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Market Research

Background

Many market research professionals and academics point to the 1920s as a starting place for the market research industry, which was about the same time that marketing was gaining recognition as a serious business strategy for companies. Prior to the 1920s the main approach to business that companies had was to sell as much of their goods as possible. Consumers grew weary of these aggressive sales tactics. When businesses started to have trouble selling their goods, they realized they had to think more carefully about their customers and what they wanted. Companies started strategizing how best to promote their products and services to their target audiences. This was the beginning of marketing, and its main focus was connecting companies with their customers. Market research evolved around the same time to help companies understand their customers better and learn more about potential customers, competitors, and the marketplace. 

The introduction of radio and the development of advertising helped give rise to market research. In the 1920s, radio was a new technology and new medium for news and entertainment. Companies started advertising on radio shows, with many producing and sponsoring the shows. Commercials weren’t needed because the name of the company or product was in the show’s title, e.g., The Fleishmann Yeast Hour, General Motors Concerts, and The Voice of Firestone. Research was done to learn more about radio audiences, and this is considered the first market research. Radio shows in the United States were driven by commercial revenue, so market research surveyed listeners to find out how many people listened to certain shows and heard certain advertisements.

The founding fathers of market research had diverse backgrounds that didn’t necessarily include mathematics and statistics, as might be expected. Many were social scientists, psychologists, educators, and entrepreneurs. Among the market research innovators were Daniel Starch, Ernest Dichter, George H. Gallup, and Alfred C. Nielsen. Starch, a psychologist, opened his market research company in the 1920s and came up with a test to determine how many people could recall a half-page ad or full-page ad they had seen in a magazine or newspaper; he polled people on the street. Dichter, also a psychologist, introduced the use of psychoanalytic techniques to the study of consumer behavior. Gallup, a former Columbia University teacher, developed public polling that focused on the “what” instead of the “why” questions. In 1935 he founded the American Institute of Public Opinion, which became well regarded for its public opinion polls that were conducted in several countries. The Gallup Company is still going strong today, and many people are familiar with the Gallup Poll. Nielsen, a market analyst, came up with methods to measure the audiences of radio and television broadcast programs. The Nielsen Company continues to provide valuable consumer research and analysis for various industries.

Market researchers today gather data for clients through surveys, which may be done in person or by telephone, mail, or online; focus groups, personal interviews, observation, and field trials. Computers and the Internet have given market researchers more tools than ever before that help them find information quickly and easily, such as census data, county business demographics, and federal agency reports. With this ease of access to information about consumers and the general public, concerns over privacy have grown. Federal, state, and local laws governing online and telephone market research are in place to help protect consumers’ privacy. The laws are constantly changing and market researchers pay attention to the rules and regulations to conduct their work legally.