VIII. Online Market Research

Report
This class took up the concerns of market research as applicable to EC. It was noted that, in the first place, this type of research was developed primarily for application to the area of economics and had little to do with customers per se. However, with the increase of customization and the departure from mass marketing, there currently is growing emphasis on market research as a way of gathering information about the economy, as well as about industries, firms, products, pricing, distribution, competition, promotion and consumer purchasing behaviour.

Taking consumer purchasing behaviour as an area of focus, market research for EC looks at the purchase patterns of individuals and groups (segments), the factors that encourage online purchasing, navigational patterns, and optimal web design. Its objective is to turn browsers into buyers. This conversion rate is becoming increasingly important because of the growing number of suppliers. The challenges lie in overcoming security issues, customer hesitancy to part with money, time factors (e.g. delivery) and using search tools ("open" or "by attribute") that match consumer navigation patterns for a particular product.

Online market research methods include web-based surveys, online focus groups, hearing directly from customers, customer scenarios, and tracking customer movements. Web-based surveys can be passive or interactive and can even be used in product design. (Mazda’s design of Miata, for example, was assisted by web-based survey.) The problem here is that the customers that are surveyed are already part of the segment that is using the site, and trying to find out why people are not buying online cannot be done by surveying those who are! Online focus groups, in which companies recruit participants in advance by telephone and help them connect to the internet, work well for fast-moving consumer products and as a way of reaching busy executives who have little time. The method’s only requirement is technology that works; otherwise, the method is cheap and disperses easily geographically. Hearing directly from customers can be done by establishing an e-bulletin board where visitors can make and read each other’s comments and opinions, as in that which Facebook makes available. Lego employed this kind of survey method, using a market-research agent to analyze and report on responses daily. Customer scenarios gather information on the reasons why customers make specific purchases towards the design of future products and advertising. Tracking customer movement uses cookie files to track consumer web movement, observing their behaviour rather than questioning them directly.

The benefits of internet research are its speed, efficiency, high response rate, and potential access to a large and geographically diverse audience. Its limitations lie in response accuracy, obtaining truly representative samples, obtaining so much data that analysis becomes expensive and time consuming, the lack of eye contact and body language, equipment failures, and legal and ethical issues related to web tracking. To attain an optimal web page design, the site must be tested repeatedly, first on employees, then on sample consumers via a non-productive interface.

As a case in point, Boots uses customer purchase history data collected through its Advantage Card loyalty program to improve marketing. Strategic change within the organisation is driven by this information on purchasing patterns and is resulting in a move away from a product category focus to a customer-centred view.

Reflection
Good market research techniques are obviously essential to helping businesses remain competitive, and i can see that they would be able to provide valuable information at various stages of a business’ development, i.e. creating a business plan, launching a new product or service, fine tuning existing products and services, or expanding into new markets. While online market research methods have their benefits, the fact that internet surveys completely miss consumer segments that are not using online channels is, i believe, a huge drawback at this point – and one which will presumably decrease as online consumption grows.

The issue of market fragmentation, cited as one of the reasons that market research has become so important, is something that we also have been taking up in our course in International Marketing. Market fragmentation is being driven, since the 1990s, by increasing levels of consumer affluence and sophistication. Consumers have never before enjoyed such a wide variety of products and brands. Product life cycles are short, and disposability has become the norm. New market segments with distinct needs and requirements have emerged out of previously homogeneous segments, limiting the usefulness of mass marketing and eroding brand loyalty.

A 2003 article by Julian Mellentin, entitled “Market Fragmentation Paves the Way for Niche Marketing” (http://www.functionalingredientsmag.com/fimag/articleDisplay.asp?strArticleId=423&strSite=FFNSite), gives an interesting example of this phenomenon. Mellentin says that consumers have been bombarded by information about food and health and that, rather than finding this educational, consumers have found this confusing and contradictory. Their response has been simply to decide what works best for them in the context of their own lifestyles and to choose food and diets accordingly. As a result, the market for health products has become fragmented, meaning that health-enhancing products may perform well as niche brands, while attempts to mass market new lines are doomed to failure – “as Swiss pharma group Novartis thought it could do for its now-failed Aviva range of functional foods.”

I wonder if online market research could have helped Novartis avoid this problem?!