Marketing Research

Marketing as a discipline is progressively becoming more scientific through advances in research techniques. From data mining to behavioral tracking, recent advances in acquiring and analyzing data provide an increasing level of confidence for managers to make decisions—in theory. Yet with all this information at their fingertips, executives and managers seem to be making pretty much the same mistakes that they’ve always made. The hits seem to come from inspiration or vision, and myriad failures seem to have been logical after looking at the data.

At the heart of this dilemma is the fact that most market research examines the executive mind while the habitual mind is driving the bus. The historical knowledge that managers have relied upon is therefore compromised because it is based on the flawed assumption that our customers know why they do what they do. This cannot be overemphasized because so much of what we think we know is based on this flawed assumption. This is why the new product introduction failure rate remains unchanged and customers continue to leave, regardless of their satisfaction levels.

Managers might want to believe the marketing research, but their gut tells them not to rely too heavily on the data. Market researchers, in turn, feel frustrated that the value of their contribution is not recognized. What is needed is an understanding of what the data is actually measuring, whether it is information captured from the executive or habitual minds.

I had the privilege of studying under Naresh Malhotra Ph.D., Regent’s Professor of Marketing at Georgia Institute of Technology. Recognized as one of the most prolific researchers in the world, Dr. Malhotra imbued in me a strong respect for the integrity of the data from collection to analysis to conclusion. His Marketing Research textbook is considered one of the best on the subject and is used on college campuses across the country. Under his tutelage, I learned how to choose a research methodology to apply to specific marketing questions. After the data was collected, I was trained to apply a wide range of rigorous single and multivariate statistical analyses from simple regression to causal modeling. Dr. Malhotra is a stickler for statistical integrity, making sure every step of research is subject to internal and external tests of validation.

Combining this training with my experience teaching statistics for five years, I became a strong advocate of marketing research, of arming managers with knowledge, not just information. My attitude could be summed up as “The more quantitative, the better.” In that light, I looked down on most qualitative research as lacking in rigor, reliability, and statistical validity.

Based on the discoveries outlined in Chapter 2, my attitude toward market research has undergone a profound modification. Market researchers have long divided studies into two categories: qualitative and quantitative. Qualitative methods usually employ small samples with open-ended formats such as focus groups and in-depth interviewing. Quantitative research covers a wide spectrum of techniques, from simple cross tabs to advanced mathematical modeling. Researchers often view qualitative and quantitative research as complimentary, with the former providing insights that can be examined with the latter. But both qualitative and quantitative research have the same Achilles’ heel: They often fail to capture the unconscious habits and scripts that are actually guiding customer behavior.

Yet great data is being collected and analyzed with powerful statistical tools that can give managers tremendous insights. How can managers know what data is reliable and what needs to be used with caution?

The primary difference is whether the data is collected based on the habitual mind (actual behavior or in-depth techniques) or the executive mind (surveys, questionnaires, focus groups). When I explained this difference to Alan Weber, president of Kansas City database consulting company Marketing Analytics Group, he immediately made the connection. “What you are saying is that instead of looking at the database as a record of transactions, it’s actually a record of customer behavior.” Companies are sitting on vast sums of information—in effect, a behavioral database.

Myriad techniques exist for extracting value from this data. Data mining is a brute-force method of examining purchases and looking for nontrivial connections that are not apparent to traditional statistical analysis. However, we can use a variety of statistical methods to extract a better understanding of what customers are doing and, more important, what they will do in the future. Numerous research studies indicate that current customers often telegraph future intentions through changes in purchase patterns. Does your organization know the behavioral indicators of soon-to-be defecting customers?

A company’s electronic presence also provides enormous data that it can analyze and act upon. However, few companies integrate their online presence with their customer databases other than in order processing.

Getting qualitative data from the habitual mind requires somewhat of an indirect approach. As explained previously, metaphors can be a highly effective tool in uncovering the influence of the habitual mind. The difficulty in this approach is that it is time consuming, takes a trained interviewer, and does not lend itself to statistical validation. However, the insights gleaned from this type of research can be invaluable to product managers, marketers, and product designers.

Quantitative methods, such as conjoint analysis, capture unconscious influences. In this statistical procedure, subjects rank order cards that list a variety of product attributes, such as brand name, price, and features. Because respondents are presented with more variables than the executive mind can accommodate, the unconscious scripts of the habitual mind are accessed.

Both Donald Norman and Harry West emphasize the importance for designers to observe actual customers in real-life situations. Observation is equally important in market research. Capturing this information and developing a method of communicating resulting insights is critical for how you approach the marketplace. Executives and managers who do not supplement research reports with actual visits to where their customers work, shop, and live will never fully understand what the research has to tell them.

Market intelligence companies are advancing behavioral research with technology that tracks customers as they move through stores and view web sites. This type of information can help us understand the underlying habitual patterns of our customers’ lives, but this information alone will not uncover the subtle emotional and social influences that invisibly guide behavior.

The next decade will undoubtedly reveal far more about the implications of the brain’s multiple minds. This opens up tremendous opportunities for companies to rethink and reposition their marketing to better align with how customers are actually interacting with their brands.