The Pulse

Marketing's Illinois connection

By NICK PANAGAKIS

This column usually discusses election outcomes and poll results or their meaning and methodology. Polls may be the most visible part of the survey research industry, but they are a small part of the total survey research industry — the systematic gathering of information for better decision making by business. The largest component in this industry and one vital to the Illinois economy is marketing research.

In the May 27 issue of the Marketing News, industry expert Jack Honomichl reported $5.6 billion spent on marketing research worldwide in 1990. The largest marketing research companies located in Illinois account for 25 percent of the worldwide expenditure.

Verne Churchill is chief executive officer at Chicago-based Market Facts, which was founded in 1946 and now has $40 million in sales annually. Churchill says marketing research "quietly results in higher quality products leading to greater customer satisfaction and business productivity." Each day tens of thousands of Americans voluntarily participate in marketing research as members of focus groups or consumer mail panels or in answering questions at shopping malls or on their telephones. These consumers help business make better decisions and avoid costly mistakes.

Marketing research does not include selling by telephone, usually termed telemarketing. Far more phone calls are made in telemarketing than in marketing research. Perhaps as many as 100 calls are made by telemarketers to find one prospect for kitchen cabinets or home windows. Worse are the telemarketers pretending to do surveys who are selling instead (examples from calls at my home — selling chiropracter services and cemetery plots).

Marketing research does include product testing. My firm did testing on a frozen pizza which proved to be much preferred over leading brands. The test results got the entrepreneur both investor dollars and precious shelf space in supermarkets. Bravissimo! pizza is now a new Illinois employer which boasts nearly $10 million in annual sales.

Churchill tells of an Illinois grocery products company whose new aerosol deodorant was failing in consumer tests. A series of discrimination tests were done to find how many people could tell the difference between it and alternative prototype products. Of thousands of national mail panel members, a few suffered respiratory irritation which traced to a single ingredient. After substituting a different ingredient, the product achieved national success. Later the Food and Drug Administration removed the irritating ingredient from the list of substances acceptable for aerosol use.

New products are the source for economic expansion. From Oakbrook, McDonald's research director Don Lorr tells how research added variety to the hamburger giant's menu to the delight of poultry farmers across the nation. Chicken McNuggets underwent 10 years of research, development and test marketing to optimize taste appeal and to answer questions about how many pieces should make a serving and at what price the product should be sold. McDonald's Egg McMuffms created a new category of restaurant users — quick service breakfast customers. But research came before the chicken or the egg items were found to meet customer expectations and serving capability of the franchise owners. One of McDonald's newest items, McLean Deluxe, also underwent four years of testing to ensure that its new 91 percent fat-free ground beef sandwich had the same burger taste customers had come to enjoy.

In packaged goods marketing, product testing assures that repeat purchasing by future loyal customers will sustain a sufficient level of sales long after the usually hefty cost of introduction to the market-

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place. Equally important is first defining the idea of the product or product concept and then developing effective advertising communication to attract enough first-time buyers.

Creative and Response Research in Chicago with $14.6 million in 1990 sales tells of a canned stew product which was unacceptable to consumers because it was too thin. Focus groups led to a redefinition of the product, now a highly successful line of hearty soups — same product, better idea. Amoco Oil brought unleaded gasoline to Illinois before it was mandated nationally. Why? Amoco's advertising agency found that drivers would prefer paying more per gallon to get longer spark plug life.

Founded in 1923, A.C. Nielsen in Northbrook had almost $1 billion in sales in 1990. Nielsen is best known to the public for a TV ratings service which provides audience characteristics such as age and size of family so advertisers can match their media plan with the market they want to reach. But the major activity at Nielsen has been product movement data, at first with regular audits of a sample of stores across the nation. Now Nielsen also captures the Universal Price Code scanner data as products move through check-out lanes in a sample of 3,000 supermarkets.

Information Resources Inc. (IRI), another pioneer in scanner delivered sales data, billed $166 million in 1990. They Cover 3,100 supermarkets, drug and mass merchandise stores. Like Nielsen, IRI offers scanner tracking data along with household consumer panels to record repeat buying and purchaser data. Major IRI clients have been Kraft and Searle. IRI also uses "split" cable TV, allowing different commericials to be sent to two separate panels of households matched demographically to test advertising campaigns and advertising frequency.

Marketing research really means a continual dialogue between businesses and consumers to confirm that decisions about packaging, promotion, product design, product concept and advertising are effective.

Nick Panagakis is president of Market Shares Corporation, a marketing and public opinion research firm headquartered in Mount Prospect. Panagakis, a member of the National Council of Public Polls, is best known for preelection and exit polls conducted for the news media in Illinois, Wisconsin and Missouri.

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