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Printer Friendly Page Market Research Needs to Raise the Bar for Poll Vaulting ~ #28

Market Research
Needs to Raise the Bar for Poll Vaulting ~ #28

By Alan F. Kay, PhD
2003, (fair use with attribution and copy to authors)
Oct. 8, 2003

Political poll findings appear in the news sections of print or broadcast media when it suits the interests or needs of the poll sponsors.

Never released are political poll findings that tell elected officials and candidates — or their backers — how politicians should frame and promote their positions on issues so as to appeal to voters. That's a no-no that would push the public into understanding how it was being manipulated.

Always released are the findings of political polls that are sponsored by the news media.

Often released are the findings of political polls sponsored by policy organizations. Many findings pass through media screens and achieve limited distribution.

Never released are market polls and focus group research, which are much more numerous than political polls. Never being released, they are not noticed.

To some degree the findings of market research can be deduced by anyone who takes a crack at "reverse engineering" one of the zillion print ads or daily broadcast commercials, to uncover the message behind the "message from the sponsor."

It might intrigue you on a dull day to try "reverse engineering" by asking yourself what research findings led the corporate sponsor to create some ad. You'll learn that the sponsor's message inserted into your brain is not fair, balanced and truthful, but you already know that. Most market research seems so inconsequential and is so invisible to consumers that caring about the quality of the research seems irrelevant and such questioning never occurs, even by investigative media.

Today's "Polling Critic" column (#28) shows that investigative media is missing the heart of a story on Wal-Mart by not questioning the validity of its crucial market research.

In a major story, Business Week (Oct. 6, 2003, p. 102) introduces you to the unique role of Wal-Mart in the economy:

"With $245 billion in 2002 revenues, Wal-Mart Stores Inc. is the world's largest company, three times the size of No. 2 retailer, France's Carrefour. Every week, 138 million shoppers visit Wal-Mart's 4,750 stores; last year, 82% of American households made at least one purchase at Wal-Mart."

Many people know that the big-box stores, like Wal-Mart, Target, and K-Mart, planted themselves along highways in lower cost, often unincorporated, jurisdictions just beyond high tax urban centers and bought the allegiance of shoppers by low-price loss leaders. Wal-Mart got far ahead of the others by two strategies:

(1) Stocking products of ever larger sectors of retailing. Wal-Mart aggregated in one giant big-box and in ever-expanding varieties: clothing, sporting goods, books, magazines, CDs, Videos, DVDs, appliances, hardware, garden, construction, electrical, electronic, optical, plumbing, machinery, food, groceries, meals, drugs and pharmaceuticals, until finally now there is little most consumers seek not offered at Wal-Mart.

(2) Convincing America that buying at Wal-Mart saves big money. From the beginning Wal-Mart pressed its suppliers to cut the cost to the consumer by re-designing products to give good value, generally downscale and not necessarily long-lived.

Whether a product has a long useful life can determine whether it's a bargain or not. Consider this example. A product is sold at a price 14% lower than a seemingly identical product and, when used, both products perform identically for three years, at which point the less expensive one dies while the more expensive one continues to perform well for another year. An economist will tell you the shorter-life product would be worth about 14% less and no bargain.

Over the years, Wal-Mart's market share grew enormously. In many high volume items and well-known brands, Wal-Mart's market share is now in the range of 20 to 30% and could reach 50% by the end of the decade.

Suppliers have learned that they could be cut out of a large part of their business if they did not meet Wal-Mart's cost-cutting demands. Suppliers have worked hard at cost cutting or were promptly dropped.

Inside a giant Wal-Mart store, as far as the eye can see are hundreds of signs proclaiming amazing will-not-be-undersold prices, etc. Can that tell us that Wal-Mart is cost-saving? Hardly.

Wal-Mart has unique challenges brought about by its increasing control of almost all retail sectors: (a) likely unavailability of labor and executives to fulfill its big expansion plans, (b) attacks by unions and local authorities for forcing downscale wages down further and destroying the livelihoods of neighborhood retail workers and owners, (c) the use of promotional prices to invade each new sector and after becoming the dominant consumer supplier in that sector, replacing the no longer needed promotional prices with profitable, higher prices, and (d) the Wal-Mart culture that limits the variety of informational, entertainment, and educational items because of rural, religious and cultural biases of most of its executive management.

The only way Wal-Mart will be able to get much closer to its goal to become the monopolistic retail supplier of nearly every product consumers require is to have proof that consumers benefit by lower prices. Two studies that Wal-Mart can now use as evidence for benefiting consumers are: (1) a UBS-Warburg, investment bank, study that showed that grocery prices are on average 14% lower where Wal-Mart competes and (2) a New England Consulting estimate that Wal-Mart saved its U.S. customers $20 billion in 2002, and almost $80 billion more from price cuts other retailers had to make to compete. The fact that this consulting company and an investment bank that stand to gain from Wal-Mart's growing success, and stand to be obliterated if their studies block Wal-Mart's march to monopoly, suggests that much bias may be found in these two examples of market research.

A complete, accurate study of Wal-Mart's on-going financial impact, requires the knowledge of every purchase of every item and its purchase price by every American minute-to-minute — clearly impossible. Useful studies can be simplified and produced, but would Wal-Mart finance such a study and accept its findings if the findings did not produce a conclusion that favors Wal-Mart? Of course not.

As long as Congress and the administration can be made to believe that Wal-Mart is saving consumers billions, the media, as exemplified by the Business Week article, will not challenge that conclusion, and the charge of monopoly will remain moot. No investigative media organization will touch it. This is one piece of market research that should not seem, like a print ad or a broadcast commercial, so inconsequential and so invisible to consumers that it is ignored and irrelevant. Forget raising the bar for poll vaulting. The market research bar is so low, a limbo dancer couldn't get under it.

>>> 2.5  The Polling Critic

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