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McDaniel & Gates – Marketing Research, 9th Edition Instructor’s Manual

CHAPTER 2

The Marketing Research Industry and Research Ethics

LEARNING OBJECTIVES

1. To appreciate the structure of the marketing research industry

3. To learn about the various types of firms and their functions in the market research industry.

5. To learn who uses marketing research.

7. To appreciate trends in global marketing research.

9. To become familiar with respondents’ rights.

10. To discover methods by which the level of professionalism in marketing research can be

raised.

KEY TERMS

Custom research firms

McDaniel & Gates – Marketing Research, 9th Edition Instructor’s Manual

CHAPTER SCAN

Chapter Two is an examination of the supplier and users of marketing research The marketing

research industry consists of (1) information users (consumer and industrial goods and services

producers; federal, state, and local governments; media companies; retailers and wholesalers),

(2) marketing research suppliers (custom research firms’ syndicated research firms, online

tracking firms, and limited function research firms), and (3) marketing research supplier service

firms. The marketing research industry was hurt by the recent recession. Sales and employment

CHAPTER OUTLINE

1. Evolving Structure of the Marketing Research Industry

I. Primary Information Users (Client Organizations)

A. Consumer and Industrial Goods and Services Producers

2. Consumer and Industrial Corporate Marketing Research Departments

I. Corporations

3. Research Suppliers

I. The Marketing Research Industry

McDaniel & Gates – Marketing Research, 9th Edition Instructor’s Manual

A. Consumer Watch

B. Consumer Buy

C. Custom Research Firms

D. Syndicated Service Firms

I. Collect, Package, and Sell Marketing Research Data

II. Deal Primarily with Media Audience and Product Movement Data

E. Limited Function Research Firms

F. Marketing Research Supplier Service Firms

I. Field Service Firms

II. Sampling firms

III. Software Firms

IV. Other Service Companies

4. Using Marketing Research–A Corporate Perspective

I. External Clients

5. The State of the Marketing Research Industry

6. Marketing Research Ethics

I. Ethical Theories

A. Deontology

McDaniel & Gates – Marketing Research, 9th Edition Instructor’s Manual

B. Utilitarianism

B. Request Bids to Obtain Free Advice and Methodology

C. Making False Promises

D. Requesting Proposals without Authorization

E. Retailer Ethics

V. Field Service Ethics

7. Summary

CHAPTER SUMMARY

1. THE EVOLVING STRUCTURE OF MARKETING RESEARCH INDUSTRY

There is over $31 billion a year spent on marketing/advertising/public opinion research services

around the world. Revenue of the top 50 marketing research firms in the world is approximately

see Exhibit 2.1 General Categories of Organizations Involved in Marketing Research (p 23)

see Exhibit 2.2 Structure of the Marketing Research Industry (p 23)

see Exhibit 2.3 The 40 Largest U.S. Marketing Research Firms (p 26)

see Exhibit 2.4 Syndicated Service Research Firms (p 29)

I. Global Research

Although developed countries account for the vast majority of research expenditures, emerging

markets are the focus of rapidly increasing marketing research expenditures because of need for

common strategies across the world. The Internet along with increased consumerism has made

consumers across the globe more accessible to researchers. Southeast Asia and Eastern Europe

are two examples.

II. Primary information Users (Client Organizations)

A. Consumer and Industrial Goods and Services Producers–use marketing research data on

an ongoing basis in a variety of ways to support the marketing decision-making process:

2. To evaluate the ongoing success of operational marketing strategies

4. To assess changes in the external, or uncontrollable, environment and the implications of those

charges for their product or service strategy

6. To measure the quality of customer service and level of satisfaction

1. Federal marketing research expenditures–$5 billion annually

a. This money goes to work conducted through academic nonprofits

C. Media Companies

1. Advertising agencies, sales promotion companies, public relations agencies, and direct

marketing firms

D. Retailers and Wholesalers

1. Highly competitive retail market, understanding the customer is paramount

E. Manufacturers

1. Industrial goods manufacturers use marketing research to measure both dealer and customer

satisfaction.

F. Marketing Research Suppliers

1. Custom, syndicated, and limited function marketing research firms–sell research services,

design research studies, analyze the results, and make recommendations to their clients

G. Marketing Research Supplier Service Firms

1. Service the research industry–software providers, samples, online panels

2. CONSUMER AND INDUSTRIAL CORPORATE MARKETING RESEARCH

DEPARTMENTS

1. The average size of research departments in a corporation is small. Recent study showed only

2. Current trend

a. Combining marketing research and strategic planning

McDaniel & Gates – Marketing Research, 9th Edition Instructor’s Manual

C. Attention–focus on larger corporations

1. Research managers will work with

See From the Front Line: Discovering Marketing Research and Why You Should Too (p

1. That most decisions are made on intuition and not on analytical foundations.

2. Basic principles of marketing research can be applied in any industry—supplier or client side.

3. RESEARCH SUPPLIERS

I. The Marketing Research Industry

A. Giants in the Industry

see Exhibit 2.4 The Forty Largest Marketing Research Firms (p26)

1. Two largest firms in the industry–ACNielsen Company and Kantar

3. ACNielsen has two main business groups: Watch, which does media research, and Buy, which

focuses on consumer research.

A. Consumer Watch

1. Nielsen’s Watch segment includes measurement and analytical services related to TV, online,

2. Media clients use the data to price their advertising inventory and maximize the value of their

content, and its advertising clients use the data to plan and optimize their advertising spending

B. Customer Buy

1. This unit provides market research and analysis primarily to businesses in the consumer

packaged goods industry.

2. This segment is organized into two areas: Information, which provides retail scanner and

consumer panel-based measurement, and Insights, which provides a broad range of analytics.

C. Custom Research Firms

2. Majority of custom marketing research firms are small, with billings of less than $1 million

and fewer than 10 employees.

D. Syndicated Service Firms

1. Collect and sell marketing research data to many firms.

E. Limited Function Research Firms

2. Use a single research technique or a special type of research technique.

4. Research panel consists of a group of individuals who agree to participate in a series of

research studies over time

F. Marketing Research Supplier Service Firms

I. Field Service Firms

a. Data-collection specialists, collecting data on a subcontract basis for corporate marketing

research departments, custom research firms, ad agency research departments, and others.

II. Sampling firms

a. Provide samples (persons to interview) to marketing research suppliers and other research

III. Software Firms

a. Companies specialize in providing software for statistical analysis and/or Internet

interviewing.

4. USING MARKETING RESEARCH–A CORPORATE PERSPECTIVE

see Exhibit 2.5 Using Marketing Research–A Corporate Perspective (p 31)

I. External Clients

A. Vendors

1. Strategic partnerships–alliance formed by two or more firms with unique skills and

B. Franchisees–franchisors of consumer goods and services provide marketing research data to

their franchisees

1. Mystery Shoppers–poses as a customer, observes how long it takes to be waited on and/or

make purchase, the courtesy of the clerks, the cleanliness of the operation and whether his or her

II. Internal Clients

A. Marketing Managers–use research data more than any other group of managers

1. Marketing mix decisions–regarding products or services, promotion, distribution and pricing

2. Product managers–to define their target market, heavy users with the target market

3. New product development managers–heaviest users of marketing research

4. Distribution function–research is used to choose locations for new stores and to test

1. Finance department–test market data used to forecast revenue streams for 1 to 3 years

5. THE STATE OF THE MARKETING RESEARCH INDUSTRY

McDaniel & Gates – Marketing Research, 9th Edition Instructor’s Manual

1. In 2009, research industry revenue fell for the first time since industry wide data was first

2. Most research clients feel that suppliers are doing the basics well—that is, using the right

methodologies, asking questions in the right way, surveying the right people, and analyzing the

data in a proper manner.

see Practicing Marketing Research: Strategic Research Is Fine But Firms Must be Nimble in

Today’s Marketplace (p 36)Ravi Parmeswar, contends that long-term research is important, but

6. MARKETING RESEARCH ETHICS

I. Ethical Theories

A. Deontology–people should adhere to their obligations and duties when analyzing an ethical

dilemma

B. Utilitarianism–the ability to predict the consequences of an action

1. The choice that yields the greatest benefits to the most people is the choice that is ethically

correct.

2. Two Types of Utilitarianism

a. Act Utilitarian–adheres exactly to the definition of utilitarianism as described–performs the

acts that benefit the most people–regardless of personal feelings or the societal constraints such

as laws

McDaniel & Gates – Marketing Research, 9th Edition Instructor’s Manual

C. Casuist–compares a current ethical dilemma with examples of similar ethical dilemmas and

see Exhibit 2.6 Unethical Practices in Marketing Research (p 38)

II. Research Supplier Ethics

A. Low-Ball Pricing–quoting an unrealistically low price to secure a firm’s business and then

using some means to substantially raise the price

B. Allowing Subjectivity into the Research–should avoid using biased samples, misusing

statistic, ignoring relevant data, and creating a research design with the goal of supporting a

predetermined objective

1. Advocacy studies–commissioned by companies or industries for public relations purposes or

C. Abusing Respondents

2. Predictive dialers–dial phone numbers ahead of available interviews

3. Selling of names and addresses of potential customers to firms seeking sales leads

D. Selling Unnecessary Research–dealing with a client who has little or no familiarity with

marketing research often has the opportunity to “trade the client up”

E. Violating Client Confidentiality–information about a client’s general business activities or

the results of a client’s project should not be disclosed to a third party

III. Black Box Branding

IV. Client Ethics

A. Requesting Bids When a Supplier Has Been Predetermined–to predetermine which

supplier will received a contract and yet ask for proposals from other suppliers to satisfy

B. Requesting Bids to Obtain Free Advice and Methodology–solicit detailed proposals,

including complete methodology and a sample questionnaire from a number of suppliers–

“picking the brains” of the suppliers, the client assembles a questionnaire and then contracts

McDaniel & Gates – Marketing Research, 9th Edition Instructor’s Manual

D. Requesting Proposals without Authorization–client representative seeking proposals with

first receiving the authority to allocate the funds to implement the research

E. Retailer Ethics

Intense competition at the retail level has resulted in a mushrooming of customer satisfaction

V. Field Service Ethics

A. Marketing Research Field Services–the production arm of the research industry requiring

telephone or face-to-face interviews–critical link between the respondent and the research

supplier.

1. They must properly record information and carefully follow sampling plans–if not the

B. Using Professional Respondents

1. Most likely to occur in the recruitment of focus group participants

VI. Respondent’s Rights

A. Right to Choose–to determine whether or not to participate in a marketing research project

B. Right to Safety–to safety from physical or psychological harm

1. Consumer privacy can be defined in terms of two dimensions of control

2. Laws have been passes in recent years dealing with the various aspects of privacy

see Global Research Safe Harbor in a Privacy Storm (p 44)

1. Good ethics provide a solid foundation for professionalism

McDaniel & Gates – Marketing Research, 9th Edition Instructor’s Manual

B. Fostering Professionalism

1. Profession–membership in a profession–may require an exam to belong–but membership is

objectively determined

2. Professionalism–evaluated on more persona and subjective levels–measure of the level of

professionalism of marketing researchers

a. have autonomy in their jobs, were permitted to exercise judgment, and were recognized for

their level of expertise and ability to work independently

C. Researcher Certification–MRA has launched a Professional

1. Certification–not a licensing–a voluntary program administered by a nongovernmental body

that provides a credential for differentiation in the marketplace

7. SUMMARY

QUESTIONS FOR REVIEW AND CRITICAL THINKING

1. Compare and contrast custom and syndicated marketing research firms.

Both the custom and syndicated marketing researching markets are dominated by a few large

2. What is the role of field service firms in marketing research?

3. Describe the levels of the marketing research industry.

McDaniel & Gates – Marketing Research, 9th Edition Instructor’s Manual

Level 1 includes the primary users of marketing research information, usually a corporate

marketing department. This is the level where the information is used to make marketing

decisions.

4. List several key characteristics of corporate marketing research departments.

The size of research departments has been decreasing, while their budgets have been increasing.

5. Discuss the various project offerings of syndicated service firms.

These firms collect, package, and sell the same marketing research data to many firms. While the

6. Divide the class into groups of five. Each group should select one section of the city in

which the course is being taught (or the closest large city) and determine the zip codes for

this section of the city. Next, go to http://www.claritas.com and follow the instructions for

getting Prizm profiles by zip code. Each group should then discuss the marketing profile

for its section of the city.

Students’ answers will vary.

7. What do you see as the role of a code of ethics within an organization? What can be done

to ensure that employees follow this code of ethics?

A code of ethics is a guideline for what is acceptable and unacceptable behavior for employees

within the organization. Its role is to be a reference guide for ethical decisions. To ensure that

8. Who would you say had the greatest responsibility within the marketing research

industry to raise the standards of ethics – market research suppliers, market research

clients, or field services?

The greatest responsibility to raise ethical standards in the marketing research industry should be

felt by market research suppliers. Supplier firms are staffed by marketing research professionals;

9. What role should the federal government play in establishing ethical standards for the

marketing research industry? How might such standards be enforced?

The government should not have a significant role in establishing ethical standards for the

10. If respondents consent to interviews after being told they will be paid $50 for their

opinions, do they forfeit all respondent rights? If so, what rights have been forfeited?

No, they have not forfeited all respondent rights. The respondent still has the right to safety and

11. What is the relationship between ethics and professionalism? What do you think can be

done to raise the level of professionalism within the marketing research industry?

A lack of ethics in any field indicates a lack of professionalism. Professionals are assumed to be

those who carry out their profession to their best ability, including making ethical decisions. The

12. Explain the Safe Harbor Program and its importance.

The Safe Harbor Program was created by the U. S. Department of Commerce to meet the

common principles of the European Community Directive on Data Protection. The U.S. had been

declared a country that did not have “adequate privacy protection,” therefore, the EU would not

share data about their citizens.

The Safe Harbor Program allows companies to (1) join a self-regulatory program that adheres to

the Safe

WORKING THE NET

1. Compare the offerings of two marketing research firms, DSS Research and Burke

Incorporated, by visiting their Web sites at http://dssresearch.com and www.burke.com.

Students’ answers will vary.

2. Research International, which is part of the Kantar group, is a major international

marketing research firm, with offices in 54 countries. Go to its Web site at

http://www.researh-int.com and report on its global research capabilities.

3. Interviewers must take special care when interviewing children or young people. The

informed consent of the parent or responsible adult first must be obtained for interviews

with children. Parents or responsible adults must be told some specifics about the interview

process and special tasks, such as audio or video recording, taste testing and respondent

fees before permission is obtained. All researchers must adhere to all federal and state

regulations regarding the interviewing of children 13 years of age or younger. All

interviews conducted online must adhere to the Children’s Online Privacy

Protection Act (COPPA). Use these sites to gather more information about interviewing

children and report the results to the class.

http://www.ftc.gov/bcp/conline/edcams/kidzprivacy/biz.htm

http://www.ftc.gov/privacy/coppafaqs.htm

http://www.ftc.gov/bcp/conline/edcams/kidzprivacy/files/coppa-full_files/frame.htm

Student answers will vary.

4. Go to CMOR’s Web site at http://www.cmor.org for a discussion of the latest issue

regarding respondent cooperation.

REAL LIFE RESEARCH

Case 2.1 – Schering-Plough and Pfizer Go Toe-to-Toe in Court with Marketing Research as

Their Weapon (p 56)

Key Points

• Two pharmaceutical giants are at odds about marketing tactics. The issue is whether

Phizer sales people tell the absolute truth or whether explicitly or by implication give

their story the most desirable “spin.”

Questions

1. Discuss the role of marketing research in this case. Was it critical to the outcome?

McDaniel & Gates – Marketing Research, 9th Edition Instructor’s Manual

When you combine attorneys and advocacy researchers, the truth becomes pretty subjective. The

2. How might lawyers attack evidence presented from marketing research data?

There is almost always some basis to quibble about research methodology. Lawyers don’t care if

the findings are accurate; they just want findings that support their client’s position. They will

3. Give examples of other instances where marketing research could play a role in lawsuits.

It is always good to bolster your legal arguments with empirical evidence gathered by a credible

scientist. In one case involving trademark infringement, we sought to provide evidence that

Case 2.2 – Budget Rent a Car Drives a Message Home (p 59)

Key Points

• Budget Rent a Car in South Africa runs a large network of over 80 branches in a highly

competitive industry.

McDaniel & Gates – Marketing Research, 9th Edition Instructor’s Manual

• Budget needs to stay in touch with their customers’ needs and experiences in order to run

a world-class organization.

• Traditionally, collected satisfaction data from their customers using pre-paid reply survey

cards. However, response rates were very low and often it would take up to three months

Questions

1. Budget has used marketing research to measure customer satisfaction. How else could

the firm use marketing research?

Response will vary. However, some ideas beyond satisfaction, the company could collect

2. Based upon a description of the “players” in the marketing research industry discussed

in the first part of the chapter, what is Touchwork? Why?

Touchwork is a Marketing Research Supplier Service Firm that focuses on software solutions.

3. Why is customer feedback so important to a company like Budget? Is it just as

important to other types of businesses like Home Depot or Duke Energy Corporation (an

electrical utility company)?

Staying in touch with the customer and paving immediate response is critical in the service

industry. The cost of acquisition far outweighs the cost of retention, which may be as simple as