Caution: global forces at work

Editor’s note: Mitch Eggers is COO of GMI, a Seattle research firm.

Powerful forces are changing the way market research is conducted and driving rapid increases in the demand and need for Internet market research. This push is not just coming from the market research industry but from all sectors of the economy.

A relentless march toward “better, faster, cheaper” high technology has combined with rapid human adoption of new communication modes in an environment where consumer-driven marketplace economies are proliferating. Add a dash of vintage sampling theory to these powerful changes and the rise in demand for online global market research is not only understandable but also not about to abate any time soon.

The proliferation of technology among consumers

Advances in high-tech are well-known and have become not just accepted but also expected by nearly everyone. The proliferation of the Internet represented a paradigm shift as dramatic as the coming of the railroad. Hand-in-hand with these technological advancements have come plummeting costs of digital communications. In the 1970s, a long-distance telephone call to Asia, Europe or Latin America was very expensive, but today that same long-distance communication is extraordinarily cheap. Moreover, the modes now available for nearly real-time international trans-oceanic communication are numerous; instant messaging, e-mail, and voice over IP telephony are all replacing the more expensive switched-network, dedicated private line communication modes.

Couple the increasing reliance on technology with decreasing costs and it is easy to understand how progress along high-technology frontiers has made it possible for market researchers to: cheaply collect clicks from all over the world, cheaply store those clicks in large integrated data repositories, and cheaply crunch those clicks to distill valuable insights about world-wide consumer tastes, habits, practices and desires. Access to technology and lowering costs coupled with the importance of knowing what your consumers think have made it not only possible but also a good investment to collect data on almost anything.

Technology and the human touch

The huge boom in demand for online global market research was not created by improvements in high technology alone. The human element was the necessary catalyst. When the world embraced, with remarkable confidence, online banking transactions, credit card payments, consumer purchases and shipment tracking, the Internet jumped from being an advancement in technology to a part of the everyday experience. We have accepted and come to rely on a myriad of remote network service providers for an increasingly wide variety of our daily communications, transactions and information. The age of connection has unfolded and we have embraced it with a vengeance.

For market researchers this adoption of technology at an unprecedented rate has by default made consumers - and more importantly the right consumers - accessible to researchers. As the number of connections grows exponentially with every additional member, we are more connected today than ever before and are increasing our worldwide connections at a faster rate than ever before. Upper-income, better-educated households around the globe - who we know account for the bulk of worldwide discretionary income and purchasing power - are already Internet users, and the penetration of the Internet into middle- and lower-income households is rising rapidly. Bottom line: The technology adoption is delivering the right sample direct to our desktop. We have found our market research nirvana and we now have access to a very sophisticated sample cheaply.

The empowered consumer has arrived

As remarkable as these changes are at both the technological and individual level, equally radical changes have erupted in the realm of the collective. The worldwide era of the empowered consumer, who reveals his or her tastes when asked and votes with his or her pocketbook, has arrived. Their demands will be met through a Darwinian struggle of product and service innovations that force producers to intimately know their consumers as well as their competition. Individual consumers, confident in their preferences and in charge of their checkbooks, have replaced the collective command-and-control economies.

The past few decades have witnessed the rise of the marketplace economies across huge swaths of the globe. Old Europe has unified and formed a single marketplace of over 300 million people. The former Soviet Union is gone and the marketplace is the new social order, a change that has affected more than 290 million people. China invited the marketplace into its formerly controlled society and introduced individual decision-making, self-interest and competition to over 1.3 billion people - a form of social organization that efficiently harnesses individual ingenuity and empowers consumers like no other. A good example of the power of this shift is a recent news article on General Electric - a global company with a market capitalization of $380 billion. The company reported that in the next 10 years, 60 percent of its revenue growth is expected to come from developing countries, as compared to 20 percent in the past decade. That’s a pretty remarkable jump and additional evidence of the undeniable influence globalization has and will continue to have on business today.

With the rise of the empowered consumer and marketplace economies comes global design, production, marketing and distribution chains that stitch world commerce together to attain lower production costs, larger target markets and greater profits. Rapid integration and trade between the older marketplace economies of Europe, North America, Asia and Latin America, and the newer marketplace economies of Central and Eastern Europe and China  is well underway. Driven by superior market research and design, products not only appeal to a global consumer audience, but are marketed, distributed and sold to a larger percentage of the world’s population than ever before. A hit product designed for international use can now truly be sold worldwide.

Examples that represent both ends of the opportunity spectrum, Deere & Company and Apple Computer, Inc., illustrate the point. Today John Deere ships combines made in East Moline , Ill. , to the former Soviet Union, Chinese combines to the Middle East, Brazilian combines to Europe and German and Indian tractors to the U.S. In fact, to remain competitive it produces a tractor in Augusta , Ga. , that is assembled largely with parts received from 12 other countries. Its business - and many like it - is dependent on the global economy. Similarly Apple’s iconic iPod - which appeared to descend on the world’s population from nowhere, selling over four million units at launch - is available in Moscow, London, New York, Sao Paulo, Beijing, Sofia and Istanbul - a global triumph that harkens of things to come.

However, naturally offsetting the great opportunities the global marketplace offers businesses are corresponding realities and demanding challenges. The world today is indeed a very small place. With the birth of modern technology and communications, we have experienced the death of distance. A necessary condition for businesses to survive - and thrive - in the global arena is to embrace the world’s cultural differences, and this is where knowledge equals power. The Internet affords large multi-country research. Usually the domain of only the biggest and richest, now even small and medium-sized companies can afford to ask questions. The market research industry can effectively reach out to 20 countries and collect and turn around data in as little as 48 hours. Public opinion polling that would typically take three days now takes 12 hours, resulting in an almost constant cycle of monitoring and message adjustment.

Tuning in to the world’s most powerful listening device

The last major innovation fueling the avalanche of demand for online market research did not occur so recently. Probability and sampling theory are the classical tools still being applied in the modern world with great effect and add to the efficiency of modern data collection. Nowhere are these tools more valuable than in a market research setting where measuring the tastes and proclivities of a very small percentage of the total population reveals the essential nub of the entire population’s wants. We can now effortlessly gather an online sample of 1,000-1,500 people and report the views of an entire country. The Internet is delivering the right demographic infrastructure, allowing companies to speak to the right people to gain almost instant feedback on their products or messages. In a single weekend a studio will test the ending of a film, choose the most effective trailer and launch the most-embraced TV commercial by sampling a global audience at the speed of the Internet.

Market researchers owe a great debt to de Moivre, Gauss, Fisher, LaPlace and Pearson, for these are the minds that founded and developed the normal curve and inferential statistics and taught us that, correctly gathered, we can measure a few to understand the many. Properly applied, and deployed across the modern communication infrastructure, these techniques have turned the Internet into the world’s most powerful listening device. Modern researchers can divine the tastes of the world’s consumers more quickly, accurately and cheaply than ever before, making the return on investment in market research positive for an exploding universe of products.

Old and new

It would appear the stars have finally aligned for the Net-centric researcher. Ever increasing global connectivity and the ease of access to information from anywhere means the Internet is now living up to the predictions made a decade ago. Now we can apply the best of the old world - tried and trusted market research disciplines - with the opportunities of the new, the Internet - an all-encompassing worldwide data collection vehicle that has entangled the human race in its sticky web.