Market Research



Market Research

Abstract

Although the primary purpose of their studies is often dissimilar, both academic scholars and commercial practitioners conduct market research. Whereas academics aspire to understand the causes of market participants' behavior, commercial practitioners tend to use research as a basis for more effective decision making. Academics often develop new methods while commercial researchers tend to adopt such methods if these promise to improve their decisions. The theories that support market research often build on work in microeconomics and psychology. Economic theory favors a normative perspective, which predicts the behavior that consumers or managers should undertake if they want to act optimally. Psychological theory is more descriptive in nature and attempts to explain how people actually behave. Market researchers use a variety of methods to test theories. While studies of market data have high descriptive validity, interpretations of observed or inferred behavior typically suffer from the impossibility to identify a unique explanation. Laboratory experiments, on the other hand, can eliminate alternative explanations, but sometimes show effects that do not apply to the real world. We suggest that digital technology is revolutionizing how market research is conducted. As consumers realize how much of their behavior is recorded, their willingness to provide information, either obtrusively or unobtrusively will depend on their perception of the costs and benefits. Benefits from customized products and services can be obtained at the expense of lost time and privacy.

Table of Contents

Abstract2

Chapter 1 - Introduction5

Chapter II - Theoretical Underpinnings6

Chapter III - Data Collection and Methods11

Chapter IV - The Future17

References21

Chapter 1 - Introduction

Market research consists of both academic treatises and practical approaches to the collection, analysis, interpretation, and use of data. When undertaken by academic scholars, the research intends to understand and explain the behavior of market participants. This is accomplished by describing and interpreting real-world behavior, by measuring participants' attitudes and preferences, by experimentally manipulating variables in laboratory and field research, and by developing and testing models of marketplace behavior, laboratory decisions, and survey responses. When undertaken by practitioners, the research aims to predict the behavior of market participants so that managerial decisions can be made more effectively and efficiently based on the criterion that the expected value of information exceeds its cost.

To some extent the academic (theoretical) and practical research activities are related. For example, commercial researchers eagerly adopt new methods that show promise for improved practical applications. These new methods are often developed and tested by academic researchers. Also, the model-building branch of market research tends to insist on pragmatism (Leeflang and Wittink 2000). In that branch, standard questions are: does a new or revised model provide superior predictive validity and will managerial decisions be improved?

Chapter II - Theoretical Underpinnings

There is great breadth and richness in market research stemming from its cross-disciplinary nature. The concepts that support inquiries are often based on either economic or psychological theories, and the aim of an academic research study is usually similar to the aim of research in the related discipline.

Economic theory tends to describe and predict normative behavior: the ...