Today, over $20 billion a year is spent on marketing/advertising/public opinion research services around the world. Spending on marketing research is $6.9 billion in the United States alone. During the past two decades, the research market has become highly concentrated, with about 54 percent of the market being held by the 50 largest worldwide organizations. The other half of the market is shared by a thousand or more small research firms. The concentration is even more pronounced in the United States, where the 10 largest firms account for 64 percent of total U.S. spending for marketing research.
In the highly competitive retail market, understanding the customer is paramount. In order to fill in the gaps of consumer’s buying motive and actual buying, companies have to understand the customers, and of course, marketing research is the tool for gaining knowledge about the customers.
Marketing research is a systematic gathering of information and such analysis of data gathered connects the consumers and the public to the marketer so as to identify the marketing problems and opportunities, assess marketing actions, manage the marketing performance, and improve the overall marketing process. Marketing research information is provided by research suppliers which can be either an internal supplier or an external supplier. Most manufacturers, retailers, and service businesses, such as McDonald’s, Kraft Foods or American Airlines, have small internal marketing research departments, and Procter and Gamble (P&G) has a large internal research department. External suppliers are outside marketing research companies hired to supply marketing research data; and they can be classified as full service supplier firms and limited service supplier firms; full service suppliers are companies that offer full range of marketing research activities, they provide standardized information which involves two broad classes, namely the syndicated data services and standardized services.
Concepts of Syndicated Data and Standardized Services
Syndicated data is a form of external and secondary data supplied in a standardized format and ready-to-use routine information made available to multiple subscribers known as a syndicate in a common database, which means the information is not tailor made to meet the needs of any particular company or designed to solve client-specific problems, the data format is designed to provide a standard, ongoing vehicle to facilitate the collection of data. Syndicated data is provided in a common data base for a service fee charged to subscribers and these research firms which provide the data are known as syndicated data service firms. These suppliers offer syndicated data on a subscription basis to all subscribing members of the syndicate, such detailed information can be of value to companies in a specific trade but may not be available in libraries. Syndicated data suppliers collect data on a continuing basis regarding the consumption of a specific product or products or the purchasing behavior of a specific target market segment. These data are then sold to companies, which specify how much data they want and the analysis they require; the more data and analysis that are required, the higher the price and what they do not do is conducting research specifically for any single client company. With syndicated data, both the process of collecting and analyzing the data and the data itself are standardized, firms supplying syndicated data follow standard research formats and uniform reports that enable them to collect the same standardized data over time at periodic intervals. Common types of syndicated data measure retail sales, wholesale product shipments, consumer panels, advertising media audiences, advertising effectiveness, and consumer attitudes. ACNielsen TV Ratings and IRI are examples of two large syndicated data services firms, ACNielson collects information on TV and media viewing and also on ad recognition on the internet, anyone, including the public, can buy the products they sell by visiting their website.
On the other hand, standardized services rarely provide clients with standardized data, rather, they provide the research process. Standardized services refer to a marketing research process that is standardized and used to generate information for a particular user and the application of that standardized process will result in different data for each client, even though the standardized process is the same in gathering the data. For example, a client will use a standardized service firm to measure customer satisfaction, instead of developing its own process. Several other marketing research services, such as test marketing, naming new brands, pricing a new product, or using mystery shoppers, can be provided or purchased from standardized service firms. Synovate’s ProductQuest service assists in developing new products and improving existing products. Baltimore Research offers a ‘Mock Trials’ service to clients involved in litigation, to listen to different attorney presentations so that the litigant’s attorneys can have better presentation ways to impact the jurors.
Standardized information is a type of secondary data which can be either syndicated or standardized, in which the data collected and/or the process of collecting the data are standardized for all users. Standardized information can have many applications, in general, it includes measuring the consumer attitudes, clarifying market segments, conducting market tracking and monitoring the usage of media and effectiveness of promotional activities.
Advantages and Disadvantages of Syndicated Data and Standardized Services
Advantages of Syndicated Data
A key advantage of syndicated data is on the shared costs of the data among users as many clients may subscribe to the same information, thus making the cost of the service greatly reduced. Due to the quality of the data collected is typically very high and requiring a huge amount of cost, so the share of affordable cost with several users maintains the validity and reliability quality of the data. Another advantage is that the data are normally disseminated very quickly because of the routinized systems, standard procedures and methods used to collect and process the data over and over again on a periodic basis. Besides, the information is current, the more current the data, the greater is the use. Syndicated data services can at least aid in the formulation of the client’s decision problem, suggest types of data for meeting the information needs, and service as a source of comparative data by which internal data from within the organization cannot achieve.
Advantages of Standardized Services
The advantage of using standardized service suppliers is mainly buying the experience of the research firm, especially when the buyer company does not have enough the experienced personnel to carry out a particular research process. Besides, using standardized services helps to reduce cost of the buyer when the trial and error process and potential errors can be minimized. Since the standardized service suppliers has been conducting the service for many clients regularly, their procedure is therefore efficient in delivering the result as compared to having the research processed by the buying company themselves. Most importantly is the time saved for buying company in collecting similar data by themselves, because several weeks or months may be required to design, pretest a survey or questionnaire, train the interviewers, devise a sampling plan, collect and process the data. In addition, such cost of the project could be tremendous but it can be much reduced by employing the services from external standardized suppliers. Due to the always availability of standardized services, it is therefore important in the marketing research application.
Disadvantages of Syndicated Data
Since the format is standardized, buyers have little control over what information is collected and must be satisfied with the standardized information received. Buyers may feel helpless if the units of measurement or definition of classes, recency of data, publication currencies and the units of geographical data are not appropriate which are summarized as the ‘data fit problem’. A second disadvantage, that buyers must often commit to a long-term contract which only serves to secure the expenses required by the syndicated data supplier on the quality and vast scope of research. The last and most crucial disadvantage is that the same data is available to competitors, that is, what the client firm buy and see from the report, the competitors also see the same analysis and picture.
Disadvantages of Standardized Services
Naturally, the word ‘standardized’ automatically implies the service is not customized, standard service suppliers do not design a service specifically for the client’s project. Besides the standardized service supplier may not know a particular industry well so it becomes the responsibility of the buying company to ensure the standardized service really fits their intention. This accuracy problem poses a limitation and can only be minimized if the buying company has a comprehensive knowledge of the research process so as to evaluate the accuracy of the data and assess the evidences regarding the quality of the data as well.