Marketing research traces its roots back to the 1800‘s when the first rudimentary surveys where used to guide marketing decisions. Marketing research continued to develop through 19th and 20th centuries becoming ever more prevalent and sophisticated. In the early part of the 20th century a few businesses like the Kellogs Co. created in-house marketing research groups and Harvard’s graduate business school organized the Bureau of Business Research (BBR). The Bureau was formed to inform business practices and conducted research in four areas: industries, companies, business history and people (employees and management). Over the years the BBR has been responsible for developing many of the business practices that today, we take for granted including the development of practices focused on strategy, business and market research. For example, the internal and external environmental scanning process of strengths and weaknesses known as a SWOT analysis was developed through the BBR.
From the 1920’s through the 1950’s marketing research emerged as a major component of the marketing process receiving validation from the American Marketing Association. Market research luminaries rose to prominence researchers such as D.S. Duncan published a book detailing commercial research and George Gallup published public opinion polls in newspapers. The modern era of market research began with an infusion of quantitative and qualitative analysis in the 1950’s aid by the development of the computer. As computer capacity and speed increased through the end of the 20th century market researchers were able to process ever increasing and diverse data sets and perform analysis that could not be completed without the help of computers. Starting in 1996, the Internet began to play an increasing role in the ability market researchers to access data needed for critical decisions.
Henry Mintzburg, offered five definitions for strategy:
(1) a plan – a thoughtful course of action – there are two requirements: made in advance and developed consciously and purposefully.
(2) a ploy – a specific maneuver designed to outsmart or beat a competitor.
(3) a pattern – often times an organization adjusts to market situations, and specific actions and behaviors develop, either intended or unintended and become a consistent set of behaviors.
(4) a position – locating an organization in its environment,creating a balance between internal and external forces
(5) a perspective – a series of actions that the organization consistently takes over a period of time that becomes a characteristic of the organization much like an individual has a personality, a company has a strategy
In order to research you need to understand why you are researching, where you are going, and what do you want to do in the future. So what is strategy?
Strategy Components
A business needs a strategic framework in order to be successful. The framework consists of the mission, a vision for the business, culture, values, brand essence and positioning. For example the mission statement answers the questions: Why does this business exists today, for whom does it exist (for what benefit), and to what extent. The vision describes the business at a point in the future. How will stakeholders, competitors, customers and employees perceive the business five years from now? The vision statement describes the ideal state. Another component of the strategic framework is the organization’s values. Values detail what the organization maintains as important. Values are the things that the organization will not compromise on.
Culture, is the way work gets done in a business when there are no explicit processes or rules to guide individuals. Culture is best seen through artifacts such as the vocabulary that is used, shared experiences that result in group knowledge, symbols and customs.
Internet Research Strategies
There are two other components of strategy that impact the marketing effort directly, and these are brand essence and positioning. Brand essence is related to brand, which is the promise the business (products and services) make to its customers. Brand essence is about how customers and stakeholders feel about the products and services of the company, it is also how they identify and make the goods and services of a company personal. Positioning relates to how company A relates to company B, how do they differentiate themselves from their competitors.
Strategic Thoughts
A strategic issue is an activity, opportunity, challenge that affects the ability to develop and maintain a competitive advantage. A competitive advantage is defined by the factors: it is a superior value added, difficult to imitate, and it enhances an organizations flexibility (Glawson, 2009).
Bruce Henderson, founder of the Boston Consulting Group and a contributor to the BBR summarized strategy is the management of natural competition. In order to compete, a business must understand the interactions of its competitors, predict how those interactions will affect the dynamics of the market place, be able to wisely commit resources to desired and future outcomes, predict risk and return, and have the
conviction and fortitude to act.
5 Force Analysis
Michael Porter is the author of Competitive Advantage: Creating and Sustaining Superior Performance (1984) the definitive book on business strategy (1980). Porter claims that a company can only differentiate itself in one of two ways: it can either adopt a pricing strategy or a differentiation strategy (which is based on innovation). He identified 5 competitive forces that shape the structure of an industry and thus impact the strategic approach:
(1) the rivalry among existing competitors
(2) barriers to entry for new competitors
(3) the threat of substitute product or services
(4) the bargaining power of suppliers, and
(5) the bargaining power of buyers
Analyzing these forces provides insight into how the economic value of a product, service or a technology is allocated between companies in the industry: suppliers, distributors, substitutes, and potential new entrants. A 5 force analysis answers questions such as: Is this a good industry in which to launch a business? An analysis using these 5 forces will identify drivers of profitability, and will show how the profitability will evolve in the future. Porter began to apply his strategy tools to the Internet in 2001 and he suggests that the analysis be done not only on the Internet, but also on the industry that is using the Internet to market. Porter(2001) concludes his discussion by stating, “Only by integrating the Internet into the overall strategy will this powerful new technology become an equally powerful force for competitive advantage.”
Market Research
The key to competitive advantage is research, and it is from this perspective that Internet Research Strategies begins, not by using a search engine, but by enhancing the decision making capability of the organization so that decisions can confidently be made. Bennet (Forrest, 2003) indicates that the American Marketing Association defines market research“… as the marketing function that links the consumer, customer, and public to the market through information”.
Market research fulfills four needs
(1) identify and define market opportunities
(2) inform and adjust previous marketing actions
(3) monitor on going performance
(4) gain insights into the marketing process.
The process begins with the researcher clarifying the question or problem and developing an understanding of why the information is needed, determining if the question can be answered, and what information already exists. The next step is to determine the research objective. What is the research question? Is it to describe a marketing phenomena? For example, who is the target market for this service, what are their characteristics?
The question can have a diagnostic focus: Why do consumers like and dislike this service? The question can also be designed to investigate causal relationships and enable precise predictions. For example if web advertising is increased do sales from licensing also increase? The next step in the process is to design the research study. Will the study use primary and secondary data or only one or the other? In some instances the question may be answered strictly by using research data that already exists. In some instances secondary data will be of no help at all due to the uniqueness of the question or problem and the only option is to conduct primary research. Researchers should identify a hypothesis that will answer the research question. The hypothesis will inform the research design by gathering information that will test the hypothesis. In most instances the research design will be a combination of both primary and secondary data.
Sources:
Forrest, E. (2003). Internet marketing intelligence: Research tools, techniques and resources. New York: McGrawHill-Irwin
Porter, M. (2001). Strategy and the Internet. Available online: http://www.cis.gsu.edu/~emclean/R0103Dp2.pdf
Zinmund, W.G. (2003). Essentials of marketing research. Mason, Ohio: Thomson – Southwestern
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