6.4 Ethical Issues in Marketing Research
Learning Outcomes
By the end of this section, you will be able to:
- 1 Describe ethical issues relating to marketing research.
- 2 Discuss ways to avoid unethical research practices.
The Use of Deceptive Practices
In marketing research, there are many potential areas of ethical concern. Each day people share personal information on social media, through company databases, and on mobile devices. So how do companies make sure to remain ethical in decisions when it comes to this vast amount of research data? It is essential that marketers balance the benefits of having access to this data with the privacy of and concern for all people they can impact.
Too many times, we have heard about the lack of ethical decision-making when it comes to marketing research or personal data. Companies are hacked, share or sell personal information, or use promotion disguised as research. Each of these can be considered unethical.
Link to Learning
The Insights Association
There is an organization devoted to the support and integrity of quality marketing research. This organization, called The Insights Association (IA), “protects and creates demand for the evolving insights and analytics industry by promoting the indisputable role of insights in driving business impact.”21 Having a solid understanding of ethical practices is critical for any marketing professional. Become familiar with terminology, responsibilities, enforcements, and sanctions of the IA’s code of standards and ethics.
First, let’s look at some deceptive practices that might be conducted through research. The first is representing something as research when it is really an attempt to sell a product. This is called sugging. Sugging happens when an individual identifies themselves as a researcher, collects some data, and then uses the data to suggest specific purchases.22 According to the Insights Association Code of Marketing Research Standards, researchers should always separate selling of products from the research process.23
Other deceptive research practices include using persuasive language to encourage a participant to select a particular answer, misrepresenting research data subjectively rather than objectively while presenting the results, and padding research data with fabricated answers in order to increase response rate or create a specific outcome.
Invasion of Privacy
Privacy is another concern when it comes to marketing research data. For researchers, privacy is maintaining the data of research participants discretely and holding confidentiality. Many participants are hesitant to give out identifying information for fear that the information will leak, be tied back to them personally, or be used to steal their identity. To help respondents overcome these concerns, researchers can identify the research as being either confidential or anonymous.
Confidential data is when respondents share their identifying information with the researcher, but the researcher does not share it beyond that point. In this situation, the research may need some identifier in order to match up previous information with the new content—for instance, a customer number or membership number. Anonymous data is when a respondent does not provide identifying information at all, so there is no chance of being identified. Researchers should always be careful with personal information, keeping it behind a firewall, behind a password-protected screen, or physically locked away.
Breaches of Confidentiality
One of the most important ethical considerations for marketing researchers is the concept of confidentiality of respondents’ information. In order to have a rich data set of information, very personal information may be gathered. When a researcher uses that information in an unethical manner, it is a breach of confidentiality. Many research studies start with a statement of how the respondent’s information will be used and how the researcher will maintain confidentiality. Companies may sell personal information, share contact information of the respondents, or tie specific answers to a respondent. These are all breaches of the confidentiality that researchers are held accountable for.24
Although we hear about how companies are utilizing customers’ data unethically, many companies operate in an ethical manner. One example is the search engine DuckDuckGo. The search industry generates millions of pieces of user data daily; most of the providers of searches capitalize on this data by tracking and selling this information. Alternatively, DuckDuckGo has decided NOT to track its users. Instead, it has built its business model on the fact that no user information is stored—ever. Ethically, DuckDuckGo offers users private searches, tracker blocking, and site encryption. In an industry that is continuously collecting and selling personal search information, DuckDuckGo is the exception. There is no concern with being hacked because no data is collected.25
Companies with a Conscience
Gallup
The Gallup Organization is a market research firm that specializes in understanding market sentiment (see Figure 6.11). Every year among its numerous polls, Gallup completes an assessment of the honesty and ethical approach of different professions. In the 2021 survey, nursing was the top profession regarding these two measures.26
Gallup’s research led additional findings about the state of ethics for businesses. “Ethical standards need to be at the core of an organization’s purpose, brand and culture.”27 But what about Gallup’s own ethical standards? Gallup is “a global analytics and advice firm that helps leaders and organizations solve their most pressing problems.”28 In order to be proficient and well-informed on the variety of topics Gallup investigates, it must hold itself and its employees to a high ethical standard.
Gallup completes multiple polls and research continuously. In order to meet the high standards of its public, Gallup must perform these practices in an ethical manner. Each step of the research process is completed with diligence and intention. For those reasons, Gallup is recognized for its ethically backed data. Gallup is a global leader in market insights and has locations in seven cities within the United States and an additional 27 locations internationally. According to Chuck Hagel, former Secretary of Defense of the United States, “Gallup is truly an island of independence—it possesses a credibility and trust that hardly any institution has. A reputation for impartial, fair, honest and superb work.”29
Chapter Summary
In this chapter, we discovered the critical nature of marketing research on the success of a business. Big data, marketing intelligence, and marketing information systems were defined, and each was explained regarding its impact on the field of marketing research. Next, we learned about the seven steps of the marketing research process and how each step builds toward an actionable plan by management. The difference between secondary and primary data was clarified, and several sources of each were shared. Finally, ethical decision-making in research is essential as some very detailed information about consumers is collected.
Key Terms
- aided awareness
- when a product, brand, or company list is provided to select from to measure awareness
- anonymous data
- data in which the respondent is not identified
- awareness
- a consumer’s familiarity with a product, brand, or company
- big data
- the countless number of records that continues in an increasing capacity and at a faster rate; often described as volume, velocity, and variety of data generated
- breach of confidentiality
- a situation where the researcher promises to hold private information but discloses it in an unethical manner without permission
- causal research
- studies that define a cause-and-effect relationship between two factors
- census
- when all potential target population members are included in the research
- competitive intelligence
- a collection of information about competitors from the marketplace
- confidential data
- data that is tied back to a respondent, but the respondent’s personal information is not shared
- convenience sample
- a nonprobability sample type where potential respondents to the research are selected by convenience rather than through any scientific method
- cross tabulation
- an analysis of two variables and the frequency of each answer in relation to the other variable
- customer acquisition cost
- the total expenses a company spends to gain a new customer
- customer effort score
- a survey used to measure ease of service experience with an organization
- customer satisfaction score
- also known as a CES, a survey used to measure ease of service experience with an organization
- data analysis
- the distillation of information into a more understandable and actionable format
- data collection
- systematic gathering of information that addresses an identified problem
- database
- a collection of related data
- descriptive research
- data collected to describe the situation in the market and help define an opinion, attitude, or behavior
- electronic surveys
- surveys sent through digital means to respondents; respondents also reply to the survey digitally
- ethnographic research
- method of collecting data that is conducted by observing people’s natural behavior
- experimental research
- studies that define a cause-and-effect relationship between two factors
- exploratory research
- research conducted that is more general to learn more about the industry or market
- external data
- data that originates from outside the organization
- focus group
- a small group, typically 8 to 12 people, who are asked several questions by a moderator and encouraged to build upon each other’s responses
- frequency
- a report of the number of each answer received
- in-person surveys
- surveys conducted when the respondent and data collector are face-to-face
- infographic
- a representation of data in a variety of visual presentations
- internal data
- critical marketing intelligence that already exists in the company’s records
- judgment sample
- a nonprobability sample type where the potential participants are selected based on a perceived match to the sample frame
- mailed surveys
- surveys sent to potential participants through a mail service, such as the US Postal Service
- marketing information
- also known as business intelligence, competitive intelligence, or marketing intelligence; information about the market that helps to identify opportunities available
- marketing information system
- a system used to collect, analyze, and report interesting findings from internal and external data of the company
- marketing research
- the function that links the consumer, customer, and public to the marketer through information
- mean
- an arithmetic average of values
- mechanical observation
- the use of electronic monitoring to record the actions of the observed
- median
- the middle number when all answers are organized from smallest to largest; if an even number of data, the mean of the two middle answers is the median
- mode
- the most common response
- nonprobability sample
- a situation which each member of the population has an unknown chance of being selected to be part of the sample
- observational research
- data collected by watching consumers and recording actions
- one-on-one interview
- an interview that happens on an individual level between researcher and respondent
- personal observations
- observations that are collected by human recorders
- phone surveys
- surveys conducted through the use of a telephone that can be completed through digital or human methods
- primary data
- unique information that is collected by the researcher with the current project in mind
- privacy
- maintaining the data of research participants discretely and holding confidentiality
- probability sample
- a sample in which everyone has a known chance of being included in the research
- problem definition
- the realization that there is an issue that needs to be addressed
- qualitative data
- data that cannot be distilled into number of responses, such as responses to an interview
- qualitative research
- data shared through words, descriptions, and open-ended comments
- quantify the research
- to take a variety of data and compile it into a quantity that is easily understood
- quantitative data
- data that can be reduced to number of responses, such as number of responses to each answer on a multiple-choice question
- questionnaire
- also known as a survey, a series of several questions that can collect a variety of qualitative and quantitative data; can be distributed through several different methods
- sample
- a portion of the entire population that is included in the research
- sample frame
- a parameter that defines who will be included in the sample and who would not be included
- sample size
- the number of respondents that are to be included in the research
- sampling unit
- each individual entities that is included in the sample
- secondary data
- any research that was completed, within the organization or outside of the organization, for another purpose
- simple random sample
- a type of probability sample where every entity has an equal chance of being selected
- stratified random sample
- a probability sample type where the population is divided into groups and then participants are selected from each stratum randomly
- sugging
- suggesting a purchase disguised as research
- survey
- also known as a questionnaire, a series of several questions that can collect a variety of qualitative and quantitative data; can be distributed through several different methods
- syndicated data
- a type of secondary data that is available through a subscription service
- target population
- the group of people that are of interest for a study
- unaided awareness
- when no prompts or lists of potential products, brands, or companies are given to test awareness
- unobtrusive observation
- a type of observation research where the observed is not aware they are being monitored
- verbatims
- exact quotations of responses to a qualitative question
Applied Marketing Knowledge: Discussion Questions
Critical Thinking Exercises
Building Your Personal Brand
If you’re a curious person, you may enjoy a career in data science, marketing research, or consumer insights. Businesses report that there is a growing need for data specialists—analysts, engineers, scientists, translators, and cybersecurity managers—to grasp the power of data insights to drive major business initiatives. Business professionals across organizations depend on analytical know-how to make informed decisions with real-time insights. Ongoing data evolution requires data scientists to learn and adopt new technology to accelerate organizational data strategies.
For budding professionals in the data science/consumer insights field, it’s essential to have foundational knowledge in applied mathematics, statistics, data analytics and visualization, machine learning, computer science, or data engineering. These may be courses you wish to add to your upper-level academic work. You can also apply the resulting skill sets to your brand as you investigate internships and projects. Keep in mind that insights specialists must be able to communicate and present complex findings to cross-functional teams clearly and succinctly, driving data-driven decision-making from those findings.
Internal marketing departments generally rely on analysts to handle business intelligence and data scientists to aggregate company data. Read this article to better understand the role differences between a marketing analyst and a data scientist. Review the differences in salaries for marketing analysts and data scientists here.
Now build a chart summarizing the skills necessary for both roles and then identify which of those skills you feel you already possess and which of those you need to work on. For those skills that you need to develop, identify one or two steps you can take to add this to your personal brand.
What Do Marketers Do?
Research is a part of many career paths for marketers and business personnel. Financial planners, human resource managers, logistics analysts, and marketing strategists all use research on a daily basis. Most businesses now rely upon customer loyalty and product/service ratings as they attempt to gain distinction among competitors. Many companies now ask consumers to rate their products and services. That rating is the next best thing to asking friends and family members for product suggestions. Customers want proof that products or services are reputable. Customer reviews are vital in providing personalized experience and insights to promote customer relationships.
Speak to a consumer insights specialist from a local advertising agency or a professor at your college or another university—especially one who specializes in big data analytics—about the importance of data in making marketing decisions. To find an insights specialist or professor, conduct a Google and/or LinkedIn search. Also check out this list of top marketing professors on Twitter.
In your interview, you might ask the following questions, but be sure to also include any questions you might have.
- What is big data, and how do firms gather it?
- How do companies I may be familiar with analyze and use data on a regular basis to inform marketing efforts?
- What are metrics, dashboards, and actionable goals?
- I understand that employee turnover is a major consideration in customer satisfaction these days. How does data analysis help companies measure employee satisfaction?
- Are there specific methods to gather information about customer satisfaction?
- I’ve received emails after making a purchase online, asking for my feedback. How seriously is this feedback taken?
- Can you give an example of how researchers may use primary and secondary data?
- Are there specific courses I should take if I’m interested in the data side of marketing?
Marketing Plan Exercise
Complete the following information about the company and products/services you chose to focus on for this marketing plan exercise. You may need to conduct research to gather necessary information.
Instructions: Using the Marketing Plan Template file you created from Marketing and Consumer Value and expanded upon in Strategic Planning in Marketing and Market Segmentation, Targeting, and Positioning, complete the following section of your marketing plan: Current Market Situation/Situation Analysis.
Once complete, submit the marketing plan to your instructor for grading and feedback.
Closing Company Case
Nordstrom
One day a customer walked into an upscale fashion retail store in Anchorage, Alaska, to return a set of tires. The store had a wide selection of shoes, clothes, and accessories, but no tires. However, the store that previously occupied the space did sell tires. After much discussion, a Nordstrom store manager made the return and accepted the tires. The story is legendary in customer service circles. It is also true.
A leading fashion retailer based in Seattle, Washington, Nordstrom prides itself on customer service and innovative methods of serving the customer. Founded in 1901, the company now operates 358 retail stores in the United States and Canada as well as online retail.30
Nordstrom has long been famous for its customer-centric mindset. The “Nordstrom way” has always been about serving customers according to their needs and making them feel good about the shopping experience. Part of the experience is focused on ease, selection, and convenience.
In 2020, Nordstrom saw tremendous growth in online sales. By integrating online and in-store sales, the company realized that 50 percent of customers who buy in store at Nordstrom have first had a digital experience with the retailer. Identifying trends between in-store sales and online sales has assisted Nordstrom in formulating a more customer-centric strategy.31
To better serve customers and increase sales, Nordstrom sales associates are key. Sales associates develop connections with the customer. With good questions and involvement in the customer experience, the sales associates determine consumer needs and wants. Understanding consumer needs and wants leads Nordstrom to craft an experience unparalleled in retail.32
Through careful study of the customer and the analytics available in online and in-person shopping patterns, Nordstrom has developed a more robust system that allows for seamless coordination between all Nordstrom properties. In developing a better customer experience, Nordstrom worked to really understand how customers live and behave.
From customer interactions, observation, online data, and careful marketing research, Nordstrom Local emerged. One key piece of information was that 35 percent of customers who place an online order first visited a store to help guide the purchase decision.33 With Los Angeles and New York as the top markets, Nordstrom needed methods to connect with and help ease the purchase process for its customers in these locations.
One significant aspect of the purchase process was to make online ordering easier, allowing for quick in-store pickups and returns while also including a method of getting alterations when and where it was most convenient. The creation of Nordstrom Local was the answer. Through a Nordstrom Local, available in the top markets, the customer could get the Nordstrom experience—closer to home.
Nordstrom realized the more channels a customer could use, the more they would spend with the retailer. In fact, soon after opening Nordstrom Local, the company was able to determine that customers using the new locations spend 2.5 times the amount of all other customers. So how could the company better serve those customers and make transactions more profitable?
Part of the Nordstrom plan to connect the customer more fully with the “experience” included the ability to easily order online and pick up in-store—using Nordstrom Local made that possibility easier to achieve. Nordstrom Local also included tailors available at pickup, the exclusive Nordstrom Stylist who would travel to all stores within a local market area, easy returns and exchanges, and finally, Certified Gift-Wrapping Specialists to make special packages look styled for whatever the occasion.
Consumer insights help Nordstrom to provide curated merchandise for each store. When shopping at Nordstrom, you will find merchandise specific to the region and store location. Pop-up shops are a regular feature at Nordstrom. The pop-up allows for a preview of potential merchandise to meet the needs of the local market. A well-rounded plan to connect at every point of contact has allowed Nordstrom to create an experience unrivaled in the industry.
Case Questions
References
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