Marketing research is the systematic gathering, recording, and analysis of qualitative and quantitative data about issues relating to marketing products and services. More specifically, the American Marketing Association has defined it: "Marketing research is the function that links the consumer, customer, and public to the marketer through information--information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing research specifies the information required to address these issues, designs the method for collecting information, manages and implements the data collection process, analyzes the results, and communicates the findings and their implications". The goal is to identify and assess how changing elements of the marketing mix impacts customer behavior.
The marketing research field is sometimes described as market research, business research and in some diisciplines the same tools are known as social research methods. The use of these research tools in marketing has a long history. There exists multiple textbooks providing a general overview on the discipline.
The purpose of marketing research (MR) is to provide management with relevant, accurate, reliable, valid, and up to date market information. Competitive marketing environment and the ever-increasing costs attributed to poor decision making require that marketing research provide sound information. Sound decisions are not based on gut feeling, intuition, or even pure judgment.
Managers make numerous strategic and tactical decisions in the process of identifying and satisfying customer needs. They make decisions about potential opportunities, target market selection, market segmentation, planning and implementing marketing programs, marketing performance, and control. These decisions are complicated by interactions between the controllable marketing variables of product, pricing, promotion, and distribution. Further complications are added by uncontrollable environmental factors such as general economic conditions, technology, public policies and laws, political environment, competition, and social and cultural changes. Another factor in this mix is the complexity of consumers. Marketing research helps the marketing manager link the marketing variables with the environment and the consumers. It helps remove some of the uncertainty by providing relevant information about the marketing variables, environment, and consumers. In the absence of relevant information, consumers' response to marketing programs cannot be predicted reliably or accurately. Ongoing marketing research programs provide information on controllable and non-controllable factors and consumers; this information enhances the effectiveness of decisions made by marketing managers.
Traditionally, marketing researchers were responsible for providing the relevant information and marketing decisions were made by the managers. However, the roles are changing and marketing researchers are becoming more involved in decision making, whereas marketing managers are becoming more involved with research. The role of marketing research in managerial decision making is explained further using the framework of the DECIDE model.
Marketing research aims to guide marketing managers to take decisions. Sometimes the problem has a clear structure, sometimes the framework is not clearly defined. Then we can distinguish between:
- Exploratory Research : Used to identify the structure of a social or business environment, or the framework of a problem (problem-identification) .
- Conclusive Research : Used to formulate final conclusions and support decisions (problem-solving research)
We can also classify Marketing Research Methods, based on the source of information. Then we can distinguish between:
- Secondary research , which refers to information gathered by others (i.e. secondary sources), they could be external to the firm, or internal (some other department or function collected the information for a different purpose) and
- Primary research (gathered directly from first hand sources, such as consumers, suppliers, distributors, and public at large). Secondary research is mostly exploratory research (it is a cheap and fast way to conduct to explore, but usually it does not fit exactly the information need, and researchers need to gather primary information). Besides, it is not always reliable, and must be carefully evaluated. Primary research is taylored to the researchers' need, it can be exploratory or conclusive.
There are two basic ways to conduct primary research:
- Qualitative marketing research , mostly used with an exploratory purpose, to search for ideas, hypothesis or general framework about the problem at hand. Based on a mall number of non representative participants—the findings are not generalizable to the whole population
- Quantitative marketing research , more conclusive, and amenable to apply statistical inferences.
Evidence for commercial research being gathered informally dates to the Medieval period. In 1380, the German textile manufacturer, Johann Fugger, travelled from Augsburg to Graben in order to gather information on the international textile industry. He exchanged detailed letters on trade conditions in relevant areas. Although, this type of information would have been termed "commercial intelligence" at the time, it created a precedent for the systemic collection of marketing information.
During the European age of discovery, industrial houses began to import exotic, luxury goods - calico cloth from India, porcelain, silk and tea from China, spices from India and South-East Asia and tobacco, sugar, rum and coffee from the New World. International traders began to demand information that could be used for marketing decisions. During this period, Daniel Defoe, a London merchant, published information on trade and economic resources of England and Scotland. Defoe was a prolific publisher and among his many publications are titles devoted to the state of trade including; Trade of Britain Stated, (1707); Trade of Scotland with France, (1713) and The Trade to India Critically and Calmly Considered, (1720) - all of which provided merchants and traders with important information on which to base business decisions.
Until the late 18th-century, European and North-American economies were characterised by local production and consumption. Produce, household goods and tools were produced by local artisans or farmers with exchange taking place in local markets or fairs. Under these conditions, the need for marketing information was minimal. However, the rise of mass-production following the industrial revolution, combined with improved transportation systems of the early 19th-century, led to the creation of national markets and ultimately, stimulated the need for more detailed information about customers, competitors, distribution systems and market communications.
By the 19th-century, manufacturers were exploring ways to understand the different market needs and behaviours of groups of consumers. A study of the German book trade found examples of both product differentiation and market segmentation as early as the 1820s. From the 1880s, German toy manufacturers were producing models of tin toys for specific geographic markets; London omnibuses and ambulances destined for the British market; French postal delivery vans for Continental Europe and American locomotives intended for sale in America. Such activities suggest that sufficient market information was collected to support detailed market segmentation.
In 1895, American advertising agency, N. H. Ayer & Son, used telegraph to contact publishers and state officials throughout the country about grain production, in an effort to construct an advertising schedule for client, Nichols-Shephard company, an agricultural machinery company in what many scholars believe is the first application of marketing research to solve a marketing/ advertising problem)
Between 1902 and 1910, George B Waldron, working at Mahin's Advertising Agency in the United States used tax registers, city directories and census data to show advertisers the proportion of educated vs illiterate consumers and the earning capacity of different occupations in a very early example of simple market segmentation. In 1911 Charles Coolidge Parlin was appointed as the Manager of the Commercial Research Division of the Advertising Department of the Curtis Publishing Company, thereby establishing the first in-house market research department - an event that has been described as marking the beginnings of organised marketing research.. His aim was to turn market research into a science. Parlin published a number of studies of various product-markets including agriculture (1911); consumer goods (c.1911); department store lines (1912) a five-volume study of automobiles (1914).
In 1924 Paul Cherington improved on primitive forms of demographic market segmentation when he developed the 'ABCD' household typology; the first socio-demographic segmentation tool. By the 1930s, market researchers such as Ernest Dichter recognised that demographics alone were insufficient to explain different marketing behaviours and began exploring the use of lifestyles, attitudes, values, beliefs and culture to segment markets.
In the first three decades of the 20th-century, advertising agencies and marketing departments developed the basic techniques used in quantitative and qualitative research - survey methods, questionnaires, gallup polls etc. As early as 1901, Walter B Scott was undertaking experimental research for the Agate Club of Chicago. In 1910, George B Waldron was carrying out qualitative research for Mahins Advertising Agency. In 1919, the first book on commercial research was published, Commercial Research: An Outline of Working Principles by Professor C.S. Duncan of the University of Chicago.
Adequate knowledge of consumer preferences was a key to survival in the face of increasingly competitive markets. By the 1920s, advertising agencies, such as J Walter Thompson (JWT), were conducting research on the how and why consumers used brands, so that they could recommend appropriate advertising copy to manufacturers.
The advent of commercial radio in the 1920s, and television in the 1940s, led a number of market research companies to develop the means to measure audience size and audience composition. In 1923, Arthur Nielsen founded market research company, A C Nielsen and over next decade pioneered the measurement of radio audiences. He subsequently applied his methods to the measurement of television audiences. Around the same time, Daniel Starch developed measures for testing advertising copy effectiveness in print media (newspapers and magazines), and these subsequently became known as Starch scores (and are still used today).
During, the 1930s and 1940s, many of the data collection methods, probability sampling methods, survey methods, questionnaire design and key metrics were developed. By the 1930s, Ernest Dichter was pioneering the focus group method of qualitative research. For this, he is often described as the 'father of market research.' Dichter applied his methods on campaigns for major brands including Chrysler, Exxon/Esso where he used methods from psychology and cultural anthropology to gain consumer insights. These methods eventually lead to the development of motivational research. Marketing historians refer to this period as the "Foundation Age" of market research.
By the 1930s, the first courses on marketing research were taught in universities and colleges. The text-book, Market Research and Analysis by Lyndon O. Brown (1937) became one of the popular textbooks during this period. As the number of trained research professionals proliferated throughout the second half of the 20th-century, the techniques and methods used in marketing research became increasingly sophisticated. Marketers, such as Paul Green, were instrumental in developing techniques such as conjoint analysis and multidimensional scaling, both of which are used in positioning maps, market segmentation, choice analysis and other marketing applications.
Over the last decades, Internet has provided new ways to gather observational information. For example, different forms of browsing behavior and social network platforms, provide data about individual consumers and segments. This information can be used for Web analytics, planning e-commerce and web advertising, measuring performance indicators such as click-through and exit rates.
Marketing Information Systems
Traditionally Marketing Research was associated to specific projects or plans. The modern perspective considers a richer approach where the marketing research developed by a firm is more systematic, collecting information in a continuous way to assess the performance of marketing actions and subsequent corrections. The function to conduct these activities is known Marketing Information System, or Market Information System. It can involve several subsystems:
- Internal secondary research, gathering information collected by other units in the firm
- Market intelligence or research of the microenvironment, using secondary but mostly primary sources
- Marketing science/analytics, analyzing quantitative data to derive formal models, forecast, and provide conclusive studies (which can sometimes include decision support systems),
- ad hoc marketing research for a specific project, conducted in a less systematic way.
Marketing Information Systems should not be confused with other Management Information Systems, designed to manage information internally, often related to transactions (for example, enterprise resource planning software).
- Qualitative Methods (mostly used for exploratory purposes)
- Questioning Methods: (1) Direct questioning— examples include focus groups, in-depth interviews, and projective techniques, (2) Indirect questioning— examples include projective methods, creative or forecasting methods.
- Observation Methods: Unstructured direct observation of behavior (data that cannot be tabulated), in the natural environment or in a laboratory, sometimes using human observers (that can be disguised or not, and can interact or not with the observed subjects). Also biometric studies (including neuromarketing tools). There are also mixed methods, for example Ethnographic studies combining observation and questioning.
- Quantitative Methods (mostly used for conclusive research)
- Questioning Methods: The typical tool are surveys (postal, face to face, Internet based, telephone). Also panels where several subjects are questioned regularly over time.
- Structured Observations: Studies that observe the behavior in a structured way, data can be tabulated and analyzed statistically. This includes sales data from retailers, expenditure data from consumers, audience data
- Experiments: used to study causal effects. The researcher creates a quasi-artificial environment to try to control spurious factors, then manipulates at least one of the variables (treatment) on a group of elements and study effects, comparing with a control group that is not exposed to the treatment. To control for external variables that could be confounding the results, the elements are randomly allocated to the treated or control groups. If the allocation is not randomized, the study is known as a quasi-experiment.
Researchers often use more than one research design. They may start with secondary research to get background information, then conduct a focus group (qualitative research design) to explore the issues. Finally they might do a full nationwide survey (quantitative research design) in order to devise specific recommendations for the client.
Note that marketing research tools can be used in business to consumer (B2C) markets (to study consumers, distributors, competitors), and in business to business (B2C) markets. Marketing research can be conducted in local (domestic) markets, or internationally. International marketing research is more challenging, exploring social and cultural heterogeneities in a way that the results can be compared.
Some typical Applications
Organizations engage in marketing research for two reasons: firstly, to identify and, secondly, to solve marketing problems. This distinction serves as a basis for classifying marketing research into problem identification research and problem solving research. Problem identification research is undertaken to help identify problems which are, perhaps, not apparent on the surface and yet exist or are likely to arise in the future like company image, market characteristics, sales analysis, short-range forecasting, long range forecasting, and business trends research. Research of this type provides information about the marketing environment and helps diagnose a problem. For example, the findings of problem solving research are used in making decisions which will solve specific marketing problems. Some typical applications are:
- Product research — This looks at what products can be produced with available technology, and what new product innovations near-future technology can develop (see new product development).
- Pricing: research about willingness to pay, competitors prices, etc.
- Market analysis: study of market shares, competitive reactions.
- Advertising research – is a specialized form of marketing research conducted to improve the efficacy of advertising. Copy testing , also known as "pre-testing," is a form of customized research that predicts in-market performance of an ad before it airs, by analyzing audience levels of attention, brand linkage , motivation, entertainment, and communication, as well as breaking down the ad's flow of attention and flow of emotion . Pre-testing is also used on ads still in rough (ripomatic or animatic ) form. (Young, p. 213)
- Analysis of consumer behavior, including attitudes, heterogeneity, classification into different segments. The Stanford Research Institute, on the other hand, conducts an annual survey of consumers that is used to classify persons into homogeneous groups for segmentation purposes. The National Purchase Diary panel (NPD) maintains the largest diary panel in the United States.
More specifically, we can mention:
- Ad Tracking – periodic or continuous in-market research to monitor a brand's performance using measures such as brand awareness, brand preference, and product usage. (Young, 2005)
- Advertising Research – used to predict copy testing or track the efficacy of advertisements for any medium, measured by the ad's ability to get attention (measured with AttentionTracking), communicate the message, build the brand's image, and motivate the consumer to purchase the product or service. (Young, 2005)
- Brand awareness research — the extent to which consumers can recall or recognize a brand name or product name
- Brand association research — what do consumers associate with the brand?
- Brand attribute research — what are the key traits that describe the brand promise?
- Brand name testing – what do consumers feel about the names of the products?
- Buyer decision making process— to determine what motivates people to buy and what decision-making process they use; over the last decade, Neuromarketing emerged from the convergence of neuroscience and marketing, aiming to understand consumer decision making process
- Commercial eye tracking research — examine advertisements, package designs, websites, etc. by analyzing visual behavior of the consumer
- Concept testing – to test the acceptance of a concept by target consumers
- Coolhunting (also known as trendspotting) – to make observations and predictions in changes of new or existing cultural trends in areas such as fashion, music, films, television, youth culture and lifestyle
- Copy testing – predicts in-market performance of an ad before it airs by analyzing audience levels of attention, brand linkage, motivation, entertainment, and communication, as well as breaking down the ad's flow of attention and flow of emotion. (Young, p 213)
- Customer satisfaction research – quantitative or qualitative studies that yields an understanding of a customer's satisfaction with a transaction
- Demand estimation — to determine the approximate level of demand for the product
- Distribution channel audits — to assess distributors’ and retailers’ attitudes toward a product, brand, or company
- Internet strategic intelligence — searching for customer opinions in the Internet: chats, forums, web pages, blogs... where people express freely about their experiences with products, becoming strong opinion formers.
- Marketing effectiveness and analytics — Building models and measuring results to determine the effectiveness of individual marketing activities.
- Mystery consumer or mystery shopping – An employee or representative of the market research firm anonymously contacts a salesperson and indicates he or she is shopping for a product. The shopper then records the entire experience. This method is often used for quality control or for researching competitors' products.
- Positioning research — how does the target market see the brand relative to competitors? – what does the brand stand for?
- Price elasticity testing — to determine how sensitive customers are to price changes
- Sales forecasting — to determine the expected level of sales given the level of demand. With respect to other factors like Advertising expenditure, sales promotion etc.
- Segmentation research – to determine the demographic, psychographic, cultural, and behavioral characteristics of potential buyers
- Online panel – a group of individual who accepted to respond to marketing research online
- Store audit — to measure the sales of a product or product line at a statistically selected store sample in order to determine market share, or to determine whether a retail store provides adequate service
- Test marketing — a small-scale product launch used to determine the likely acceptance of the product when it is introduced into a wider market
- Viral Marketing Research – refers to marketing research designed to estimate the probability that specific communications will be transmitted throughout an individual's Social Network. Estimates of Social Networking Potential (SNP) are combined with estimates of selling effectiveness to estimate ROI on specific combinations of messages and media.
Market research techniques resemble those used in political polling and social science research. Meta-analysis (also called the Schmidt-Hunter technique) refers to a statistical method of combining data from multiple studies or from several types of studies. Conceptualization means the process of converting vague mental images into definable concepts. Operationalization is the process of converting concepts into specific observable behaviors that a researcher can measure. Precision refers to the exactness of any given measure. Reliability refers to the likelihood that a given operationalized construct will yield the same results if re-measured. Validity refers to the extent to which a measure provides data that captures the meaning of the operationalized construct as defined in the study. It asks, “Are we measuring what we intended to measure?”
- Applied research sets out to prove a specific hypothesis of value to the clients paying for the research. For example, a cigarette company might commission research that attempts to show that cigarettes are good for one's health. Many researchers have ethical misgivings about doing applied research.
- Sugging (from SUG, for "selling under the guise" of market research) forms a sales technique in which sales people pretend to conduct marketing research, but with the real purpose of obtaining buyer motivation and buyer decision-making information to be used in a subsequent sales call.
- Frugging comprises the practice of soliciting funds under the pretense of being a research organization .
Marketing Research Industry
Many firms outsource some of the marketing research actions. There is a large industry providing support on marketing research. Sometimes, conducting Customized services offer a wide variety of marketing research services customized to suit a client's specific needs, but also providing access to syndicated studies (standardized services conducted for different client firms that can buy access to pieces of information). For example retail sales in some product category, consumer panels, audience studies. These firms can be more or less comprehensive.
- Limited-service suppliers specialize in one or a few phases of the marketing research project. Services offered by such suppliers are classified as field services, coding and data entry, data analysis, analytical services, and branded products. Field services collect data through the internet, traditional mail, in-person, or telephone interviewing, and firms that specialize in interviewing are called field service organizations. These organizations may range from small proprietary organizations which operate locally to large multinational organizations with WATS line interviewing facilities. Some organizations maintain extensive interviewing facilities across the country for interviewing shoppers in malls.
- Coding and data entry services include editing completed questionnaires, developing a coding scheme, and transcribing the data on to diskettes or magnetic tapes for input into the computer. NRC Data Systems provides such services.
- Analytical services include designing and pretesting questionnaires, determining the best means of collecting data, designing sampling plans, and other aspects of the research design. Some complex marketing research projects require knowledge of sophisticated procedures, including specialized experimental designs, and analytical techniques such as conjoint analysis and multidimensional scaling. This kind of expertise can be obtained from firms and consultants specializing in analytical services.
- Data analysis services are offered by firms, also known as tab houses, that specialize in computer analysis of quantitative data such as those obtained in large surveys. Initially most data analysis firms supplied only tabulations (frequency counts) and cross tabulations (frequency counts that describe two or more variables simultaneously). With the proliferation of software, many firms now have the capability to analyze their own data, but, data analysis firms are still in demand.
- Branded marketing research products and services are specialized data collection and analysis procedures developed to address specific types of marketing research problems. These procedures are patented, given brand names, and marketed like any other branded product.
Some of the positions available in marketing research include vice president of marketing research, research director, assistant director of research, project manager, field work director, statistician/data processing specialist, senior analyst, analyst, junior analyst and operational supervisor.
The most common entry-level position in marketing research for people with bachelor's degrees (e.g., BBA) is as operational supervisor. These people are responsible for supervising a well-defined set of operations, including field work, data editing, and coding, and may be involved in programming and data analysis. Another entry-level position for BBAs is assistant project manager. An assistant project manager will learn and assist in questionnaire design, review field instructions, and monitor timing and costs of studies. In the marketing research industry, however, there is a growing preference for people with master's degrees. Those with MBA or equivalent degrees are likely to be employed as project managers.
A small number of business schools also offer a more specialized Master of Marketing Research (MMR) degree. An MMR typically prepares students for a wide range of research methodologies and focuses on learning both in the classroom and the field.
The typical entry-level position in a business firm would be junior research analyst (for BBAs) or research analyst (for MBAs or MMRs). The junior analyst and the research analyst learn about the particular industry and receive training from a senior staff member, usually the marketing research manager. The junior analyst position includes a training program to prepare individuals for the responsibilities of a research analyst, including coordinating with the marketing department and sales force to develop goals for product exposure. The research analyst responsibilities include checking all data for accuracy, comparing and contrasting new research with established norms, and analyzing primary and secondary data for the purpose of market forecasting.
As these job titles indicate, people with a variety of backgrounds and skills are needed in marketing research. Technical specialists such as statisticians obviously need strong backgrounds in statistics and data analysis. Other positions, such as research director, call for managing the work of others and require more general skills. To prepare for a career in marketing research, students usually:
- Take all the marketing courses.
- Take courses in statistics and quantitative methods.
- Acquire computer skills.
- Take courses in psychology and consumer behavior.
- Acquire effective written and verbal communication skills.
- Think creatively.
- Vice-President of Marketing Research: This is the senior position in marketing research. The VP is responsible for the entire marketing research operation of the company and serves on the top management team. Sets the objectives and goals of the marketing research department.
- Research Director: Also a senior position, the director has the overall responsibility for the development and execution of all the marketing research projects.
- Assistant Director of Research: Serves as an administrative assistant to the director and supervises some of the other marketing research staff members.
- (Senior) Project Manager: Has overall responsibility for design, implementation, and management of research projects.
- Statistician/Data Processing Specialist: Serves as an expert on theory and application of statistical techniques. Responsibilities include experimental design, data processing, and analysis.
- Senior Analyst: Participates in the development of projects and directs the operational execution of the assigned projects. Works closely with the analyst, junior analyst, and other personnel in developing the research design and data collection. Prepares the final report. The primary responsibility for meeting time and cost constraints rests with the senior analyst.
- Analyst: Handles the details involved in executing the project. Designs and pretests the questionnaires and conducts a preliminary analysis of the data.
- Junior Analyst: Handles routine assignments such as secondary data analysis, editing and coding of questionnaires, and simple statistical analysis.
- Field Work Director: Responsible for the selection, training, supervision, and evaluation of interviewers and other field workers.
- Ad Tracking
- A/B testing
- Advertising research
- Commercial eye tracking
- Copy testing
- Consumer behavior
- Experimental techniques
- Enterprise Feedback Management (EFM)
- Global Marketing
- Integrated Marketing Communications
- Journal of Marketing Research
- Knowledge management
- List of marketing research firms
- Marketing Research Association
- Marketing Research Institute International (MRII)
- Marketing research mix
- Marketing research process
- Master of Marketing Research
- Observational techniques
- Quantitative marketing research
- Qualitative marketing research
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