1. Identify the significant changes taking place in today’s business environment that are forcing management decision makers to rethink their views of marketing research. Also discuss the potential impact that these changes might have on marketing research activities. Please provide adequate references for each of the points in your discussion.
Today’s business environment is relentlessly subjected to significant changes. These changes force decision makers to reassess their views of marketing research and also induce changes in the marketing research processes themselves. No longer is marketing seen as a component of the sales branch in a company but it has established a well-deserved status as a vital element of the working of the entire organisational structure.
The growing complexities of today’s market place have given rise to the business philosophy of total quality management. This practice “…focuses on integrating customer-driven quality throughout an organisation with continuous improvement of product quality and service” (Zikmund 2003, p. 8). Firms are now addressing problems from the perspective of their customer which in turn places a greater emphasis on the importance of marketing research.
There are a great many changes constantly occurring within the current business environment. Some of the prominent broad categories of change would include:
The global business environment, competition, and consumer demand is ever shifting. It appears that the only constant in today’s business environment is change. With this in mind, consumer attitudes, perceptions, and preferences must be carefully taken into consideration when developing and launching new products into the market. Management decision makers must recognise and understand market trends, demographic and social changes, technological change and any other overall developments when they prepare marketing strategies for their products and services.
The “Information Explosion” has seen the shift of a great deal of power to the customer but at the same time this adjustment has created confusion and uncertainty amongst consumers. Consumers have never been more informed than they are today, but this information overload can sometimes prove counterproductive when making purchasing decisions. It is the job of today’s management decision makers to recognise the need for effective marketing research in this situation.
The abundance of information can lead to the increased ambiguity of problems, making research more time consuming. However it is in general benefiting marketing with the enormous amounts of descriptive information available on consumers. Market research can often be inexpensive in comparison to past years due to the high level of secondary data available for purchase or even free of charge. Fortunately, the rapid growth in volume of marketing information has been accompanied by great improvement in marketing research techniques.
Ecommerce and the internet have had a huge influence in developing the current business climate. Foreign trade and investment have grown significantly as a result of growth and improvement of mass communication technology. The internet has created a new market place and has greatly impacted on the functioning of existing markets. Marketing research now must incorporate new technological developments in data collection and distribution into the research design allowing researchers to dramatically reduce data collection times, especially across long distances. However, decision makers must also be aware of the limitations of certain technologies due to mismatches of technical infrastructure.
The evolution of the internet will and has no doubt significantly changed the way in which marketing research is performed with regards to both accessing secondary data and collected primary data (through questionnaires and tracking users). Internet market research is unfortunately subject to self-selection bias due to the non-representative makeup of the internet population: less technologically capable individuals or markets will often not participate.
Decision makers must therefore understand this and assess whether the use of the internet in their research will be beneficial. For example marketing research regarding elderly people may be quite ineffective as only a minority proportion of the target group with very similar characteristics will respond. It would also likely take a very long time to build up a worthwhile sample size for analysis. It is up to a decision maker to prevent these mistakes from occurring.
Globalisation is a term used to describe the amplified interconnectedness that has occurred in recent years. Technological changes enable information and goods to move much faster than has ever been possible before, making transporting and communicating with people much easier. Other factors also responsible for the phenomena include the end of the cold war and the growth of more liberal political thinking, causing the withdrawal of trade barriers.
Identifying current marketing research needs requires an understanding of the changing global environment. Thirty to forty years ago many U.S. firms were faced with slowing rates of growth in domestic markets and began entering international markets. Japanese and European firms followed suit and also expanded globally in order to broaden the scope of their operations, enabling them to compete with foreign competition and to benefit from potential economies of scale (Douglas and Craig, 1989).
The unit of analysis for research design in these situations was generally the country in question. However, most marketing research agencies were in general national organisations with limited or no capacity to perform research of a multi-national nature. But, as firms have expanded internationally and markets are becoming progressively more integrated worldwide, the major decision issues facing management today have altered considerably. Increased importance is now given to performing studies on an international level determining difference and similarity in behavioural patterns of differing cultures.
A Basic Example of this need for understanding the market one is entering can be seen in the McDonald’s food chain and their entry into Middle-Eastern markets. McDonald’s have two locations in the holy city of Mecca alone and marketing research would have dictated the necessity of properly prepared food: there would be almost no demand at all for non-halal food. Simple though this decision seems, often such factors are overlooked by management when entering foreign markets. Retailers expanding into new markets are subjected to change and a more integrating marketing infrastructure, consequently the demand for marketing research to track these changes and guide decision-making is ever increasing.
Regulatory conditions regarding marketing research mainly has significance to online research. As mentioned previously it is possible to carry out research simply by tracking the movements and activities of internet users. Online tracking can be carried out using cookies (text files downloaded to a user’s hard drive recording details of a visit to a particular website). Cookies are generally useful and can make future navigation easier, however some can be used “…to track where consumers go online and what they look at while they’re there” (Kane 2000).
There has even been discussion of this in the US Senate. Recently, ethical and legal issues have surrounded certain types of cookies and also spyware [“A general term for a program that surreptitiously monitors your actions. While they are sometimes sinister, like a remote control program used by a hacker, software companies have been known to use spyware to gather data about customers. The practice is generally frowned upon” (http://blackice.iss.net/glossary.php)].
Decision makers must be totally aware of the recent changes in laws which apply to the type of research they intend to carry out. There remains a definite grey area as to what is legal and illegal with regards to this online-tracking style of market research however decision makers cannot use ignorance as an excuse and must be aware of the changing legal environment that affects them.
On the whole, all aspects of modern life are subject to continuous change. Change occurs at differing pace in different areas of the globe. In this unstable climate researchers and decision makers are required to make assessments and conduct studies of the highest quality as quickly as possible. There is an increasing emphasis on marketing research which can potentially indicate market trends in a rapidly changing and increasingly competitive global environment before they largely affect organizations.
In order to control and/or adjust to the business environment, decision makers must identify when marketing research is necessary, and if it is undertaken understand the value and benefits of sound and timely marketing information and research in both the offline and online environment. Once gathered, marketing information and research can be used to develop and implement marketing strategies that make a difference. When adopted and implemented the results of modern marketing research shall facilitate satisfying the needs of the clients, which is the ultimate objective of any corporation.