Edition 43, Marketing

The Challenge of the Transformation of Marketing Research

By: Edmundo Ramírez
Master Research

During the past few days, we had the opportunity to participate in the Mexican Association of Marketing and Public Opinion Research Agencies S.C. (AMAI) congress. The main themes of the congress were the transformation, change and innovation in marketing research. This meeting presented the opportunity to raise the challenge that the marketing research industry faces in adapting to the online world, beginning with the current traditional techniques. The idea for this article came from the presentation that was given at the congress.

First, I would like to refer to the existing paradigm in organizations with respect to the function of current marketing. In many organizations in Mexico and, of course, in the majority of developing countries, the change in advertising, promotion, distribution and sales activities that the traditional media employs has now begun to rely on digital marketing to generate sales and cultivate customer loyalty. Even though they use a good number of tools and digital media, the anticipated results have still not been achieved, and therefore, the tactics of using traditional media and techniques are still very important for companies.

However, with the obvious lack of results from online marketing, companies must deploy new business models with digital resources because they will be the business practices of the future.

Current reality indicates that both types of processes – traditional and digital – must exist in what today is called “integrated marketing” to generate the synergy that will drive company business. Of course, it is necessary to evaluate the performance of this integrated marketing.

To evaluate this performance, one now speaks of new metrics, and while it is true that there are some very precise assessment techniques, I think that they all support the key performance indicators (KPI), which I mention below:

  • Brand equity (BE)
  • Top of mind and brand awareness (TOM and BA)
  • Marketing share (SOM)
  • Profitability (ROI)
  • Customer satisfaction (CS)

It’s not that these indicators have changed, but the processes that generate them must be faster and more efficient, and the measurement must be done almost in real time. For example, the development of new products must be more tenacious, because the competitive environment of any industry, especially high tech, is turbulent and, therefore, customer care must be more expeditious, more efficient and more personalized.

To get an idea of the speed in which the media has changed throughout the world, let’s take a look at radio, which took 38 years to reach 50 million listeners, while television needed 13 years and Facebook achieved this in only two years.

Of course, during this time, consumers have also changed their shopping and consumption habits, due to the arrival of new products, but above all the multitude of sales channels that greatly facilitate the business process, making it faster and more efficient.

To highlight the speed in which the change in the commercial process is being carried out at companies, I’m going to describe the diagram (Fig. 1) and show how the use of technology decreases the amount of time, increases accuracy and customizes the consumers.

Figure 1

En resumen, en un proceso comercial llevamos a cabo los siguientes pasos:

Step 1. The customer or prospective customer profile is identified, which includes: likes and preferences, lifestyle, transactional documents and demographic data.

Step 2. Information is analyzed and homogeneous consumer groups or clusters are formed. These are defined as consumer groups with homogenous characteristics. This stage, just as the previous one, is carried out through traditional marketing research.

Step 3. Communication or publicity campaign is conducted.

Step 4. The campaign is disseminated.

Step. 5. The consumer buys the product.

In the traditional manner, this process is carried out in a minimum of three months, but depending on its complexity, it can be extended up to a year. However, with the current technology of enterprise marketing management (EMM) systems, like UNICA of IBM, it is possible to compile the database, and with this, the customer or prospective customer profile, perform segmentation analysis of customers, design the campaign and run it on all the media the company uses, as well as optimize it to begin to generate sales in only a few days, as opposed to the months that are needed with traditional media.

With the current systems, it is possible to identify the insights of online shoppers and, in addition, conduct predictive analysis and very detailed segmentations, design offerings to suit the customer and identify in almost real time the performance of these offerings, perfecting them as necessary. Also, it is very important to be able to use all of the company’s online and physical channels.

The result is clear: faster, more reliable processes with better, measurable results that, above all, meet the needs of the customers.

The relevant question is: Where does marketing research exist in this process and what is its role in the digital era?

Let’s start by saying that the challenge that marketing research faces is to better understand consumer behavior, and now even more quickly, more accurately and at a lower cost.

The basic task of marketing research remains the same: identify buying habits, determine consumer preferences, identify unmet needs, as well as gathering opinions. The major change in marketing research is that it not only has to determine what has happened with consumer behavior, but it also should predict what might happen to consumer behavior.

Expected Evolution of Marketing Research

The challenge that the digital world presents to marketing research is to achieve a deeper knowledge of consumer behavior – but now it must be virtually in real time and projected into the future. From my point of view, there are currently four trends in marketing research of the digital era, which are discussed and described below.

1. Analysis in Real Time

An analysis in real time comes from the observation and instant collection of quantitative and qualitative data; that is, consumer profiles are traced by obtaining their information from social networks, their interaction with web pages, blogs, microblogs and all kinds of media that are currently used to acquire a better understanding of consumer behavior. The systems SPS, SAS or UNICA are able to obtain and analyze consumer information in real time and in digital form. Not only the collection of data has an important role, but also by combining disciplines, such as social anthropology, ethnography and semiotics, among others, you can discover through the use of technological devices, such as computerized cameras, sensors or remote control recorders, the way people consume food and beverages, or how they use the refrigerator or other electrodomestic appliances. In general terms, it is possible to know in detail the time and place of consumption or simply preferences or aversions to a product or brand of individual or family consumption.

The advantage of these techniques is that they are not invasive and do not require the direct participation of the observer, so that response of the subjects analyzed is more natural and spontaneous.

A concrete example is the compilation of consumer opinions at the point of sales when a beverage company significantly raised the prices of its products. Consumer responses and opinions at the time of purchase made it possible to identify the degree of acceptance to the price change and the actual reactions to the increase. The only thing this study needed was a computerized camera and many hours of recording; and of course, a good analyst.

II. Predictive Analysis

Predictive analysis is based on information about consumer behavior to determine with some probability the future occurrence of consumption patterns, changes in uses and habits, and changes in the perceptions and preferences of users, and to detect possible shopping fraud.

Predictive analysis uses business intelligence systems, data mining and complex statistical analysis, like SPSS and SAS.

Those systems apply mathematical methods and algorithms to predict consumer actions in a certain type of event and for a specific category of products.

The use of predictive analysis improves product performance, point of sales and promotions, among other factors, as well as customer satisfaction, because it better covers his/her expectations.

III Biometric measurements or neurosciences

Biometric measurements used to determine functional variables, such as heart beat, galvanic skin response, brain activity, breathing rate, eye movement and others, have been applied in recent years to measure reactions and impulses arising from the use of brands and new presentations, and of likes and dislikes, that are now measured more accurately.

One of the so-called neurosciences is neuromarketing, which attempts to measure brain activity in order to overcome the limitations of the classical research of conscious responses and to focus on the manifestations of the unconscious mind, that give more reliable answers than those obtained in a survey or an interview with tradition methods.

The measurable stimuli with the registration of brain activity are aromas, flavors, colors, images, symbols, sounds and even linguistic elements that facilitate or hinder comprehension and communication.

In a neuromarketing study, which demonstrated the importance of the brand in the preference of a product, consumer taste preferences for Pepsi Cola and Coco Cola were analyzed. In the analysis of a blind test of 67 participants carried out by Read Montague in 2003 (Lindstrom, Compradicción, p. 30), it was found that each brand had about a 50% flavor preference. This response of the brain showed that there were no actual differences. But, once the brand was revealed, the preference increased to 75% in favor of Coca Cola.

Another measurement was conducted with equipment that detects eye movement and the place where the eye was fixed to identify, on a web page created by BMW, the sections of greater attraction and the observation time of users. The result helped to improve the design of the site on the internet.

With all these applications, we’re looking to increase the certainty in measurement and, with this, in the results of marketing research. Of course, each technique has specific applications and scope, but certainly they generate greater reliability in the results.

IV. Simulation and Modeling

While the use of simulation techniques and modeling date back a few years, with the advent of the internet, the development of the systems of type design and CAD modeling, and particularly with the ease of communicating with selected user communities, the application of marketing research is extended.

The concept is simple: The aim is to develop a virtual prototype of a product, packaging, logo, or any object or idea. This computer-created prototype is evaluated by the potential users from their home or work. It is possible to make changes, such as changes in color and parts of the design, until you arrive at an attractive concept for the majority of the consumers evaluated.

With the online modeling as a means of research it is possible to validate the information desired, refine an idea, concept or product and even predict its acceptance.

An example of this application is provided by Procter and Gamble, which has used packaging designs simulating its availability in a self-service shelf to identify forms, positions and the most attractive accommodations at the point of sale for potential customers.

With these techniques it is possible to develop products faster and allow potential customers to evaluate them almost in real time. It is also possible to improve any concept at low cost and in a short time compared with traditional methods of research.

Conclusions

In general terms, marketing research has to be transformed through technology to identify consumer insights and predict their behavior in a faster and more reliable way, with greater value for the customer and at a lower cost.

The transformation requires more knowledge, technologies and skills of the participants in this dynamic industry. However, the people and their creativity are and will be a fundamental element of any research, since there is no single technique that resolves all marketing problems.?

Edmundo Ramírez Torres studied chemical engineering and has a Master’s in business administration, but his passion is marketing and marketing research. For the past 18 years, he has been the director of Master Research, a marketing research company owned by AMAI.

References:

Martin Lindstrom, Compradicción, México, Norma, 2009.

http://www.unica.com

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