the results into a business plan.

Company size is itself a context, and while, in general, business is business at any scale, problems and opportunities manifest differently. Managements in large organizations, for example, are inevitably at a much greater distance from the actual interface where customers and products meetwhere the action is. Small business owners are closer to the market but rarely have vast resources at their command. Distance from the market and the extent of it that must be surveyed influences the techniques deployed. Market research may take the simple form of driving around and talking to a lot of peopleor just parking someplace and counting the number of cement trucks a competitor sends out. At the other extreme, it may cost hundreds of thousands of dollars and may even involve undertaking test marketing in several cities.

A general rule of market research is that costs vary inversely with level of detail and currency. A business can get a broad view of a market by finding free materials at the library. Expert studies on a national or global market cost between $150 to $700 (depending on the subject). But a business wishing to have detailed information at the county level on some cluster of products is looking at minimally $3,000 for a commissioned studyand more likely four times that. Baseline economic data are collected by the U.S. Bureau of the Census. These are better at the aggregate than at the detailed level. Good data on specific products are simply not there, but data on physical products are better than on services. The Bureau collects fewer data on service sectors and these at a rougher granularity. The future auto dealer, in other words, has an easier job plotting the future than the future independent midwife. Government data are invariable three-or-more years old when they become available. Collecting current, real-time data is very costly. Grocery chains collect such data digital at the check-out counter, but access to it runs into hundreds of thousands of dollars.

Useful market research has a time element. It will present a history of developments and include a projection of future events. A manager wants to make decisions about what to do next and therefore needs a look at the future. Projecting data forward requires special but somewhat opposing skills: statistical expertise on the one hand and an inspired, open, and yet sober sort of gaze. Market research that merely confirms management's prejudices, hopes, or fears is worth littlebut the findings, of course, may do just that. Managements often do see the future accurately.


Market Size and Structure

Market size is an important aspect of orientation in business: it tells the owner how he or she is doing. Measuring market size at the national level is easy, at the local level difficult and costly. The government collects data at the county level in a series called the County Business Patterns, but the CPB only reports establishments, employment, and payroll. Product detail is not available. Nonetheless, CBP data are the most objective look at what is happening locally. Data from the CBP, combined with averages on shipments or revenues at the national level, can produce an estimate of the market size for broad industry categories locally. Where an activity is visible (e.g., picture framing shops), market size can be approximated by looking at telephone directories and using an average sales volume. Federal data for framing shops will not be available because the activity is "too detailed." Therefore alternative approaches are necessary. Where only factories are visible, local sales are very difficult to estimate, but the "production market" may be estimated similarly.

At the local level the structure of the marketits divisions into products, its channels of distribution, its concentrationare also subject more to guesswork than study. Telephone surveying is the method most likely to yield reasonable results, but such work is very expensive.

Not surprisingly, most small businesses develop a sense of their market in the course of day-to-day operationsrather than by spending thousands of dollars on studies. They talk with vendors, customers, and competitors. They listen to the gossip and translate bits and pieces of information into rough numbers. This process is rarelybut can beformalized. A small business owner and his and her key managers can sit down with notepads and work out the market size and structure. Sometimes this is useful for planning or for justifying loan applications. At the local level, disciplined recording and analysis of such information yields results comparable to very expensive studies at the larger scaleand looking at CBP data can produce rough confirmation.

Market Share and Competition

An important aspect of every market is its concentration, measured by creating a list of participants, sorting them by sales, and then adding up the market shares of the top layerthe top five, the top three. If the top three have most of the market, the industry is highly concentrated; if the top five have around 15 to 20 percent, concentration is low. Most market share listings have an "All Other" category. Small businesses are invariably hidden in that line. The sales volumes of small operations are rarely available publicly, but "work arounds" are available to infer their size. Important measures are employment and square footage. A "typical" small business can calculate its own sales per square foot in retail, for instanceor its sales per employeeand can then proceed to develop approximate company size estimates for its competitors by applying the same unit measures to them after counting their people and eyeballing their floor space. There are all kinds of other "proxy" measures available. A ready-mix concrete supplier knows his/her revenues per truckand can count competitors' trucks. Economic forces tend always to produce the same averages across an industry.

Competitive strategies are also accessible to the small business. The method of detecting such strategies will depend, of course, on the relative visibility of the competitor. Retail stores advertise; the frequency of their sales and the items they use as loss leaders indicate strategy. They can be visited. Vendors are a useful source of information on less visible competitors' strategiesas are observations of such companies at trade shows. The alert small business owner will constantly watch his or her competitors and note when they enlarge their leases, build, or pave their parking lotsor when their inventories overflow to the parking lots. Problems that they encounter also leave tell-tale signs. When such observation becomes routineand when the owner collects ads, news stories, and records observation in notesdoing a market share and competitive analysis for a plan will be relatively easy.

Products Research and Consumer Surveys

A small business intending to test products before launching them to the market will expose them to employees, friends, customers, relatives, vendors, suppliersanyone at all with a likely opinionand will thus gradually discover what seems to be the best design, positioning, packaging, name, and even marketing slogan. The more systematic this type of exposure isand the more effectively informants' opinions are recorded and analyzedthe more it will resemble the practices of large organizations who deploy sophisticated methodologies like focus groups and consumer surveys.

In general "sophistication" translates into disciplined planning of tests and the application of specialized expertise in that planning. Focus groups and customer surveys frequently employ psychologists before a trial (preparing settings, choosing respondents, framing questionnaires, etc.), during a trial (observing reactions), and after the trial (analyzing results). But, in effect, a high level of sophistication is simply an attempt to formalize and then to apply mechanically what is nothing other than good entrepreneurial "feel" and "instinct." Many a very successful product was launched because the entrepreneur simply liked itand so did the people around him or her.

Small businesses generally lack the resources for massive, costly trials and surveys and, instead, rely on innovative ways to obtain consumer feedback. A store, for instance, may mount two very different product displays and then instruct the clerks to note which one the customers spend more time examining. Surveys can be conducted at very modest costs by simply asking every customer a question at checkout timeand then recording the answer. Such approaches may lack the "scientific" halo of big studies but will produce actionable and reliable results if properly done.

Keeping record of informal events is another low-cost method to accomplish in a small business what large companies spend huge amounts achieving. Customers complain. Customers make complimentary comments. Customers criticize products or comment on them. To jot down such comments with appropriate annotations, to collect them in one place, periodically to review them can be a source of intelligence on customer satisfaction.

Other Market Influences

An important component of all market research is identification and assessment of forces external to the market itselfbut likely to influence it. A classical example of government action for a small business might be the routing of a freeway; it could isolate the business from major parts of its clientele or massively increase its traffic. External influences include government, as already mentioned, which can by its enactments increase pay (up minimum wage) or returns (accelerate depreciation), impose costs by regulation, modify interest rates, stimulate or inhibit exports, and do hundreds of other things. Changes in demographic patterns were underway in the mid-2000s as the baby boom generation marched toward retirement, eroding some markets, swelling others. International events may have great influence by disturbing raw material or energy availability or stimulating competition (outsourcing). Technological change of a massive character impacted communications and distribution by means of the Internetbut less visible changes, like improvements in materials or equipment have sometimes dramatic impacts of a particular business too.

In most industries, insiders watch certain indicators vital to the industry: interest rates in residential construction are an example; housing starts, in turn, send signals to a large number of suppliers, e.g., producers of appliances. Publishers of references watch budgetary trends in libraries. Hotels and resorts watch gas prices and air travel costs. And so on. The small business doing market research may find it more difficult to find precise indicators that serve as signal for its operations. One way to identify them is to spend some time with trade publications which like to track and publicize changes in relevant second- and third-order influences on the market.


Most formalized market research techniques are used by large corporations to "see" a market difficult to track by its very diversity and size. Major categories are 1) audience research, 2) product research, 3) brand analysis, 4) psychological profiling, 5) scanner research, 6) database research, also called database "mining," and 7) post-sale or consumer satisfaction research. When these techniques involve people, researchers use questionnaires administered in written form or person-to-person, either by personal or telephone interview; questionnaires may be closed-end or open-ended; the first type provides users choices to a question ("excellent," "good," "fair") whereas open-ended surveys solicit spontaneous reactions and capture these as given. Focus groups are a kind of opinion-solicitation but without a questionnaire; people interact with products, messages, or images and discuss them. Observers evaluate what they hear.

Some major techniques are intimately linked with targeting marketing efforts or designing messages. Audience research is aimed at discovering who is listening, watching, or reading radio, TV, and print media respectively. Such studies in part profile the audience and in part determine the popularity of the medium or portions of it. Brand research has similar profiling features ("Who uses this brand?") and also aims at identifying the reasons for brand loyalty or fickleness. Psychological profiling aims at construction profiles of customers by temperament, lifestyle, income, and other factors and tying such types to consumption patterns and media patronage.

Scanner research uses checkout counter scans of transactions to develop patterns for all manner of end uses, including stocking, of course. From a marketing point of view, scans can also help users track the success of coupons and to establish linkages between products. Database mining attempts to exploit all kinds of data on hand on customerswhich frequently have other revealing aspects. Purchase records, for example, can reveal the buying habits of different income groupsthe income classification of accounts taking place by census tract matching. Data on average income by census tract can be obtained from the Bureau of the Census.

Product tests, of course, directly relate to use of the product. Good examples are tasting tests used to pick the most popular flavorsand consumer tests of vehicle or device prototypes to uncover problematical features or designs.

Post-consumer surveys are familiar to many consumers from telephone calls that follow having a car serviced or calling help-lines for computer- or Internet-related problems. In part such surveys are intended to determine if the customer was satisfied. In part this additional attention is intended also to build good will and word-of-mouth advertising for the service provider.

see also Focus Groups


Clegg, Alicia. "Market Research: Through the looking glass." Marketing Week. 16 March 2006.

Lury, Giles. "Market Research Cannot Cover for the 'Vision Thing.'" Marketing. 9 November 2000.

Mariampolski, Hy. Qualitative Market Research: A Comprehensive Guide. Sage Publications, 21 August 2001.

"Market Research Is Accessible, Rewarding to Small Retailers." Knight-Ridder/Tribune Business News. 19 January 2000.

McQuarrie, Edward F. The Market Research Toolbox: A Concise Guide for Beginners. Sage Publications, 15 June 2005.

Vincour, M. Richard. "When Your Customer Speaks, Listen." American Printer. 1 April 2006.

                                        Darnay, ECDI

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Market Research." Encyclopedia of Small Business. 2007. Encyclopedia.com. 29 May. 2016 <http://www.encyclopedia.com>.

"Market Research." Encyclopedia of Small Business. 2007. Encyclopedia.com. (May 29, 2016). http://www.encyclopedia.com/doc/1G2-2687200370.html

"Market Research." Encyclopedia of Small Business. 2007. Retrieved May 29, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-2687200370.html

Market Research


Market research is a tool used by businesses of all kinds to assist with decisions regarding things like product development, marketing campaigns, expansion efforts, pricing, and even overall strategy. The world's largest market researcher, AC Nielsen Corp., is best known for its Nielsen ratings, which provide information regarding a television show's viewers. Advertisers quite often use this information to target a particular demographic group with a television commercial. In the e-commerce world, online advertisers use market research to determine the efficacy of their online campaigns. Technology firms might use market research when deciding what new features to include in the newest version of a product. Many firms looking to move into e-commerce for the first time rely on market research when developing an online strategy. In fact, the Internet revolution of the late 1990s spawned a new niche for market researchers. As a result, established market researchers found themselves competing with upstarts as they jostled for position in the burgeoning Internet-related market research industries.


One market research upstart, NetRatings, was founded in the summer of 1996 by David Toth, a vice president for the software arm of Hitachi. Toth used $3 million in venture capital from Hitachi to get the Internet demographics information provider up and running. The firm gathered its information on how World Wide Web surfers used the Internet by compiling panels of regular Internet users willing to install NetRatings tracking software on their personal computers (PCs).

In 1998, NetRatings and ACNielsen jointly created Nielsen/NetRating, a service that measured Internet usage, including audience demographics and advertising, in the U.S. and Canada. The following year, ACNielsen and NetRating created ACNielsen eRatings.com, which monitored Internet usage in Europe, Latin America, the Middle East, Africa, and Asia. According to an August 2001 Business Wire release, the combined services track "the entire spectrum of Internet user behavior: who's online, where they're going, what ads they're viewing and clicking on and how much time they spend." In October of 2001, NetRatings announced its intent to buy competitor Jupiter Media Metrix for $71.2 million. The purchase was scheduled for completion in early 2002.


An established market researcher competing against rivals like Jupiter Media Metrix and NetRatings was Gartner Inc., which employed roughly 800 consultants and served a client base of nearly 10,000 businesses, institutions, and other organizations that used outside experts for advice on decisions regarding computer hardware and software, communications devices, and other technology-related topics. The firm was founded in 1979 as Gartner Group by partners Gideon Gartner and David Stein. Its original focus was providing research and analysis of the information technology (IT) industry to buyers and sellers of computers and related devices. Six years later, the firm founded Gartner Group Securities, a unit serving the investment community with IT recommendations and information. Sales reached $40 million in 1988, and earnings exceeded $2 million.

By the early 1990s, operations spanned 20 countries, and sales exceeded $120 million. To generate capital for an acquisition spree, Gartner Group listed its shares publicly for the first time in 1994. Purchases that year included information technology (IT) system evaluator Real Decisions and IT research and analysis provider New Science. In 1995, Gartner Group bought IT market researcher Dataquest, Inc., which made a large portion of its data, including statistics, charts, and analysis, available online. The firm paid $2.5 million for project management software consultant Productivity Management Group Inc. in 1996. Gartner also purchased a 40 percent stake in Web content provider EC Cubed. The following year, the company acquired a 32 percent stake in Jupiter Communications, LLC, an online market researcher that would grow to be one of Gartner's largest competitors.

Growth via acquisition continued in 1998 as the firm worked to strengthen its position as a leading IT consultant both domestically and abroad. The firm's focus on looming Y2K problems proved problematic in 1999 as analysts began pointing to Gartner's lack of attention to the emerging e-business industry. According to an August 2001 article in The Industry Standard, "The technology market researcher had spent so much effort warning the world about the looming Y2K disaster that it seemingly missed the biggest tech story of the decade. Upstart firms Forrester Research and Jupiter Communications grabbed the spotlightand pots of moneyby advising Webstruck managers about the e-business future." As a result, the firm began funneling millions of dollars into e-business market research services. To this end, Gartner acquired INTECO Corp., a research firm focused on Internet and e-commerce technology. The company also bought a 70 percent stake in cPulse, LLC, which developed an e-business application that tracked the satisfaction level of online customers.

Gartner hired 441 new employees, including 24 e-business consultants, in the first half of 2000 as part of a $10 million employee recruitment and retention program. The firm also paid $80 million for TechRepublic, Inc., a Web site for IT professionals. Four months later, the firm launched its eMetrix service, a real-time e-business monitor that cautions IT managers and other executives if a major supply chain problem appears imminent. Despite these efforts, Gartner continued to struggle with its online operations. A Web site overhaul in January 2001 drew criticism from both industry analysts and clients when several glitches remained unresolved for months. In June, Gartner released Gartner G2, a research service designed to assist non-technology executives utilize technology already in place within their company to improve operations. This new service marked the first attempt by Gartner to target non-technology professionals. Ironically, while Gartner continued to expand into new areas, it was the firm's core research and analysis that helped it weather both the dot.com fallout and economic downtown at the turn of the century better than its rivals.


Forrester Research Inc. is one of the leading market research firms covering the Internet and related technology. Its early focus on Internet technology, which began in 1995, helped bolster the firm's image as an Internet industry expert able to predict future trends in technology, business practices, and customer behavior. Unlike its rivals who base their projections on statistical data analysis, Forrester conducts surveys of major corporations. The firm's market research serviceswhich range in cost from $5,000 to $10,000target senior managers, marketing and technology executives, and business strategists at major corporations.

Forrester's products and services include two types of strategy research: Market Focus and Core Skills. Market Focus reports and briefs analyze the trends and industries related to a particular topic and make forecasts based on that information. Core Skills reports and briefs cover the issues involved in operating an e-business. Forrester also gathers Consumer Technographics data by querying over 400,000 households in North America and Europe regarding their use of technology for entertainment, shopping, and money management. Business Technographics data is pulled from interviews, regarding technology procurement, with executives of more than 2,500 corporations with annual sales exceeding $1 billion. The Advisory Services component of Forrester's offerings includes four programs: Web & Commerce Site Review, Web Site Review Boot Camp, Research Inquiry, and the Partners Program, which assigns a team of analysts to work with a business to develop and monitor some aspect of its corporate strategy. One final product, Forrester's eBusiness TechRankings assessment tool, evaluates emerging technologies for clients.

Forrester was founded in 1983 by George Forrester Colony, who spent five years at rival Yankee Group conducting telecommunications and office automation market research. After initially focusing on telecommunications market research, Forrester eventually moved into the PC and networking markets. As stated in the October 1996 issue of Marketing Computers, "Colony, credited with coining the term 'client/server,' practically defined the course of network technology in the late '80s and '90s, and led many through its dark alleyways as the technology developed." New technology continued to emerge, fueling the need for market research. Forrester continued working to stay abreast of major technological developments, eventually becoming a "leading prognosticator on Internet computing, having recognized early the effects that the Internet would have on business." Integral to Forrester's Internet expertise was its New Media Research Group, created in 1995 to focus on World Wide Web site analysis, new Internet-based technologies, and the demographics of Web surfers.

In 1999, Forrester launched its PowerRankings service, which listed the best e-commerce sites among different categories of online retailers. To compile its list, Forrester surveyed nearly 20,000 online customers and also conducted its own anonymous shopping tests at a variety of leading sites selling product ranging from airline tickets, apparel, books, and music to computer hardware and software. The e-tailers were evaluated for six different criteria: cost, customer service, delivery, features, transacting, and usability. Also that year, to boost its international operations, Forrester acquired London, England-based Fletcher Research, a two-year-old market analysis firm covering Internet usage in the United Kingdom.

Forrester teamed up with Information Resources Inc. in June of 2000 to create Netquity, a brand marketing research service targeting brand managers selling products on the Internet. A few months later, BuyerZone.com and Forrester began offering market analysis reports to small and medium-sized businesses. In November, the firm began working with the National Association of Purchasing Management to monitor the utilization of Internet-based procurement by various businesses. The dot.com meltdown in 2000 began to undermine the e-business market research industry by 2001. When Forrester's sales slowed, it laid off 111 employees, roughly 15 percent of its workforce.


Yankee Group is a leading market researcher focused on Internet-related industries, such as e-commerce, telecommunications, and wireless. The communication industry's first research and advisory services firm, Yankee Group was founded by Harvard Business School graduate Howard Anderson in 1970. Eventually, the firm's focus shifted to networking technology, particularly enterprise applications and data communications networks. In 1986, Yankee Group began using the Technologically Advanced Family Survey to query U.S. households with regard to their use and perception of new technology products and services. Four years later, the firm launched its Mobile User Survey, seeking data regarding mobile technology use across North America.

Annual growth during the early 1990s exceeded 20 percent. During that time, the firm expanded into Canada, establishing a research and consulting unit in Ontario named Canadian Market Strategies. The Global Network Strategies Survey was first utilized in 1992, to gather information from corporate network administrators regarding network usage. In August of 1996, Primark Corp. acquired Yankee Group from Anderson for roughly $65 million. The company expanded into Brazil by opening an office in Sao Paulo in 1999; the number of World Wide Web users there, approximately 3.5 million, was expected to nearly double over the next two years. This growth prompted firms like MCI Communications Corp., Sprint Corp., and Bell Canada to move into the country, and Yankee Group believed a market for its services would exist there as well. As a result, the firm also launched its Internet Strategies Latin America Planning Service, which analyzed the regional Internet Service Provider (ISP) strategies, broadband Internet access development, business-to-business (B2) e-commerce initiatives, and Web hosting services among Latin American businesses.

It was during 1999 that Yankee Group also began to retool itself as an Internet industry expert. Not only did the Internet become a key focus of Yankee Group's researchalong with wireless and communications industriesbut the firm also began working to offer its Internet industry analysis on a global scale, reaching Europe, the Pacific Rim, and Latin America. YankeeTek was created to invest in small dot.com startups, which would receive strategic planning services from Yankee Group, as well as access to Yankee's research.

Yankee Group launched two new programsOnline Financial Strategies (OFS) Planning Service and Online Retail Strategies (ORS) Planning Servicein 2000. The OFS service analyzed the Internet's influence on the financial services industry in terms of consumer behavior, new products, market-place requirements, and business issues. The ORS service analyzed the behavior and attitudes of online shoppers, the business models used by online retailers, online shopping services, and fulfillment. Yankee Group also assisted clients within either industry to develop appropriate business strategies. Reuters plc, one of the world's leading information firms with $35 billion in market capitalization, bought for Yankee Group from Primark for $72.5 million in June. Yankee Group remained an autonomous entity, operating out of its parent's newly created global information business arm, known as Reuters Enterprise. The firm released its "Yankee Group Stars" list of the best online retailers in early 2001. That year, Yankee created a new Global Regulatory Strategies service to cover the regulatory issues surrounding international e-business.


Barlas, Pete. "Small Firm Has Big Plans for Net Ratings." The Business Journal, December 15, 1997.

Fattah, Hassan. "Would Wall Street Muzzle George Colony?" Marketing Computers, October 1996.

"Forrester Research and the National Association of Purchasing Management Collaborate to Generate a Quarterly Report on eBusiness." Business Wire, November 6, 2000.

"Forrester Research's Creative Thinker." InformationWeek, November 15, 1999.

"Gartner Rises Again." The Industry Standard, August 2001. Available from www.thestandard.com.

Greene, Tim. "Yankee Group to Focus on e-Business." Network World, November 15, 1999.

"IRI, Forrester Research Launch Netquity." Chain Drug Review, June 5, 2000.

Judge, Paul C. "Forrester Research: Sassy, Quirky, and Rich." BusinessWeek Online, May 26, 1997. Available from www.businessweek.com.

Konicki, Steve. "Economic Slowdown Hits Hard at Analyst Firms." InformationWeek, September 10, 2001.

McGee, Marianne K. "The Specialists: Finding Their Own Niche." InformationWeek, November 15, 1999.

"Nielsen/Net Ratings is Launched in Argentina." Business Wire, August 21, 2001.

Tanzillo, Kevin. "Howard Anderson's Forward Thinking." Communications News, December 1996.

SEE ALSO: Forrester Research; Gartner Inc.; International Data Corp. (IDC); Jupiter Media Metrix; Yankee Group

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Market Research." Gale Encyclopedia of E-Commerce. 2002. Encyclopedia.com. 29 May. 2016 <http://www.encyclopedia.com>.

"Market Research." Gale Encyclopedia of E-Commerce. 2002. Encyclopedia.com. (May 29, 2016). http://www.encyclopedia.com/doc/1G2-3405300300.html

"Market Research." Gale Encyclopedia of E-Commerce. 2002. Retrieved May 29, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3405300300.html

Marketing Research


MARKETING RESEARCH evolved as the U.S. economy shifted from a production-driven one to a market-driven one. As the American production of goods and services, plus imports, was beginning to satiate American demand, marketers needed to learn how to tailor their products to the needs and likes of an increasingly discerning public. This tailoring resulted in increased market demand and, for successful companies, increased market share.

Formal marketing research was initiated in 1911 when the Curtis Publishing Company appointed its first director of commercial research. Early practitioners were inspired by the efforts of Frederick W. Taylor, famous for his time and motion studies, and others to employ disciplines of "scientific management" to improve business processes and thereby improve results. Marketing research has evolved into an industry consisting of large and small firms worldwide as well as dedicated market research departments in all large and many small companies. Expenditures for marketing research in the United States exceeded $1 billion in 2000.

The American Marketing Association defines marketing 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 understanding of marketing as a process." Marketing research "specifies the information required to address these issues, designs the method for collecting information, manages and implements the data collection process, analyzes the results, and communicates the findings and their implications."

Marketing research consists of gaining consumer input and data. It is the lifeline between companies and customers, and it allows the application of scientific methods to gain knowledge about consumers, buyers, competitors, markets, and marketing.

In general terms, marketing research is either primary research or secondary research. Primary research is either qualitative or quantitative. Qualitative research explores, defines, and describes. It involves in-depth studies of limited samples of people. Use of focus groups is a popular tool of qualitative research. In this format, participants are prescreened to assure that they match the sociodemographic profile of the brand or company performing the research (that is, they are either customers or potential target customers). Once screened, groups of eight to twelve customers participate in a group discussion, with a company-hired moderator, to discuss the topic at hand: new products, reaction to advertising or packaging, or assessment of goods or services. Use of one-on-one interviews is another popular tool of qualitative research. Often these are conducted in shopping malls (mall intercepts), where shoppers are approached, screened to match a predetermined sociodemographic profile, and escorted to a facility for a thirty-minute to one-hour interview.

Quantitative research measures, estimates, and quantifies. It generally involves polling of a broad sample of people. This choice is necessary when statistically significant results are required. Large companies and well-known packaged-goods brands use this type of research when they want to be certain that consumer opinions are representative of the population at large. In the last decade especially, political opinion polls have become popular for U.S. presidents and others to assure that they are taking the public's point of view into consideration in policymaking and that they remain popular among their constituents.

Specific research objectives may require a mix of qualitative and quantitative research. Examples include awareness and attitude surveys, brand image surveys, advertising tracking, promotion testing, media mix evaluation, new products research, marketing optimization research, and customer loyalty evaluation.

Secondary research entails gathering information from already published data and sources. Some applications for secondary research include competitive intelligence (where one company wants to monitor its competitors, their spending, their new product introductions, their staffing, or their financial performance) and trend assessment. As an example, Albing International Marketing, a global home furnishings consultancy, used secondary research data to prepare a market study, Windows on the Millennium—Across the Threshold to the New Century (2001), which cited ten key trends expected to shape and impact the home furnishings industry in the subsequent decade. The trends were listed under the following headings: Home and Family, Leisure, The Aging Population, The Ethnic Influence, The Spiritual Search, Information and Technology, The Environment, The Wealth Effect, Globalization and Nationalism, and The Value Mentality.

New methodologies and new technologies are continually being adopted by the marketing research industry. New research techniques provide deeper insight into buyer behavior, even using predictive models of how their behavior will change under alternative scenarios. The computer has been integrated into nearly every phase of research, from computer-assisted telephone and personal interviews to disk-by-mail data collection to Internet sampling. The Internet has become the key portal for gathering secondary research. In addition to access to public library databases, several sites exist exclusively to sell market research reports on a broad variety of subjects (for example, Profound, Factiva, Market Research.com). It is only a matter of Time until Web-based survey research becomes an industry norm.


Mendelsohn, Susan. "In Search of Market Research." Information World Review (March 2002).

Neal, William D. "Getting Serious about Marketing Research." Marketing Research (Summer 2002).

Thomas, Jerry W. "Marketing Research." Executive Excellence (November 2001).

Wade, A. Kenneth. "Focus Groups Research Role is Shifting." Marketing News (4 March 2002).

Nancy P.Neumann

See alsoAdvertising ; Business Forecasting ; Polling .

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Marketing Research." Dictionary of American History. 2003. Encyclopedia.com. 29 May. 2016 <http://www.encyclopedia.com>.

"Marketing Research." Dictionary of American History. 2003. Encyclopedia.com. (May 29, 2016). http://www.encyclopedia.com/doc/1G2-3401802544.html

"Marketing Research." Dictionary of American History. 2003. Retrieved May 29, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3401802544.html

market research

market research Qualitative and quantitative research on the tastes, values, and perceptions, on the personal, household, and neighbourhood characteristics, and on the purchasing behaviour, of individual consumers of (or industrial customers for) equipment and services. Usually carried out by agencies who specialize in this activity, although some large companies have their own market-research divisions, and some market research companies are also involved in academic research (for example large-scale surveys) on a contract basis.

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

GORDON MARSHALL. "market research." A Dictionary of Sociology. 1998. Encyclopedia.com. 29 May. 2016 <http://www.encyclopedia.com>.

GORDON MARSHALL. "market research." A Dictionary of Sociology. 1998. Encyclopedia.com. (May 29, 2016). http://www.encyclopedia.com/doc/1O88-marketresearch.html

GORDON MARSHALL. "market research." A Dictionary of Sociology. 1998. Retrieved May 29, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1O88-marketresearch.html

market research

market research, organized use of sample surveys, polls, focus groups, and other techniques to study market characteristics (e.g., ages and incomes of consumers; consumer attitudes) and improve the efficiency of sales and distribution. Development of new products, opening of new markets, measurement of advertising effectiveness, and knowledge of business competitors are among its basic aims. Developed in the United States in the early 20th cent., the field expanded rapidly after World War II, spreading to Europe and Japan.

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"market research." The Columbia Encyclopedia, 6th ed.. 2016. Encyclopedia.com. 29 May. 2016 <http://www.encyclopedia.com>.

"market research." The Columbia Encyclopedia, 6th ed.. 2016. Encyclopedia.com. (May 29, 2016). http://www.encyclopedia.com/doc/1E1-marketres.html

"market research." The Columbia Encyclopedia, 6th ed.. 2016. Retrieved May 29, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1E1-marketres.html

market research

market research Study of consumer preferences and demand, for the purpose of increasing the sales of commercial products. It involves the collection, recording and analysis of data derived from testing a product on a representative sample of likely consumers. Interviewing to ascertain popular preferences for products is another method.

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"market research." World Encyclopedia. 2005. Encyclopedia.com. 29 May. 2016 <http://www.encyclopedia.com>.

"market research." World Encyclopedia. 2005. Encyclopedia.com. (May 29, 2016). http://www.encyclopedia.com/doc/1O142-marketresearch.html

"market research." World Encyclopedia. 2005. Retrieved May 29, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1O142-marketresearch.html

Facts and information from other sites