TRC

The Black Swan is a book that was published a few years ago and generated much publicity and at least some controversy. It occurred to me that there are lessons market researchers can learn from that book, particularly about the relationship between qualitative and quantitative data obtained from a survey format. The idea is that the framework used to analyze such data is different from that used for directly obtained qualitative data through methods such as IDIs and focus groups. Understanding the difference between quantitative and qualitative frameworks for data analysis (and in particular, the difference between statistical and managerial outliers) can help derive more value when the qualitative data are collected in a regular survey. But first, let's take a detour.

A Brief Tour of The Black Swan

In his informative (and entertaining) book, Nassim Nicholas Taleb argues that real data are either distributed normally (from "mediocristan") or not (from "extremistan"). The former are characterized by data that follow the traditional normal distribution (or bell curve). The majority of the distribution is near the middle surrounding the average and as we venture further out the number of observations becomes increasingly scarce. It is a distribution that defines many phenomena in the natural world. In fact, basic statistics shows that with a reasonable number of observations most distributions start approximating the normal.

Tags: Quantitative, Qualitative, Market Research

This month here in the States we will be celebrating our biggest secular holiday, Thanksgiving.   Traditionally, the holiday is thought to have started when early settlers to the "new" world, the Pilgrims, sat down to have a meal to celebrate the harvest with the Native American's who had befriended them. As we begin to close out 2011 in an industry facing an uncertain future, I was struck by the similarities between those early settlers and market researchers today.

On the surface the story of adventurers seeking a better life is a bit different than the story of boring market researchers seeking to survive, but I disagree.

Tags: Social Media, Market Research

Later this month, those of us in the United States celebrate one of my favorite holidays, Thanksgiving. Officially, Thanksgiving is a post-harvest celebration that was brought to the Americas by European settlers in the 16^th or 17^th century (depending on which historian you believe). Unofficially, it's the day where families and friends gather to feast, take naps and watch football. Oh my, even as I type this my mouth is watering...turkey, potatoes, stuffing, cranberry sauce, peas and the like, with chasers of pumpkin, apple and other assorted pies. All delicious, but I particularly love eating turkey on Thanksgiving.

Tags: Market Research, segmentation

As I sat down to write I realized that this is not a simple question. Consider the conventional meaning of necessities (defined as must-haves) and luxuries (defined as nice-to-haves). Which category market research falls into may depend on the eye of the beholder.

Researchers (or more accurately research sellers) may want to think of themselves as producing necessities rather than luxuries. But in the consumer world necessities are also generally commodities and often sold based on price. Researchers of course want to be seen as producing something valuable, something that is worth a premium -- in other words, a luxury.  So, which is it?

Now let's look at it from a research buyer's perspective. The buyer may think of research as a necessity, something that is indispensible for making good business decisions. But in keeping with the popular perception of necessities, perhaps they feel that more than one company can provide it and are hence unwilling to pay much of a premium for it. This view would support the many research sellers who complain about the commoditization of research.

Tags: Market Research, necessity, economy, Luxury

Prior to my current tour at TRC I was a partner at a small data mining boutique that had a simple objective: support the sales and marketing goals of our clients by helping them stem attrition. While the goal may have been simple, how we set out to do this was not. See, we took upwards of 30 months of time-series data on all of their customers and applied some mind-numbing statistical techniques that identified patterns in the data that preceded an eventual behavior. In most cases that behavior was a customer terminating their relationship with our client. Once our system identified the patterns that preceded attrition, we would then continue to feed it customer data each month and it would dutifully output a list of customers that were likely candidates to attrite. In addition, for each customer on this golden list we provided the prediction "trigger", or the thing that they did that was responsible for the system flagging them as a high-risk customer.

Tags: Consumer Behavior, Data Mining, Modeling

Researchers are sometimes described as busy bees but I had no idea that the opposite is literally true till I heard this NPR report on honey bees . Apparently they are wonderful market researchers!

Here's the back story. Cornell Professor Thomas Seeley is a biologist who studies swarm intelligence. Effectively he studies the idea that a group can be smarter than the individuals in the group. Replace "group" with "crowd" and of course the idea is familiar to us as the Wisdom of Crowds. But can such behavior really occur among animals too? Professor Seeley has spent 30 years studying bees and he thinks the answer is emphatically yes. That brings us to the bees-as-market-researchers hypothesis.

Tags: Market Research

A new book attempts to make behavioral economics interesting and approachable by couching it in the world of sports. Personally I try to avoid books on economics, but I did find a review quite interesting. Not only did it help to explain why the Philadelphia Flyers lost the 1980 Stanley Cup, but it also helps to illustrate the limitations of crowd sourcing and the reality of Asymmetry in key driver analysis.

Behavioral economics studies the role of emotion in economic decision making (something marketers need to master). In application it can help to explain the illogical decision making of shoppers. A classic example of this is when someone spends $1000 on a product they don't need thanks to a price cut of say $200. They will often focus on what they saved ("I saved $200!!!) and not on what they spent or the actual need.

Tags: Market Research, Behavioral Economics

This is my thesis and I don't have quantitative data to support it. I'm going more on experience than anything else, so feel free to disagree with me. The thesis is that the dominance of phone surveys through at least the last two decades of the 20^th century has changed market researchers' thought patterns in ways we are not fully aware of. This has resulted in sub-optimal behavior when it comes to designing research studies. Let me explain a bit more.

The telephone is an aural medium which naturally has restrictions that a visual medium does not have. When you have to ask someone about the two Presidential candidates, aural media work fine. When you ask to rate their satisfaction with a product again it works fine. But what happens when you have to ask about the importance of various features in a new product? Since it is an aural medium, the number of ways of asking the question is very limited. The easiest way to do it is to provide one feature at a time and ask for a rating. But this does not allow any comparison between the features and certainly does not allow trade-off methods to be used.

Tags: Market Research

Don't panic. CASRO's government affairs committee isn't warning this will happen and I don't have any evidence that it will. The point of the question is along the lines of "necessity is the mother of invention".

For example, over the past 15 years we have seen a move away from phone data collection and toward the web. Initially the focus was on cutting costs and ensuring the quality of the data were the same. As the industry embraced web, however, we began to use all kinds of innovative techniques that we simply could not do on the phone (or by mail for that matter). So, as we face a future with more and more access to data, I thought it would be interesting to think about what we would do if our traditional tools were simply taken away and we had to go cold turkey.

A good place to focus is Satisfaction research, which is already showing signs of decline. According to Inside Research (February, 2011), spending as a percentage of all MR has dropped in Europe (from 18% in '06 to 13% last year) and is stagnant at best in the states (11% last year which is in line with 12% in '09 and 10% in '08). I suspect this decline is not an indication that firms no longer care about satisfaction. More likely it reflects cheaper data collection methods and a realization that it need not be measured as intensively as in the past.

So in a world with no traditional MR, how will firms measure and impact satisfaction?

 

Tags: Untagged

 

In a very interesting article in The New Yorker, Jonah Lehrer asks the question can truth Wear Off? So, what is “truth” and what is “wearing off”? In this case truth is that which has been proven by the scientific method (i.e.) experimentally. As the psychologist Jonathan Schooler discovered, experimental effects he had shown very clearly started disappearing into the dreaded land of non-significance over time. That is the “wearing off” part. And it wasn’t just Schooler. Others have seen similar phenomena where published studies when replicated over time have effectively lost their potency. This is a particularly troubling problem for medical science and is practically seen in the number of drugs that are retroactively pulled off the market. As the medical researcher John Ioannidis has shown, there can be substantial harm to society from wrong (but well publicized) results living in the memories of doctors who continue prescribing those drugs or treatments (hormone replacement therapy and daily low doses of aspirin) even when they have proven to be ineffective or harmful. So, the question is, how do effects disappear over time?

Tags: Market Research

Doesn’t it seem like air travel has become more of a hassle recently compared to a few years (or a decade) back? Even leaving aside stricter security after 9/11 there appears to be more complaints about air travel these days. How much truth is there in these complaints? Let’s look at the possibilities, namely competition among carriers, new TSA rules and weather.

 

Tags: Consumer Behavior

I come to you, as is the tradition, with glad tidings for the New Year.

I do this in the midst of a lot of doom and gloom talk about the industry and our future. At CASRO's annual meeting, Simon Chadwick talked about "Do it Yourself" (DIY) research continuing to grow with no end in sight. A recent LinkedIn thread asked if there was a better word for 'survey' that wouldn't carry the negative connotations. The MR Heretic calls their site "Market Research Deathwatch" with constant warnings about engaging respondents better or destroying our industry. Add in the worst couple years the industry has ever faced and purchasing departments increasingly viewing us as commodities and you have the makings of glad tidings indeed!

 

Tags: Untagged

When you go out to buy something how much importance do you place on the brand name? Not only does this vary from person to person but also from category to category. Yet the vast majority of brand related research has focused on understanding the importance of brand within categories, not across. That may be understandable from a brand manager’s perspective because he is in charge of just that brand. But while a company may sell a single brand a consumer makes purchase decisions across a spectrum of categories. The importance she places on a brand in a particular category is therefore contextual. Understanding this issue of Brand Relevance in Category (BRiC) and its implications is what three researchers set out to do in a large scale multi-product, multi-country study. Here’s what they did.

 

Tags: Brand

Yes, I admit it. This is a self-serving post. But when compelling research crosses one’s eyes one is forced to write a blog post. In this case the compelling research comes from Natalie Mizik under the intriguing title of “The Theory and Practice of Myopic Management”. How can I pass that up? In this research Natalie sets out to show that myopic management (i.e. cutting marketing and R&D expenditure for short term gain) is financially bad for the firm in the long run. She proves her main point but also makes a couple more so let’s take a look at what she has cooked up.

 

Tags: Market Research

For the past few weeks, there are two big debates raging in our office:

• Will the configurator eventually replace conjoint in all its forms?
• Was it the right call to trade Donovan McNabb to the Redskins?

On the surface the only thing connecting them is that we are a choice focused market research company located just outside of Philly, but in reality they are both the same debates...namely, when is it time for the superstar to move on and allow a new star to take charge? In both cases, the answer will depend on your needs and your perspective...in other words, there is no answer that everyone will agree with.

Some variation of conjoint (discrete choice, adaptive, etc) has been with us now for nearly 40 years. It has proven to be a very effective means of understanding the consumer's thinking process...especially when it comes to developing new products. At the same time, it is not without its flaws.

Tags: Untagged

You know them, right? The friends you log into Facebook to check out. They always have something interesting to share and you like to see what it is. That process is one way of measuring influence in social networks and a rather good one at that, according to recent research by Michael Trusov, Anand Bodapati and Randy Bucklin. They set out to identify influencers in a social network and did so using some interesting data and analytics. Here’s the story.

Tags: Social Media

Ever heard of a Commitment Contract? No we are not talking about marriage. A commitment contract is one where you commit to doing something and sign a contract. If you don’t do what you committed to, the terms of the contract go into effect. The terms are set up in such a way that you could end up paying a penalty if you fail to honor the contract. In other words the incentives are aligned to elicit a specific behavior. The kicker is that you set up the contract and the penalty.

Tags: Behavioral Economics

During times of upheaval do people naturally choose what is familiar or don’t they? The notion of “comfort food” seems to imply that when faced with trying situations people take comfort in certain old favorites that, well, comfort them. This is conventional wisdom and as we know researchers like to question said wisdom. That is what Stacy Wood set out to do and her findings offer interesting implications for marketers.

Tags: Food, Consumer Behavior

Several popular books have appeared over the last few years on topics related to consumers, behavior, psychology and economics. Perhaps the most popular are the ones by Malcolm Gladwell. While most use academic research liberally to make their points, relatively few have actually been written by an academic. The reasons are twofold. One, you need an academic who has done sufficient research in an area that is worthy and of interest to the general public and two, you need good writers for lay readers. That combination is hard to come by -- which makes The Art of Choosing an unusual and interesting book. It was written by Sheena Iyengar, a professor at Columbia University Business School and deals with a topic we are all familiar with – choice. She has spent a couple of decades studying this topic and is hence eminently suited to write on it. The fact that she is blind makes it almost awe inspiring to read.

Tags: Consumer Behavior, Psychology

I'm a regular reader of the Market Research Heretic Blog . The banner above his blog posts reads "Market Research Death Watch". Many great points are made about how we take respondents for granted and how many survey instruments simultaneously gather useless data and reduce the chances of that respondent ever doing another survey again. Most important, the point is made that the market research industry is resistant to change and ultimately that will lead to its demise.

The arrival today of the latest Honomichl 50 list certainly supports the notion that the industry is in trouble. The numbers are the most brutal I've ever seen. Revenue has declined and when you focus only on straight research firms (those doing primary qualitative and quantitative research) that decline is even larger. Employment has dropped even faster (and this is measuring research firm employment, I suspect client side researchers were hit even harder). Jack Honomichl is certainly dour in his column, but I think if anything he is understanding how bad a hit research took this year.

The question is, were the results of this year and last (2008 also showed declines) just related to the recession or do they reflect a trend that will continue long after the recession is officially over? My guess is, we will see some recovery with the better economy this year, but the heretic's warnings should not be ignored.

Tags: Untagged