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Market Research

Defining Events

The first known survey conducted in the United States was for the U.S. Census in 1790, but businesses did not start using surveys for marketing purposes until the 1920s. It wasn’t until after World War II that market research started to gain a foothold in business practices. This was at a time when U.S. manufacturing was gaining strength and there was an abundance of goods available to consumers. Companies had to pay attention to what consumers wanted and respond to those needs. Companies started to use market research to hear customers’ opinions and also to learn more about the marketplace, which helped companies to distinguish their products and services from those of their competitors.

Technological inventions that helped shape the industry include the printing press, radio, television, computers, and the Internet.

Johannes Gutenberg, a German goldsmith and inventor, created the printing press in 1440. His invention was a hand press that had moveable letters which could be replaced. Text was created by rolling ink over these letters and then pressing them onto paper sheets. Books had been written by hand prior to the printing press, so this invention speeded up the production of books and reduced the cost of print materials. The masses could now have access to the books and a more literate, educated, and informed population proliferated.

Radio added a new dimension to mass media, enabling people around the world to hear the news, information, and entertainment and giving companies more marketing opportunities. Guglielmo Marconi invented the first radio transmission when he sent a radio message, which was in Morse code, across the Atlantic Ocean from England to Newfoundland in 1901. Radio was improved on in the years to follow: sound was introduced in 1906, and diode and triode vacuum tubes were invented to improve sound transmission and reception. "The Golden Age of Radio" started in the 1920s, when commercial radio shows started airing. Companies saw opportunities to spread the word about their products and services by producing and sponsoring these shows, which included drama, adventure, mystery, musical variety, and comedy. Sponsors’ names were in the show titles, such as The Goodrich Zippers and The Bell Telephone Hour. Corporate-sponsored shows were expensive to run, however, and by the 1930s, advertisements and ad jingles gained popularity. Companies wanted to learn more about radio audiences and who listened to which shows and what advertisements they remembered. Surveys and listener polls were created to measure audiences, such as the Nielsen Radio Index, and this was a start for market research.

Television was the next invention that had an effect on the market research industry. It had been invented in the 1920s but was not mass produced until the 1950s. People could now see and hear programs and commercials. Companies started to study TV audiences to learn more about them, so they could target the programs and commercials to the right viewers. In 1950, Nielsen invented a system for rating TV viewer audiences to determine the popularity of U.S. TV shows. Today Nielsen measures audiences across multiple channels: television, computers, and mobile devices. Media companies and advertisers use this research to learn more about viewers’ behavior and what they’re watching so that they can plan and invest money in programming and advertising for the appropriate audiences. The ratings are also studied to see which programs have fewer viewers than others, which helps commercial television networks decide which to cancel or continue airing. In the 1980s cable television came about, giving broadcasters and advertisers more ways to target programs and commercials for specific consumers, such as sports programming and beer commercials on ESPN, or cooking shows and kitchen-related commercials on the Food Network.

The computer and the Internet have become prime communication tools in the past few decades and have added to the media and tools market researchers use in their work. In 1990 researcher Tim Berners-Lee developed HTML (hypertext markup language), the foundation for the World Wide Web. The search engine Google was introduced in 1996 at Stanford University, and in 1999 Wi-Fi, wireless Internet connection first appeared and its use started to grow among Internet users. Since then, mobile devices such as cellphones, smartphones, laptops, and tablets have flooded the marketplace and given companies even more avenues to market and promote their products and services. They now connect directly with customers and prospects through social media Web sites such as Facebook, Twitter, Instagram, and YouTube, among numerous others. Market researchers monitor social media, providing social listening and analytics services for companies. They read social media sites as well as other sites to “hear” what users are saying about companies and brands, what their experiences are with those companies, and then report back to the companies on their findings.

The Internet has made it easy for companies to collect, store, and use information about consumers, whether they are aware of this or not. Concerns over privacy have grown and laws governing the practice of market research are constantly evolving. State and local laws vary regarding the privacy issues with online and telephone surveys. Regardless of where market researchers are located and conducting their surveys, they must pay attention to the laws in all states. One federal law that regulates telemarketing and automatic dialing systems is the Telephone Consumer Protection Act (TCPA). It was enacted by the Federal Communications Commission in 1991, when telemarketing had hit a peak and people were overwhelmed with unwanted phone calls. The TCPA restricted these types of calls as well as artificial or prerecorded voice messages. In 1992 another mandate was added to the act: telemarketers were required to maintain “do not call” lists. The TCPA was amended in 2012 to require that telemarketers get prior written consent from consumers before robocalling them, and that robocalls have an “opt out” mechanism for consumers, so they have a way to stop the calls from happening in the future.