MARKET RESEARCH COMPANIES RUN OUT OF INFORMATION

A ready supply of information about customers, actual and potential, is vital to marketing managers. Consumers have become increasingly fragmented and sophisticated in their buying habits, while the growth in size of business units calls for information which can be easily analysed and acted upon. Gone are the days when most market research could be done simply by the owner/manager of a business listening to their customers.

   

Specialist data collection companies have come to play an important role in the task of collecting information about buyers. Organizations such as Experian, CACI and Claritas have developed a role in providing socio-economic and lifestyle data which is sold on to client companies to make their targeting more effective. With the growth in direct marketing, it is important to many clients to have specific information about each individual customer, rather than a general aggregate for the whole market. This applies to information about new prospects, as well as new and additional information from people already on their databases, which is important because people's circumstances change. In contrast to client firms' need for this information, consumers by the end of the 1990s were showing increasing resistance to providing information for commercial purposes.

The market research industry has been concerned for a number of years about falling response rates to quantitative surveys. A Market Research Society report of 1997 pointed out that the public rarely distinguishes between anonymous research, database building, or telephone calls that start off asking for information but end up with a hard sell. A report prepared in 1998 by the Future Foundation found that only 50% of consumers were happy to provide personal information to firms with which they deal, down from over 60% in 1995. A core of people surveyed appeared to be not interested in taking part in data collection exercises at all, and won't fill in questionnaires. The 2001 UK Census of Population – a foundation for many research exercises – appears to have fallen short of its claim to be a universal survey of the entire UK population, with reports of up to 2 million “missing” people.  For marketers, this is a worrying development. If the public does not offer information about heir needs, wants, attitudes and behaviour, it makes the life of the marketer more difficult.

There are a number of factors that may explain this trend.  The first is that many more companies are now seeking to obtain information from buyers. Globally, ESOMAR’s monitoring of the industry shows that the total market for market research worldwide in 2001 was US$ 15,890 million, with The USA accounting for 39% of this total and the EU 37%. The Market Research society estimated that in 2000 the size of the UK Market Research Industry     was £955 million, with one of the biggest growth areas being opinion research about social or moral issues. In addition, direct marketing companies have been building marketing databases of their own customers. Saturation appeared to be setting in. The result is that we can hardly visit a restaurant, buy a new item of electrical equipment or take an aeroplane journey without being invited to give our comments. Sometimes we are approached unsolicited for our views, whether in the street or by telephone. Information is a key element of a firms' competitive advantage, so they are putting more and more effort into collecting information about customers.

Secondly, consumers are becoming increasingly aware that information which only they can reveal about themselves has commercial value.  Research from the Future Foundation suggested that the majority of people were happy to provide personal details if the result was better products or services.  However, the public's experience of how well this data is used often falls short of their expectations in terms of how it benefits them personally.

But with so much information gathering going on, is there a danger of "survey fatigue" setting in? Just how many times can a company ask customers questions about what they think of the company, before the whole process of carrying out a survey becomes an irritation in itself? Do customers think that their comments will ever be taken notice of by management? Careful organisation of surveys can improve response rates. Stopping people when they are in a hurry to catch a train will not make an interviewer popular, but approaching them when they are captive with nothing else to do (e.g. waiting for baggage at an airport following a flight) may be more successful.

Developing some form of meaningful relationship with a recipient prior to receiving a questionnaire seems to be important. At its simplest level, an individual would receive a very simple first form. If they complete and return this, it is followed a couple of months later with a reward pack of money off vouchers and samples, plus a second, more-detailed questionnaire. As an example, research by Air Miles concluded that the company gets much better, more robust data if it saves detailed questions until members have had some experience of its services, rather than asking detailed questions of new recruits.  And drinks retailer Bottoms Up was able to persuade 10,000 members of its loyalty programme, the Imbibers Club, to agree to telephone interviews on their drinking habits, something that would be very difficult to do out of the blue.

A more sophisticated approach is used by Consodata, which has a contract to collect, manage and analyse household data for the "Jigsaw" Consumer needs Consortium (Kimberly-Clark, Unilever, and Cadbury Schweppes).  The chosen vehicle is a magazine with special offers, which over time is tailored to the individual needs of respondents as more is learned about them. As an incentive, everybody gets a reward, instead of being offered a minuscule chance of winning a jackpot. Industry sources suggested that the response rate to the first issue of the Jigsaw consortium's magazine was 30 % - 35 %, in line with the results sometimes claimed for similar, data-collecting surveys undertaken via customer magazines.  Again, the point is clear that consumers are freer with their information when dealing with organizations they already know and trust.

Bigger bribes to encourage people to provide data are part of the researcher's armoury. This ploy has reached new heights in the US with reports of home shopping companies offering free computers and internet access in return for household data and the acceptance of advertising on their screen. But large bribes can lead to another problem of samples being biased towards a new breed of professional market research respondent. There have been reports that focus groups are increasingly being dominated by a small circle of individuals who can make a reasonable living off the fee paid to participants. For the research companies, such people may be readily available and need less training and instruction than a novice. But is the information that they yield of any great value?

Adapted from "Data firm react to survey fatigue", Marketing, 29 April 1999, pp29-30.

1. Discus the limitations of statistically based consumer databases of the type discussed here. Do qualitative approaches based on small groups offer any advantages?